In today’s article, I’m going to explain why it’s so important to leave instructions as to what you would like to happen with your estate.
Many of us don’t like to think about what will happen after we’re gone, and that’s perfectly understandable. But it’s really important to overcome this psychological hurdle if your wishes are to be carried out and your loved ones get the inheritance you have worked so hard for.
What are the Statistics?
According to new figures from the National Will Register, more than four in ten adults haven’t yet spoken to anyone about what should happen to their estate when they pass away.
A quarter of people said this is because they find the subject too morbid to think about, while almost one in five admitted they simply weren’t concerned about what happens after death.
Interestingly, even people aged over 55 are apparently reluctant to discuss this issue, with three in ten people in this age group not having spoken to anybody about their estate or their planning needs.
Similarly, almost half of those polled said their parents hadn’t discussed any instructions or details or a will, and only a third said their parents had informed them where a will could be found.
Of course, the simple reluctance to discuss or think about death is at the heart of this issue, but there will be many other factors influencing these worrying trends.
What if I’m not married and cohabiting with a partner, do i need to do anything?
Many people who cohabit but aren’t married may have mistakenly assumed that if they die without a will, everything will automatically go to their partner, when in fact this couldn’t be further from the truth as assets would pass to their closest living blood relatives.
As a recent study from the Women and Equalities Committee showed, 46 percent of people in England and Wales wrongly believe that cohabitants living together form a common law marriage, automatically gaining rights equal to a marriage or civil partnership.
Others, meanwhile, simply assume they don’t need to have a will. The National Will Register survey found that nearly one in three people don’t believe they have enough assets to warrant making one, and one in ten felt their estate was too simple.
All this suggests that much more needs to be done to educate people about estate planning, as they can end up making costly mistakes that don’t reflect their actual wishes.
More effort to show people how to make a will could also be necessary, as a staggering one in ten said they didn’t know how to draft a will even if they wanted to.
How Many People Have a Will?
Figures from the National Will Register show that just 44 percent of adults in the UK have made a will.
Notably, men were found to be more likely to have a will in place than women (50 percent of males, compared with 39 percent of females).
Similarly, men were also more likely to be willing to discuss what happens to their estate. Some 62 percent of men were found to have raised the issue with their loved ones, compared with just 55 percent of women.
Two-fifths of those who haven’t yet made a Will said they just hadn’t got around to making one yet. Sadly, we can never be sure when we’ll pass away and how quickly that Will might be needed.
I already have a Will
That’s great, your one of the 44% of uk adults that do. However, when was this Will drafted, have your circumstances or your wishes changed? Once you have a Will it is important that you periodically review the terms of this to make sure they are still in keeping with your wishes.
Is there anything else to consider? – Pensions?
For those that already have a Will and for those that don’t, did you know that some assts may not be included in your estate and as such may not follow the instructions of the Will (if you have one). Most pensions are actually set up under trusts, which means they do not form part of the estate. This is important to understand, as it means that the pension does not form part of the estate for inheritance tax, but it also means it does not follow the Will. For most pensions, you are required to complete an expression of wish. This is a form that tells the pensions trustees who you would like to benefit form your pension funds in the event of your death.
For those nominated on this form, they will usually have the option of retaining the funds in a pension wrapper which could be beneficial from a tax perspective, using the funds to buy a guaranteed income for life or having the funds all paid out to them. If you have not completed an expression of wish, the option of keeping the funds invested in the tax advantages pension wrapper will not be available to your beneficiaries.
Is there anything else to consider? – Live Cover?
For those that already have a Will and for those that don’t, did you know that some assts may not be included in your estate and as such may not follow the instructions of the Will (if you have one). Most pensions are actually set up under trusts, which means they do not form part of the estate. This is important to understand, as it means that the pension does not form part of the estate for inheritance tax, but it also means it does not follow the Will. For most pensions, you are required to complete an expression of wish. This is a form that tells the pensions trustees who you would like to benefit form your pension funds in the event of your death.
For those nominated on this form, they will usually have the option of retaining the funds in a pension wrapper which could be beneficial from a tax perspective, using the funds to buy a guaranteed income for life or having the funds all paid out to them. If you have not completed an expression of wish, the option of keeping the funds invested in the tax advantages pension wrapper will not be available to your beneficiaries.
Conclusion
You really shouldn’t delay getting your affairs in order, so you can be confident that your wishes will be carried out and your loved ones will be well cared for, if the unthinkable happens.
If you want any advice on making a will, estate planning and managing your wider financial affairs, please don’t hesitate to get in touch with us.
Our professional, regulated chartered financial planners will be happy to discuss these important issues with you, so you can be properly set up for the future.
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