Wills by The Conveyancing Solicitors Shoarns Solicitors

(2002/2006 Edition © Shoarns - intended only for clients of Shoarns Solicitors)

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Your Will may be the most important document that you will ever sign. Unlike many legal documents most people have an idea what a Will is for yet for some reason they put off making one - sometimes forever. This really can lead to tragic consequences. Even if you have made a Will in the past you should consider revising it from time to time to take into account important changes in your personal circumstances.

If you do not make a Will, when you die, all you leave behind - your "estate" - will be distributed in accordance with a set of rules laid down by the law which may or may not be what you would choose for yourself. Making a Will allows you to arrange your affairs and distribute your Estate through personal representatives of your choice rather than taking a chance on the law doing this in the way you would want. Making a Will is not difficult and the cost is really very modest for the benefits it can bring.

These notes are provided as practical advice for you to read and to refer to whilst your Will is prepared. A companion questionnaire is available for you to complete if you want to give us instructions and this questionnaire is specially designed to prompt you on the main points you should consider. What follows is advice on some selected general topics only - if you are in doubt at all on any point please contact me for advice appropriate to your particular needs. Some simple, optional forms that you may adapt to your circumstances and find useful are included at the end of these Notes.

1. EXECUTORS AND TRUSTEES

You will need to appoint an Executor in your Will (who will also act as your Trustee) to ensure that after death the provisions of your Will are observed and your affairs properly attended to.

1. You can appoint persons who may include a relative or a beneficiary. Whilst a sole executor is acceptable it is usually advisable to appoint two. They must be aged 18 before they can act.

2. Alternatively you can appoint Professional Executors and Trustees such as your Bank or your Solicitor. You may appoint someone to act jointly with the Professional Trustee,

2. MIRROR” WILLS FOR PARTNERS

If it is your wish to make similar Wills between partners you should so far as possible keep the eventual beneficiaries in each Will the same.

For example if it is your joint intention that in the event of you both dying your estates are to revert to your respective, say, parents I suggest both Wills should refer to 50% to one set of parents and 50% to the other. Then no unfairness will arise depending on which of you dies first.

It should be noted that either your partner or yourself can revoke your respective Wills at any time but most people accept this possibility and problems are rare. There are ways round this but they tend to be inflexible and rather complex. If, however, you are very concerned please ask for separate advice.

3. INHERITANCE TAX

This is not a topic everyone will need to read. Briefly, if your assets held between yourself and your wife after deducting joint liabilities (the net estate) exceeds £270,000 there exists a potential liability to Inheritance Tax. At a rate of at least 40% (£40,000 per £100,000) on the excess it will be realised that the potential liability - and hence potential tax saving - may be very large indeed. Unfortunately there are some complexities which are unavoidable.

The section on jointly owned property in these notes may be of relevance at this point.

If you have given substantial gifts within a 7 year period prior to death these may be required to be added back to your net estate to calculate if and what Inheritance Tax is payable.

The following should be noted:
1.    Every person is entitled to a personal exemption before Inheritance Tax is payable by their Estate. The personal nil rate band (the exemption limit) is currently £270,000. Therefore if your net estate does not exceed this sum no Inheritance Tax will be payable whoever your estate is left to.
and;
2    All transfers or bequests between husbands and wives are exempt from Inheritance Tax and therefore for a marriedperson on the first death no Inheritance Tax will be payable if:
(i) Their estate is under £270,00 whoever it passes to (e.g. children).
or;
(ii) Their estate passes to their spouse whatever its value.
or;
(iii) Part of their estate up to a value of £270,000 passes to beneficiaries other than their spouse (e.g. children) providing that the remainder of it, whatever its value, passes to her. This is the point where major Inheritance Tax savings can be made.
3. It will be seen that if your estate will exceed £270,000 you should give thought to using 2(iii) above. This would mean that you and your spouse are making use of both sets of personal exemptions. Firstly, £270,000 of your Estate can be transferred to the other beneficiaries (e.g. children) on the first death and secondly a further £270,000, Inheritance Tax free, on the 2nd death. Please keep in mind these matters:
(i) Take care that the survivor of is not be financially embarrassed by the payment of the bequest(s) to the other beneficiaries (if in doubt do not do it this way - see 4).
and;
(ii) For Inheritance Tax purposes gift which the Inland Revenue interpret as reserving benefits of some kind - like life interests in property - (technically "interests in possession") May have adverse tax consequences e.g. by resulting in a second charge to inheritance tax on the survivors death depending on the size of their estate at the time of their death.
4. Your personal representatives will be able to better judge IHT liability at the time of your death for obvious reasons and there are rules which allow beneficiaries to renounce or vary their entitlement under a Will within 2 years of the death with the same result as in 3 but with the decision being made just after death. Therefore the survivor of you may within 2 years of the first death, review the full financial position and then decide, in writing, to vary or disclaim all or part of his or her entitlement to the estate. For Inheritance Tax purposes the deceased's Will will be treated as if the variations had been made by the deceased if certain conditions are met. It would then be possible to achieve the result as in 3 above..
5.    Subject to certain exceptions gifts to Charities and Political Parties are free of Inheritance Tax.
6.    Usually you are able to make Lifetime Gifts which subject to your surviving 7 years are exempt. However limited benefit is achieved after 3 years survival which benefit increases every additional year up to the 7 years. You are also able to make limited annual gifts, wedding gifts and normal gifts out of income. For Inheritance Tax purposes remember that gifts should be outright and not reserve a benefit.
7. One method of avoiding your heirs having to pay tax is through the use of life insurance. Ordinarily the proceeds of a life insurance policy would be liable upon death to inheritance tax if an estate exceeds £270,000. If however the insurance Policy is written in trust for your heirs the proceeds are not calculated as part of the value of your Esate and would not be liable to inheritance tax. Often all that is required is to complete a simple form of trust provided by your insurers. Sometimes an existing policy can be used. Note however that not all life policies or arrangements are suitable. Please contact me or your life insurance company for more information.
8. Other inheritance tax saving devices might be worth considering for potential estates which are likely to be substantial. The most likely you will come across are Lifetime and Will Settlements in the form of life interests and discretionary trusts. Both of these have complex tax consequences for their durations - especially life interests. Both of these are complex and expensive to set up. Discretionary trusts are comparatively complicated and expensive to administer. They are flexible but the settlor or testator loses control over the ultimate destination of the property. Annual accounts and tax returns have to be completed. The trustees may have to pay a heavy rate of income tax as a trust and suffer other adverse tax consequences.

If you have an Acccountant you ought to take advice on your Will contents and tell them your intentions.

4. DISTRIBUTING YOUR ESTATE

A separate comprehensive questionnaire is available to guide you through the matters to be considered (please ask). In this note therefore only a few matters will be considered.

Most wills prepared by this Firm only relate to your property in the United Kingdom and assume that you are domiciled in the United Kingdom. If you have property abroad you should consult a qualified lawyer in that country about making a will valid for that property in that country.

It is not necessary for you to detail every asset and possession that you own as your Will will be worded so as to distribute your estate whatsoever and wheresoever it may be at the time of your death. It is a matter of personal choice according to circumstances but you may decide, especially say in a close knit family, not to refer to some some items in your Will e.g. those of low or sentimental value e.g. photograph albums jewellery, those of depreciating value e.g. clothes or those which you are likely to change e.g. a car but to discuss and arrange with your relatives as a matter of trust what should happen to them after your death.

You will have the opportunity in your will to:
1.    Specify sums of money (legacies) to be gifted (which may be index linked by the way).
2.    Specify particular assets/possessions to be passed to named beneficiaries (see above).
3.    Name the beneficiaries who are to receive the residue of your estate and (if you wish) in the event of them being unable to take to make alternative provisions.

You should note that there are some Assets which will not pass by the operation of your Will:
1.    Some property or assets held in joint names pass to the survivor irrespective of what you might say in your Will. This could extend to joint Bank or Building Society accounts and, very commonly, the jointly owned home. See the section "Joint Property" for more information about property.
2.    Death benefits under a Pension Scheme which are usually paid at the discretion of the Trustees.
3.    Life Assurance policies if written in trust for specified beneficiaries.

Care should also be taken to ensure that any asset that you are disposing of is within your ownership.

If you are in doubt about any of these aspects seek advice from us.

5. JOINT PROPERTY OWNERSHIP

I am afraid it is impossible to avoid some complexity here but I will try to keep it as simple as I can. It might help at the outset to say that, confusingly, mention of tenants and tenancies in this section has nothing to do with landlords and tenants in the renting out of a house or flat understanding of these words.

Joint owners of property are trustees of that property and its proceeds of sale - even though they probably do not think of it in these terms - usually for themselves as beneficiaries, and their joint ownership must be:-

Either 1. Joint Tenants. This is easily the most common method of ownership which usually arises through "default" - often between husbands and wives. In this case upon the death of one of the spouses their interest in the property passes by survivorship to the other automatically and what their Will says is irrelevant. This might - and often is - exactly what is wanted, of course, and the fact that it happens outside the terms of the deceased joint owners Will is neither here nor there. In some circumstances however this method of joint ownership will be unsuitable or will achieve an unwanted result or injustice especially in some of the less common situations, for example:-
(i) Where a joint owner does not want his co-owner to inherit for some reason. Please let us know when you give me instructions if you do not want your co-owner to inherit your share in jointly owned property and what your wishes are. This point ties in with the section on Inheritance Tax in these notes.
(ii) Where more control is required over the extent to which the co-owner inherits the share e.g. by giving them only a right to reside in property for their lifetime. Again if you think this might be your wish please let me know so that I can advise on the possibilities.

Or 2. Tenants in common. More formal joint property ownership - often business or unmarried partners but sometimes husbands and wives for special reasons. Each co-owner has a distinct (often by default 1/2) share in the property and its proceeds when sold. That share must pass on their death according to the terms of their Will and not by automatic survivorship as with a joint tenancy. This alternative type of joint ownership is often combined with another document like a trust deed co-habitation agreement or partnership deed to specify exactly who owns what in the joint relationship if the shares are not 50:50.

In order to save Inheritance Tax in a Will property must pass under the Will so it will be essential, if a joint tenancy exists, to convert ownership of property from 1 to 2 above i.e. from joint tenancy to a tenancy in common of some sort to do so. This is done very easily by giving what lawyers call "Notice of Severance" of the joint tenancy and I can prepare this for you quite easily should the need arise. Following such severance, as if by magic, Joint Tenants are immediately transformed into Tenants in Common and their separate shares passes on their death under the terms of their Will allowing Inheritance Tax saving.

6. POWERS OF ATTORNEY

Information about giving Powers of Attorney known as Enduring Powers of Attorney is included in Appendix 3

7. LIVING WILLS

This is, briefly, a statement of request regarding the medical treatment you want (or perhaps do not want) administered by the medical profession in the event that you are unable to communicate the information yourself through medical incapacity. They are controversial and uncommon but some clients want to tackle a difficult, often avoided, but important subject in their lives head on and we are happy to advise on these if you want one - we believe they can be worthwhile and bring peace of mind. Do not hesitate to ask if you want more information.

8. SIGNING YOUR WILL

The rules are very strict. Failure to follow them precisely might make your Will invalid. I strongly recommend that you send me the original to check after it is signed.

Please therefore follow these instructions and note the Specimen laid out in the Appendix:-
1. Read the Will or Codicil and satisfy yourself that it says what you intend.
2. There must be two witnesses present who should be capable of seeing you sign the Will. The witnesses need not read the Will but they must know that the document is a Will (or Codicil) and must be in a position to see the Will signed.
3. It is important that neither witness under the Will or Codicil have the same surname as you or be a person (or the husband or wife of a person) who takes any benefit under the Will or Codicil.
4. Do not choose witnesses who are your executors nor the spouse of any executor
5. If, on coming to sign the Will, you wish to make a last minute alteration, e.g. a name spelling, any such alteration must be made in ink or ball point pen and you and both witnesses must place your initials in the left margin space of the Will against each line in which an alteration appears and this must be done before the Will is signed.
6. Fill in the correct date in words in the Will in the "Attestation Clause" which is the part commencing "Dated this" (the exact wording may differ slightly in your Will from that shown below) and sign the Will, in ink, with your normal signature. The two witnesses who should there and then sign their names, adding afterwards their full names in block capitals, their address and occupations in ink under the Attestation Clause to the left of your signature. A specimen of the completion of a Will in this way is shown below as a guide. Note also that in Wills (to avoid fraudulent page substitution) each separate page excluding the last (i.e. any loose pages even if clipped bound or stapled together) should be initialled somewhere in the bottom margin space at the end of that page by you and each witness. Incidentally if the witness is a lady the usual description is often "married woman" "widow" "single woman" or "spinster".
7. Note that if the Wills are of such a length that they are typed on separate sheets (even if clipped together) both you and the two witnesses should also sign in the space at the bottom "margin" of each individual sheet.
8. The Will or Codicil must then be kept in a safe place, and your close relations and executors should be told where it is kept. If it is not returned to us for safekeeping, we suggest that you send us a photocopy of it dated signed and witnessed.

in our presence and attested John Doe
by us in the presence of
him or her and of each other

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