Living & Dying Tidily
Death is something most of us would rather not think about and maybe this is why over 60% of us die without ever having made a Will.

"It is too expensive" "everything I own will go automatically to my spouse or my children" or "my assets are too insignificant". These are common mis sold payment protection misconceptions. There are many good reasons for making an efficient well-drawn Will, a few of which are outlined below.

The only certain way to ensure that your partner inherits what you intend is by making a Will. If you die without having made a Will, the intestacy rules apply in an arbitrary pre pack administration manner, particularly if there are no children. This may lead to your spouse having to share your estate with relatives (E.g. brothers & sisters, uncles & aunts) whom you may never have intended to benefit. For example, Adam did not bother to make a Will, thinking everything would go to his wife, Eve. He left an estate of £300,000 and no children. His wife and two nasty brothers survived him. Eve is only entitled to personal effects (furniture etc) ,£200,000 and half the balance giving her a further £ 50,000. The brothers took £25,000 each.

Home -made Wills can be disastrous: for example omitting to cover the position if the main beneficiary does not survive; failing to take advantage of the nil-rate band (see below); referring to assets which are not owned on the death. All are reasons why you should have your Will drafted by a properly qualified professional.

You can provide for specific funeral arrangements (i.e. burial, cremation, or the use of your body for medical research).

You can safeguard your minor children's interests by appointing legal guardians to care for them if both husband and wife have died e.g. in an accident.

You can appoint Executors to deal with your estate in the event of your death and hold property on trust for example during a beneficiary's minority. These Executors have a very important role to play and should be business-minded family or friends and/or professional advisers. To some extent executors can act before grant of probate.

By careful drafting, Inheritance Tax ('IHT') can be saved on the estate you leave behind. IHT considerations are important, particularly as the estate may easily exceed the current nil rate band (£275,000 from 6th April 2005). Remember that there is at present no specific IHT exemption for the family home. IHT is presently charged at the rate of 40% on the value of the assets exceeding the nil rate band (with some exception see in particular as to business and agricultural property below). Thus, an estate consisting of a home worth £300,000 and a further £50,000 of other assets will pay tax of £30,000.

Although assets passing to a spouse are exempt from IHT, today an increasing proportion of couples choose Law Courses or to live together rather than marry and in those circumstances the spouse exemption does not apply. Moreover, if everything is left to the surviving spouse, the two estates will be bunched into one on the survivor's death, causing unnecessary IHT to be paid.

It is therefore vital that you ensure that you and your spouse each use the available nil rate band. A simple form of discretionary trust in the Will can achieve this and save at the stroke of a pen some £110,000 of IHT. (The nil rate band of £275,000 at 40%). The surviving spouse is normally included as the principal beneficiary so the arrangement should not give rise to any major difficulties.

For example, assume that husband and wife each have an estate of £300,000; and that the husband dies first, wishing his widow to be the primary beneficiary. Under a commonly used, but wasteful alternative, the husband could give his widow his £300,000 estate (absolutely or by way of life interest) ensuring that no IHT was payable on his death. On her death however, having regard to the bunching effect, other things being equal, IHT would be payable on an estate of £600,000 (currently £ 130,000 of IHT - over twice as much as need be paid!).

Your Will can also direct your business interests (such as shares in the family company) and farming interests to those intended, e.g. a son or daughter who has come into the business. An important IHT relief can apply to these interests giving discounts of either 100% (i.e. complete exemption) or 50%. Therefore, why pay a substantial tax bill when this can be reduced through careful drafting in a Will? Such business/ agricultural interests can often be dealt with through the discretionary will trust referred to.

To own your home or other asset as so called "joint tenants" is an inflexible method because the surviving co-owner automatically takes the whole. Therefore, a co-owner cannot during lifetime or by will give these assets to any other beneficiaries, for example to his children to utilise the nil-rate band. The solution: have the asset held as so called "Tenants in Common" and if the holding is already as joint tenants it can easily be severed by a relatively simple procedure.

Personal items such as jewellery, paintings and heirlooms can be dealt with in the Will and by reference to an informal letter of wishes. You can benefit good causes by leaving a legacy or share of your estate to charity, free of IHT.

The consequences of dying intestate (i.e. without having made a Will) can prove both complicated and expensive. At a stressful time for your family and friends such worry, complication and expense can be avoided through making a correct Will.

Even if you have already made a Will it is important to keep this under review at regular intervals (at least every five years). The world does not stand still and in particular your family circumstances and relevant taxation laws will change.

Remember also that in a two-year period following the death, the terms of a Will can be varied by an appropriate document entered into by the persons involved. This may, however, be prevented by changes in the law.

Having read the advantages of leaving a Will, can you afford not to make one?