6th November 2018 at 11:41am
What do lawyer-turned US President Abraham Lincoln, singer Amy Winehouse, civil rights activist Martin Luther King and author Stieg Larsson have in common?
Well, according to Forbes magazine, none of them made a Will.
It’s surprising but it’s not that unusual. Just over half of us – 53% of UK adults – don’t have one, according to Will Aid’s latest survey.
Sometimes it just hasn’t occurred to you, or you haven’t got round to it.
But take a moment to consider the practical, financial and emotional benefits and it starts to feel like a positive thing to do. And it can be easy to get one in place, then get on with living your life.
Here are eight reasons why having a Will makes good sense – and what you need to know about pension savings.
1. You get peace of mind
You sort out your finances, property and belongings – they make up your ‘estate’. By making a Will sooner rather than later and keeping it up to date you will know what you have and get peace of mind that the right people, or charities, will benefit how you want them to.
A DIY Will might seem like a cheap option but sorting out any unintended consequences could cost your family more in the long term. It could make more sense to seek professional advice – which will normally have a cost – to make sure everything is in good order.
The Money Advice Service has lots of useful information on making a will but do be aware that different legal rules apply across the UK. For example, those with ‘legal rights’ under Scots law could have a claim on any ‘moveable property’ even though it is mentioned in a Will.
2. Because life happens…
Big life events like having children, marrying, divorcing and receiving inheritances can change your circumstances and with the number of people contesting inheritance in the courts on the rise, it’s more important than ever that you regularly update your Will.
3. You make it easier for those you care about
If you don’t have a Will, your estate is dealt with under what are called intestacy rules, where the law will decide who inherits what.
Money might not go to the people you would want it to, it may take more time and is likely to mean extra legal costs for the loved ones you leave behind.
4. Surprisingly – your Will doesn’t cover pension savings
Not everyone realises that a Will doesn’t normally provide for what should happen to your pension savings.
Modern, flexible pension pots can be cascaded down the generations to anyone you choose, sometimes tax-free. But you need to actively make this choice through a pension beneficiary nomination form which you fill out with your pension provider.
Keep it up to date if your personal circumstances change to make sure those pension savings go to the right people, or charities.
You can update the details online if you’re a Standard Life customer, or contact your pension provider.
5. You’re cohabiting
If you’re cohabiting as opposed to married, it’s worth knowing that unmarried partners don’t have an automatic right to an inheritance, despite what many people think.
A Will could help make sure those who aren’t married are taken care of.
6. If you have children, make sure they are provided for
If you have younger children, a Will allows you to name guardians who can care for them, or lets you set up a trust which can ring-fence money for their future.
7. Make your money work as hard as it can for your loved ones
If you’ve got property, are investing in a pension and building up savings in bank accounts and ISAs, you will naturally want as much of it as possible to pass to the people and causes that matter to you.
If you have more complex circumstances or a lot of assets to consider, it may be worth taking professional advice to make sure your Will is right for your wishes, to help manage the tax implications in the most effective way.
8. You can get tax benefits by leaving a ‘charitable legacy’
Many charities rely on financial legacies and if this is something that’s important to you, it’s tax efficient too.
Again, this is an area where taking financial advice is really important to make sure your wishes are carried out.
Where there’s a Will, there’s a way
Every November, Will Aid encourages solicitors to waive their fee for writing a basic Will – more suited for those with simpler finances – and invites people to make a voluntary donation to charity instead.
If you have a Will, it could be a timely reminder to update it with your adviser, or make time to get one drawn up. If you don’t have an adviser, try unbiased.co.uk or get in touch with our financial planning arm, 1825.
A pension is an investment and its value can go down as well as up and it may be worth less than was paid in. Tax and legislation may change and the information here is based on our understanding in November 2018 and shouldn’t be taken as financial advice.