5 reasons you may want to review that Will!

Validity

To check it is valid. Has it been signed and witnessed? Often I seen clients that have used a solicitor, paid for the Will, and have only been left with a draft, thinking it’s a valid Will. If you have married or remarried since making your Will, the previous Will is invalid.

Changes in circumstances and family

Not every Will is flexible enough to cope with changes. Have you mentioned specific property? Do you still own that property? Personal circumstances change: marriage, separation, and divorce. Family may come into our lives and leave our lives, for lots of reasons, births, deaths and marriages being an example.

Does it still reflect your wishes?

More importantly, does it reflect what you are telling family that it does? If not, you need to align the two, so as to avoid family disputes after your demise.

Tax planning

Wills were often created in ways to take advantage of the Inheritance rules at the time. The rules have changed. Is your Will written to take advantage of the current tax rules?

Executors

Are the executors you chose still the people that you want to act? If not you need to update your Will.

If you are not sure about your Will or it contains trusts that you don’t understand, Will You Ltd can review your Will free of charge providing you with an A4 page report so you can consider whether there is any need to update your Will.

Do make sure if you have any life assurances that they are put in trust if relevant and for pension funds you have completed a trust form or a Nomination of Beneficiary form. These can be just as important as your Will. Once again we can help you review these items as part of our service alongside your financial adviser.

Lasting Powers of Attorney and Investments

If you have invested funds with a bank or investment house you may well have given them authority to buy and sell shares or funds, much in the same way an old fashioned stockbroker may have acted for you.

These are known as discretionary fund managers or DFMs. Examples are firms such as Charles Stanley, Brewin Dolphin, Seven Investment Management, Rathbones etc.

However the problem comes if you lose mental capacity. Paragraph 7.38 of the Mental Capacity Act 2005 Code of Practice states that “the attorney must make these decisions personally and cannot generally give someone else authority to carry out their duties.

If the donor wants the attorney to be able to give authority to a specialist to make specific decisions, they need to clearly state it in the Lasting Power of Attorney document (for example, appointing an investment manager to make particular investment decisions).”

So advisers need to be clear that their client does not have any schemes such as discretionary fund management, investments held by nominees or the managers of the scheme, and perhaps also need to ensure that they are unlikely to have such an arrangement in the future. Don’t forget that DFMs can also be managing pension funds within Self Invested Pension Plans.

In addition, it would be nice to allow the attorneys the possibility of investing in such a way. So in cases where the client has investments, it would be prudent to include the special wording in the Lasting Power of Attorney for Property and Affairs, just in case. Otherwise it may be necessary to rearrange long standing investment arrangements so there is no “discretionary” element involved in investment decisions.

However, when you deal with a company like Will You Ltd you would expect them to have a conversation around this to ensure your interests are protected. If you are concerned about this, please do not hesitate to contact us for advice.

 

 

Living Wills

Living Wills are also known as Advance Decisions and are effectively statements of intent as to how you want to be treated when it comes to life sustaining decisions.

Here is a link to today’s BBC real story that rather hammers home the point. The point being if you want some control over how you die write a Living Will, and it doesn’t matter if you are 18 or 80, it still applies to you.

“Doctors wouldn’t let my sister die”

What’s more you don’t need to pay us to do it for you. The charity Compassion in Dying has an excellent website that allows you to complete an Advance Decision free of charge. Here is the link…

Compassion in Dying

Of course, it is not for everyone. Some of you may not want to make any Living Will. That’s fine.

So how does someone know you have an Advance Decision in place?

You should supply your GP with a copy and they have a system that would log it and call it up if required. Even better, carry an Advance Decision card in your wallet with your credit cards. This can be printed out from the Compassion in Dying website.

Another tip is to regularly re-sign the Advance Decision, this shows that you are reaffirming your decision and commitment to it.

 

How to avoid Inheritance Tax

Politician Roy Jenkins in 1986 stated “Inheritance Tax, is broadly speaking a voluntary levy paid by those who distrust their  heirs more than they dislike the Inland Revenue.”

Like our friend Boris, I would say he liked to be controversal! The point he was making is that there are a multitude of different ways to avoid Inheritance Tax if you are thoughtful enough to plan ahead.

I recently acquired a great handbook published by SIFA called “Financial Solutions for Estate Planning” 2017. This is designed for financial advisers and it details all the financial products and schemes available to legally avoid Inheritance Tax. I would point out the booklet is over twice as thick as my 2011 version, so there is no shortage of choice.

Whatever your views, it happens, and on an industrial scale.

My point is, you should talk to a financial adviser because the money you spend on advice can return to you or your ultimate beneficiaries 100 fold.

Before you start any financial engineering, you should write a Will or update your Will with a will writer that considers these aspects. There are mechanisms that you can use in your Will that can potentially save huge amounts of Inheritance Tax.

 

 

 

 

 

POSSIBLE HUGE CHANGES TO WILLS AND WILL WRITING

The Wills Act 1837 is now 180 years old. Is it time for us to move on from the Victorian era and look again at whether this is all really working? Well the Law Commission thinks so…

So is the Last Will and Testament of the future going to be a video, a text, or a note on your Ipad?

Indeed all this is up for discussion. Some commentators are saying “Hold on a minute, how do you test whether that person had mental capacity or indeed testamentary capacity? Is this going to create a glittering Wonderland for lawyers as the level of disputes goes sky high?”

Mental capacity is a key issue. Access to will writing is another issue.

There are a thousand other things to consider as well. Other countries will be watching closely to see how radical any reforms become. Various states in Australia such as New South Wales have addressed the issue of minors under 18 being able to write a Will, so 16 year old internet entrepreneurs and others can, with Court permission, write a valid Will. I suspect that is coming here soon as well.

The Law Commission review is covering a wide variety of topics, however they are somewhat skipping over the issue of digital assets.

Digital assets include websites, music purchased online, valuable domain names, blogs, etc. This can be dealt with well by talking to a professional will writer, but some things will be a blurry area until  other areas of the law (often foreign laws) become clearer.

We are optimistic that the changes will make things better and easier but much care is needed.

Meanwhile, let us agonise over the changes. Just get a valid Will in place now, it’s not that complicated….

ACT NOW!

 

I remember back in my days in financial services we had a rubber stamp in the office with a red ink pad that said “ACT NOW!” and where necessary we used to stamp it on client letters.

Over the last month I have seen the consequences of not acting with regard to Lasting Powers of Attorney and leaving it to the last minute in hospital with considerable difficulties. I would urge you whatever age you are to consider having a “notional heart attack” now.

Is your Will up to date?

Is your Lasting Power of Attorney in place?

What about all your internet passwords?

Have you made any contingency plans if suddenly you are not able to act?

Some years ago we also saw a real heart attack situation where the father never expected to suddenly die. He never changed his Will, like he told his children he would, and it created a severe family rift.

I never bullied clients to take action, but sometimes I feel I did them a dis-service. So please if you are advising clients, please gently get them  to take appropriate action before it’s too late.

Testamentphobia!

This is not in the dictionary. It is my definition of the fear of writing a Will. The bizarre situation is that there are people that have a fear of writing a Will. I don’t get to meet them often, but I do talk to them!

The fear seems to run along the theme that if they write a Will they will suddenly drop down dead. Some of us have a fear of dying, but in it’s extreme version this is a real and serious condition and is known as death anxiety or thanatophobia (that is in the dictionary). I would not deny this can be life-limiting and may require therapy.  Sometimes a married or partnered person is not writing a Will simply because their partner has this fear, the net result is that neither of them have Wills!

39822932 - be brave and face your fears text written on notebook page, red pencil on the right

I want to assure you the process of writing a Will is painless and sometimes even a pleasure. You don’t even have to go to a scary old Dickensian lawyer. Most people are relieved to have at last put their affairs in order.  So please think about your family, face your fears and we will be gentle and understanding.

 

 

 

Effect of marriage and divorce on Wills

Firstly Divorce…

It should be noted that a will is NOT revoked on divorce, BUT

  • Any provisions appointing the former spouse as an executor or trustee take effect as if the former spouse had died.
  • Any property or interest in property bequeathed to a former spouse passes as if that former spouse had died.
  • Any gift to the former spouse lapses.

41099799 - portrait of a displeased couple sitting back to back on couch

Learning point. If anyone gets divorced they should rewrite their Will as the above can have unintended consequences. Don’t assume that the divorce lawyer will have considered updating the Will. In our experience this doesn’t happen. More often than not, the divorcee wants to get this changed if only to make a clean break from the past.

Marriage.

  • Under s18 of Wills Act 1837 (our favourite bit of legislation) a will is automatically revoked on marriage.
  • However under s18(3) you can make a will in “contemplation of marriage” to a certain named person. That Will is not revoked by marriage if the intention not to revoke the will is clear.

17161210 - just married couple sharing romantic moment

Learning point. One day someone can have a valid will, next day no valid Will, simply by marrying. We all see the point in this, as the new spouse should be considered. However in the modern world couples that are living together need to ensure that if they ever have a thought of marrying then they should write a will in “contemplation of marriage”. When you are enjoying wedding plans you generally don’t think about your death! The same applies to second marriages. A new will is not something that would be on your mind.

All of the above applies to same sex marriages despite the photo images!

In summary, any change to your relationship status, should be accompanied by a review of your Will. Simple stuff, often overlooked….

Income Withdrawal and Powers of Attorney

The recent stockmarket volatility after the referendum has focused the importance of active management of investments and pension funds to maximise returns and prevent losses.

Annuities rates are now very low and the trend is downwards. This means that many more retirees are creating Income Withdrawal accounts with their pension funds.

However in order to manage your investments and pension income it is a good idea to have good brains at work and that is not possible if you have lost mental capacity in retirement. Unlikely as you may think now, do you know that you will never be affected by stroke or dementia?

To avoid the problem you should consider setting up a Lasting Power of Attorney now for your property and affairs if you haven’t already done so. You can appoint in the document a person (known as an attorney) to act for you, and you can choose someone with investment expertise or your trusted adviser. Or more simply when you draw up the document you can express your wish that with regard to any Income Withdrawal accounts that your chosen attorneys review your pension fund each year with your financial adviser.

How do we know this is a problem?

Because we have seen situations occuring where there is no Lasting Power of Attorney in place. The alternative which is an application to the Court of Protection is expensive and time consuming and you will not get a chance to choose the attorneys who act for you. We would recommend you take control and act now.

Executors – Who to choose?

Solicitors tend to make strong arguments to have professional executors so the Will is executed professionally. On the other hand Will writers tend to allow the client to choose family members as executors and only choose professionals if no one comes to mind.

So who’s right?

Well I would argue that both are right. The Will writers focus on reducing costs to the testator. Professional executors can be expensive charging a percentage of the estate, bank trust companies often charge in this way. Solicitors, once named in the Will as executors are reluctant to step down after the testator’s death if requested to do so by the beneficiaries. Some even charge a fee for doing so or simply refuse to be removed. But why would you want to remove them? Solicitors often charge on an hourly basis for this work and it is deducted from the testator’s estate, so beneficiaries if they have the time and inclination to act themselves may request this. If the estate is not being dealt with promptly this can be the source of disputes hence a request to remove solicitors as executors.

On the positive side professional executors can avoid the following problems

  • Dispute between lay executors delaying matters potentially creating a stalemate or worse still a family rift
  • Executors not fully understanding their responsibilities under the various Trustee Acts
  • Not setting up trusts, or understanding the role of trustees
  • Not understanding the required probate and Inheritance Tax forms
  • The executor(s) may fall ill or loose mental capacity
  • Liability can fall on the executors if they act negligently or if they submit a fraudulent Inheritance Tax return to HMRC they can be imprisoned.

So what are the advantages of having family as executors?

The executors can in fact be the beneficiaries. So a classic example is Mr & Mrs Jones with two adult children choosing the two children as their executors and also being the beneficiaries.

The children will have a keen interest in sorting out the estate quickly and efficiently and if they have some skills in organisation and administration that is an advantage. Because they are likely to know all the beneficiaries it is generally easier to locate them.

Of course, lay executors such as these adult children can seek the advice of professionals from outset or when they find themselves out of their depth and can hand over to a professional executor or accept their help on an ad hoc basis with them charging accordingly. But note they can shop around for the best professional in terms of costs and skills.

Mix and match. There is nothing to stop a testator choosing BOTH family and a professional executor to act as executors. This may solve some of the problems mentioned above, but it will come at a cost as the professional has to be paid and doesn’t prevent executors being in dispute with each other.

16924691 - aren't you glad we had this meeting to resolve our conflict