It may surprise you that many people don’t have a will, so the idea of changing an existing will may be something that has never crossed your mind. Yet the importance of having a will and keeping it updated cannot be stressed enough.
People’s circumstances change throughout their lives, which also means their assets and beneficiaries can change too. Unless these changes are kept up-to-date in a will, if you were to pass away, your assets may not be distributed in the way and to who you desired at your time of passing.
So what could these circumstances be that warrant the need to update your will?
When getting married in England or Wales, a will that you have previously put in place will become void, unless it outlines your intended marriage. It is therefore important to ensure that you put a new will in place once married, if your intended marriage was not outlined in your previous will. If you do not do a new will, the law will decide who inherits your estate when you die. If you remarry (having been married before and divorced), the impact that the remarriage will have on your will is the same as if you were marrying for the first time.
Divorce will not completely revoke your will, but it does mean your ex-spouse will not be able to benefit from your will as a beneficiary, or act as an executor and/or trustee. Anything that you outlined in your will as being gifted to your ex-spouse would be managed as if they had died on the date that your marriage ended. This is an important point, highlighting that you should ensure that you update your will so it reflects your genuine wishes.
If you have a child or grandchild, it is common to want to include them in your estate plan. Without a will in place that outlines your wishes for your children or grandchild, the law will determine how your estate is divided amongst your relatives upon your death. The person entitled to inherit the most is your spouse, followed by your children. If this would not be your wishes, you will need to update your will to reflect what you want. Also crucial is naming who you would want to look after your children if you passed away. You should have an open discussion with who you wish to name as your children’s guardians in your will due to this significant commitment. If you had named guardians in your will and they pass away, it is important to update your will to name new guardians.
- Changes to a beneficiary’s circumstances
Not only do you need to consider your own life circumstances when it comes to your will, but also, the circumstances of your beneficiaries. For example, if your beneficiary becomes bankrupt, you may wish to change your will to remove them as a beneficiary so that the inheritance that would have benefitted them is not used to pay outstanding debts. Also, if a beneficiary was to get divorced, you may wish to update your will to protect the inheritance outlined for this beneficiary to ensure it is not impacted by the divorce. If a beneficiary of your will dies before you, their benefit from the estate will lapse, meaning that your gift is void. As a testator, you may want to change your will following the death of a beneficiary and amend who receives the gift you allocated to the beneficiary who passed away.
- Changes to your financial situation
A number of situations could result in an increase in your finances. Aside from the unlikely but possible lottery win, the sale of a business, promising investment, inheritance money, or other financial addition to your estate may leave you wishing to change how you would like your new estate value to be divided. You should therefore update your will not only to reflect your desires, but also to minimise taxes that might reduce the value of your estate. Inheritance tax, for example, will need to be paid if your estate is valued over £325,000. The standard inheritance tax rate is 40% on the part of your estate that is above the £325,000 threshold. Gifting strategies, such as gifting assets with the potential for growth in value, is one such way to save on inheritance tax, as the appreciation in value increases outside of your estate. For business people, it is certainly worth considering whether you qualify for business property relief (BPR), as this can often allow relief of inheritance tax on the transfer of relevant business assets at a rate of 50% or even 100%.
- Other life changes
Various circumstances can impact a person’s life in a very personal way. For example, a battle with cancer may leave you with the wish to leave a part of your estate to a charity that helped support and care for you. Through updating your will, you can state that you want a charitable organisation close to you to benefit from your estate.
Louise Williams, partner and head of probate, wills and trusts department at Hutchinson Thomas, said:
“Having an up-to-date will is incredibly important. Not only does an up-to-date will guarantee the testator’s wishes are adhered to, but it also alleviates any discrepancies between those closest to the testator, as what the testator wants has been outlined clearly and recently. This is particularly true for unmarried couples, as the surviving partner is not automatically entitled to the estate of their deceased partner unless this is stated in their will.
“The death of a loved one is always distressing, but some of the heartache can be eased when attention has been paid to how their estate it to be handled through a will. It also avoids the administration of an estate through the intestacy rules, which can be a complicated and costly process.”
For more information on lasting power of attorney, contact Louise Williams on 01639 640153 or email firstname.lastname@example.org