Guide to Wills and Probate

Transcription

1 Guide to Wills and Probate AUGUST 2015 The importance of having a Will Have you made your Will yet? It s one of those documents that we all know we should have, but one that millions of us put off making, often until it s too late. Shockingly, nearly 8 million people over 50 have yet to make a Will. Here are some of the consequences of failing to have this most important of documents: n Loved ones such as friends and family members may not inherit from your estate n People who you might not wish to inherit from your estate, such as step children, actually could n You could cause disputes among loved ones when you pass away n A significant part of your estate could be given to the government n Administering your estate to complete the Probate process could take significantly longer and cost more. There are many reasons why people don t prioritise making a Will. Some people think they are too expensive, some believe they don t need a legal document to ensure their wishes are carried out. The fact is, the reasons people give for not having a Will are often based on incorrect assumptions about how to make a Will and how a Will is used. Without a valid Will, those left behind can face significant problems when sorting out a loved-one s estate. This guide is designed to give you a total overview about Wills and probate. In it, you will find the following information: n Why making a Will is so important n Which type of Will is right for you? n A checklist of information you should include in your Will n Do you need a Trust? n How to avoid mistakes in Wills n Who should draw up your Will n Top tips on storing your Will n What you need to know about DIY Wills n How to decide on probate and executors n How Saga can help with probate n How to make things easier for your executor n How to feel better prepared n A jargon buster. For more information about The Saga Will Writing Service, please call or visit P1

2 Why making a Will is so important Why should you write a Will? When you write a Will you re officially declaring what you want to happen to your money, possessions and property following your death. Collectively, these things are known as your estate. As well as helping to reduce the amount of Inheritance Tax (IHT) that may be payable on the value of the estate, having a Will also makes it much simpler for your family and loved ones to carry out your wishes. What happens if you don t write a Will? If you don t leave a Will, the process of distributing your estate can be more time consuming and stressful. Without a Will, the law decides how your estate is passed on, running the risk that it will not be distributed as you wish. Your estate will be distributed according to strict rules of intestacy. Find out more about the rules of intestacy here. Who can make a Will? Anyone can make a Will, as long as they meet two basic requirements. They must be at least 18 years old, and they must be of sound mind'. Who should make a Will? This depends on individual circumstances. You can write your Will following your 18th birthday, but more often than not people write their Will once they are financially independent from their parents or following significant life events, such as getting married, purchasing a property, starting a family, receiving an inheritance or when grandchildren arrive. Whatever your reason, writing a Will ensures your assets and possessions are passed on to the people you choose. Do you ever need to update your WiIl? Yes it is important to ensure your Will is up-to-date and in line with your current circumstances. If your situation changes, for example, through marriage, acquiring new property or having grandchildren, you might need to update your Will or create a new one entirely. Many legal providers, including Saga, are able to review your Will to check whether it is still suitable for your current circumstances. P2

3 Which type of Will is right for you? There are several different types of Will, which differ depending on your estate and how you want it distributed. When you come to write your Will, you need to familiarise yourself with each different type so you can establish which one is right for you. If you use a professional Will writer, solicitor or legal services provider they will be able to discuss which Will would best suit your circumstances. Simple, single Will this is a straightforward Will made by an individual, regardless of their marital or relationship status. This is usually the cheapest type of Will to make, but is not designed to be used for couples who want to have similar clauses in their Wills. Mirror Will a mirror Will is designed for couples who have the same or very similar wishes. Mirror Wills are suitable for people who plan to leave their estate to their spouse or partner, and then to alternative beneficiaries. Since the two Wills essentially mirror one another, the fees for drawing up mirror Wills can be cheaper than drawing up two single Wills. In addition to writing a Will, many legal providers and solicitors recommend setting up a lasting power of attorney (LPA). There are two types of LPAs which allow others to manage your Property and Financial affairs and your Health and Welfare, should you lose the capacity to do so or are unable to do so because you re out of the country, for example. P3

4 Information you should include in your Will Whilst there are many things that can be included in a Will there are some things that you should certainly include. n Details that clearly identify the Will as being yours a full name and current address will usually suffice. n The names and addresses of your executors it s a good idea to check with your executors before you name them, to ensure they are happy to take on the role. n Clear and specific instructions for how you want your assets and possessions to be distributed you should be as specific as possible about all major assets and individual possessions, as well as providing accurate details about who will receive them. Your Will should also include instructions about who would receive your assets if the intended beneficiary were to die before you. n What happens to the rest of your estate once any debts and tax have been paid, and your assets distributed, there may be a remainder left over. This is known as the residuary estate, and you should clearly specify in your Will who receives this (it can be divided between more than one beneficiary). n The name and details of who you would like to be the guardian of any children under the age of 18 it is strongly advised that you check with your chosen guardian before including this information in your Will. You may also want to include the following: n Your funeral arrangements you can use your Will to specify funeral arrangements, such as whether you want to be buried or cremated. Bear in mind that these will not be legally binding, so you should talk them through with your executors. An alternative place to leave funeral requests is in a non-legally binding letter of wishes, stored alongside your Will. What not to include in your Will There are a few things that you can t include in your Will, and a few that you should avoid: n Certain types of property some types of property can only be distributed in specific ways, so naming them in a Will would be irrelevant. For example, a joint tenancy automatically passes to the surviving tenant, regardless of what is included in your Will. Similarly if a property is in a Living Trust, responsibility for it has already been transferred to the Trustee. n Proceeds from life insurance if you have a life insurance policy, this may dictate who receives the proceeds, not your Will. You should check the specifics with your insurance provider. n The name of a charity to which you are leaving specific gifts of money a better idea may be to say how much you are leaving to charity, and then specify which charities you have chosen in your letter of wishes. This avoids the possibility of a charitable organisation chasing up your family for the money owed. n Leaving money directly to pets using Trusts, you can certainly provide money to ensure your pets are looked after. However, animals are legally unable to own assets, so leaving possessions to pets directly could cause confusion and extra work for your executors. P4

5 Do you need a Trust? A Trust is a legal arrangement allowing you to give assets to a third party known as a Trustee, to hold on behalf of your chosen beneficiaries. You can include certain terms and conditions or give total control to your Trustees, therefore including one in your Will is an efficient way to manage your estate. A Trust can be made during your lifetime or as part of your Will. For example, if your wishes are for a child to inherit at a specific age i.e. minimum 21 years, then you could set up a Trust to cover the eventuality of you passing away before they reach that age. The executors would become the Trustees and would hold the inheritance for your child until they are old enough to receive it. In short, a Trust allows you to maintain a level of control after you die. There are many types to choose from, however the most common Trusts are life interest Trusts and discretionary Trusts. Life interest Trusts There are two ways to use a life interest Trust. The first is to hold assets on behalf of a beneficiary for their lifetime. For example, if you were to leave a property to your son, who you were worried would not be responsible with money, you could draw up a life interest Trust allowing him to live in the property, with it then passing to your grandchildren in the event of your son s death. This protects the property for future generations. However, if your son experienced financial difficulties, the Trustees would have the power to end the Trust, and pass it to the grandchildren. The second way of using a life interest Trust is if you re married or in a civil partnership. Rather than leaving your share in your estate directly to your partner, you can leave it in Trust, which has various benefits, including: n Preserving your joint assets in the event of your partner making a new Will after your death that doesn t follow your wishes n Allowing your partner to benefit from the assets during their lifetime, with the Trustees having the power to advance any sums if required n Ensuring that the eventual beneficiaries do not have any right to the assets until after your partner dies n Protecting your share of the joint assets ensuring it cannot be used towards care home fees should your partner require care n Transferring your IHT nil rate band allowance, the value of an estate that is not subject to Inheritance Tax in the UK, to make it available to you on your partner s death meaning your nil rate band allowance will be 650,000 up to April Discretionary Trusts A discretionary Trust allows your estate to be distributed according to family circumstances when you pass away. Assets will be gifted to the Trustees, and it s ultimately up to them who benefits from the gifts and funds and by how much. This means the Trustees have the final decision regarding when the beneficiary receives their gift. However, this type of Trust means none of the beneficiaries have automatic rights to the assets held in the Trust and subsequently are unable to request anything from it. P5

6 The benefits of Trusts You should consider setting up a Trust if your intended beneficiaries are too young or not responsible enough to inherit at the time of drawing up your Will. If your family circumstances aren t straightforward, for example, if you divorced and then remarried, there s a risk your estate will pass to your new spouse rather than the children from your first marriage. A Trust will protect your children and ensure they inherit. If you decide to set up a Trust, it s absolutely vital to update your Will to reflect this, including providing details of the Trustees. This will help your executors to ensure your wishes are carried out. You should have your Will reviewed and updated if necessary every two years or when any major life event occurs, such as the birth of a grandchild, so it represents your current situation. For more information about Trusts, click here. The Saga Will Writing Service can help you write your Will as well as set up a Trust if necessary. Saga s team of advisers are available seven days a week. Saga works with specialist solicitors and Will writers, which gives you peace of mind, knowing that your Will has been drawn up correctly and professionally. The Saga Lasting Power of Attorney Service is designed to make the process simple, with a fixed fee, agreed up front. Using specialist solicitors, Saga offers an online lasting power of attorney (LPA) fee calculator providing an instant estimate of the costs involved for drawing up an LPA, based on an individual s needs. P6

7 How to avoid mistakes in Wills Mistakes in Wills are more common than you d imagine. If your Will contains mistakes, it would at best cause confusion and at worse it could make the Will invalid. Common mistakes made in Wills: n The Will is incorrectly signed or witnessed this would render it invalid and the estate would be dealt with under the rules of intestacy. n The Will is poorly bound this could lead the Probate Office to suspect that pages have been removed from it, causing delays and additional work during the probate application. n It is suspected that the Will was made under duress if there is evidence that the person making the Will did not have full mental capacity, or if it seems they were coerced into writing the Will, it could cause delays and disputes and even lead to the Will being declared invalid. n Intended beneficiaries are accidentally excluded if your familial circumstances have changed since your Will was written, there may be dependants who are excluded, such as new grandchildren. This is why it's important to update your Will regularly, especially if your circumstances change. n The Will contains spelling mistakes if items are spelt incorrectly, this could lead to confusion after death. Similarly, only use English in the Will, not foreign languages. n The Will cannot be found if a Will cannot be found, a new Will needs to be written. If the Will is lost subsequent to your death this would mean the estate would be treated as if you had never made a Will. n The Will is out of date what seemed suitable at one point may no longer be the case if your circumstances have changed. It is advisable to review your Will every two years, or sooner if new dependants are born, you get married or divorced or you buy or sell a valuable asset. n Specific amounts are left to people or charities it is often a better idea to leave a percentage of your estate rather than a specific amount as this means that, if your estate ends up being worth less than you currently think, all beneficiaries will still inherit in the proportion you wanted. n The Will is not specific enough ambiguities are characteristic of a poorly drawn up Will. Make sure you express your wishes clearly and that all your wishes are reflected in your Will. Using a professional such as a legal services provider or solicitor can help reduce the chances of these errors occurring when writing a Will. Keeping a note of where the Will is kept will make sure it can be found after your death. Always use people s full names rather than familial relations such as sister, nephew, granddaughter etc. This helps to avoid potential confusion if you have more than one. P7

8 Olive Watkins and her two vehicles Unclear instructions are surprisingly common in Wills and can lead to long-lasting disputes. Just ask Adolf Weidner whose wife Olive Watkins passed away in 2010 leaving an ambiguous Will. It was unclear whether her husband of nearly 40 years should receive a 200, Bentley classic or a beaten-up old Volvo. Ms Watkins Will specified that her husband should receive her principal motor car upon her death which he claims relates to the Bentley. Her son, Robert, disagreed saying he had already sold the Bentley. Unsurprisingly, acrimony ensued, surely the last thing Olive would have wanted What to do if you are worried your Will may contain mistakes If you feel your Will may be incorrect, contain mistakes or be out of date you should review it. While you can do so yourself, it s usually best to find a solicitor or legal services provider to ensure your Will is free of errors. Saga offers this service for a fixed fee, just call for more information. P8

9 Who should draw up your Will? When writing a Will there are various options you can choose: n Solicitor check that they are specialists in writing Wills and that they are protected by the Solicitors Regulation Authority (SRA). The SRA is the legal body which regulates solicitors in England and Wales and ensures you are protected and any issues can be resolved. n Legal service provider these usually offer numerous benefits including unlimited advice whilst the Will is drafted, and provide an SRA regulated solicitor, at a price agreed in advance. An added benefit is that you can often go through the process from the comfort of your own home, meaning that the Will can be drawn up at a convenient time for you. n Will writer although sometimes a cheaper option, Will writers are not always protected by the SRA so if anything goes wrong, the issue is harder to resolve. n Do it yourself if you have a fairly simple estate, you can draw up a Will yourself, however we would always recommend you instruct a professional such as a solicitor or legal service provider to ensure there are no mistakes and that the Will is valid. If you opt to use a professional, ensure they specialise in estate planning. Also, shop around to get the best deal to suit your needs. You may feel you need to go through your family solicitor, however there may be a better or more economical alternative. If you have any doubts about the professional you ve chosen, just remember you don t have to sign anything you don t want to. Where possible always choose a legal services provider that offers a fixed fee up front to avoid escalating costs. This will also give you peace of mind that you can ask as many questions as you need to fully understand the details contained within the Will. Bear in mind that the cheapest option might not necessarily be the best option for you. P9

10 Top tips on storing your Will After making your Will, you will want to make sure it is stored securely although not so securely that your executor can t find it when they need to. With that in mind, here are our top tips on how to store your Will: 1. Choose where you want to store your Will. You have several options including: a. I n your house: this option is free, but you should choose somewhere secure so that it isn t accidentally thrown away or misplaced. b. With a solicitor/will writer: this can be secure, but you may have to pay extra for the service if you didn t use the solicitor to write the Will. You should also bear in mind that if the solicitor closes their practice, your Will may be transferred to another solicitor. c. With a legal service provider. If you make a Will with Saga, you ll receive the benefits of our print, bind and storage service. Once the Will is signed, we ll keep it in our secure document vault. This service is included with a Saga Will, and lasts a lifetime. 2. Tell your executor where it is. Whichever option you choose, make sure your executor is aware and make sure you tell them if you then move it. 3. Avoid leaving your Will in a bank safety deposit box. Banks won t allow the executor to access the box until probate has been granted. But of course, probate can t be granted without the Will. 4. Don t attach anything else to the Will. Staples, paperclips or anything else which could leave a mark on the Will could raise questions about whether the Will is missing a part, complicating things for your executor. P10

11 What you need to know about DIY Wills DIY Wills Wills drawn up using a purchased template, or even without one are often seen as a cheaper alternative to paying for a professional. If done correctly, they are just as valid as those written by a professional. Who are DIY Wills appropriate for? DIY Wills are drawn up by the individual, meaning this type of Will is usually more suited to those with straightforward estates. People with more complex family circumstances or wishes should seek professional advice. Are there any risks associated with having a DIY Will? While DIY Wills seem an attractive, cheaper option, they often carry more risk and the initial saving could be heavily outweighed by long-term costs, both financial and emotional. The fact is that, if you write a Will yourself, there is a stronger chance that the document will contain mistakes. While you can check the internet for advice on the process, there is sometimes no substitute for a professional who deals with Wills regularly. A Will with mistakes in it could be invalid, leading your estate to be distributed under the strict rules of intestacy that are set by government. What happens if your Will is deemed invalid when you pass away? It depends, but loved ones may seek to prove its validity by going through the courts and providing evidence. This is something which is difficult to do and could result in potentially high legal fees. It can take anywhere from one to three years before a hearing occurs, depending on the complexity of your estate a stressful experience for all involved. If the Will cannot be validated then your estate will be dealt with under the rules of intestacy. Isn t this true of all Wills? Yes, all Wills can be contested if there are reasonable grounds to do so. The possibility of including mistakes and ambiguous wording in your Will is far higher if you do it yourself, increasing the risk that your Will and wishes could be disputed. If you do go down the route of a DIY Will, it's worth having a professional check it carefully for mistakes. Bear in mind that if mistakes exist, you would need to draw up a new Will, sometimes negating the original saving. P11

12 How to decide on probate and executors Part of the process of drawing up a Will can be about how you want your estate to be administered after your death, a process called probate. Find out more about the Probate process here. If you leave a Will, your executor needs to apply for a Grant of Probate, a legal document giving them the right to manage your affairs once you have passed away. If no Will exists, a close relative will have the legal right to sort out the deceased s estate by becoming the administrator. Without a Will, the process of probate can be slightly more complex as the rules setting out who can inherit are not straightforward. When it comes to choosing executors you have three choices: 1. Appointing a family member or friend 2. Appointing a professional such as a solicitor or bank 3. Appointing a combination of the above. It is worth noting that appointing a professional executor can cost a lot more than you realise. Some professional executors charge a percentage of the estate plus a standard hourly rate, meaning fees can be much higher than you realise. The professional is under no obligation to step down, even if requested to do so by family members, which means you have no choice but to pay their fees. To find out more about this subject, download our free Guide to Probate and Executors. The challenges of DIY probate Probate can be a complex and time-consuming process. It usually involves dealing with lots of financial institutions and the HMRC, and entails a significant amount of administration and paperwork - which can be arduous for your executors. Some executors may agree to the job only to realise, once they begin the process, just how much work it is. However, as appointing a professional executor can be very costly, there is another option to explore: letting your executor know that they can obtain professional assistance, without losing control of their duties and responsibilities as executor. It also means that if anything is reported incorrectly, your executor(s) will be liable for any fines or losses to beneficiaries. Instructing a professional to assist them with the administration safeguards the executor and ensures that the estate is dealt with correctly. It also allows the executor to keep a tight control on the costs. We would always suggest appointing a family member or close friend who is then able to instruct a professional to assist them so as to maintain control whilst having the support needed to negotiate a potentially difficult process. This way, you have the peace of mind knowing that the legal side is being looked after by a professional whilst your best interests are looked after by a loved one. P12

13 How Saga can help with probate The Saga Probate Service has been designed to offer full support throughout the legal and practical implications of dealing with Wills and estates, all included in one competitive, fixed fee. Unlike some other legal services providers, our prices are based on the complexity of the estate rather than its value. Other than a small deposit of 99 paid upfront, the cost of the service will be taken out of the estate proceeds once all the work is finalised. For more information, please visit or speak to one of our friendly, UK-based advisers on The Saga Probate Service offers two services: Full administration Saga deals with everything for you. This includes: n Registering the death with the asset holders n Requesting date of death valuations, preparing the legal paperwork for you (including the HM Revenue and Customs forms and executor s/administrator s oath) n Obtaining the grant and registering the same with the asset holders n Collecting in all assets and closing down accounts n Paying all liabilities n Finalising the tax position n Paying any legacies and distributing the monies in accordance with the Will or rules of intestacy. Grant only This is where you provide Saga with all the information required, such as a list of assets which belonged to the deceased and what debts they owed. Saga will then prepare the legal paperwork for you (including the HM Revenue and Customs forms and executor s/administrator s oath) to obtain the necessary Grant of Probate. Everything else is then up to you to complete. P13

14 How to make things easier for your executor There are many simple things you can do to make things as easy as possible for your executor. 1. Make an inventory of your assets and everything in your estate. This includes property, possessions, bank accounts and cash. Keep this updated, especially if your circumstances change, such as when you buy or sell a property or other valuable items. 2. Write a Will and ensure it is kept up-to-date. If you don t have a Will, you should definitely consider making one this will not only protect your loved ones, it will help the person sorting your affairs enormously. Keep your Will secure, and make sure your executor knows where to find it! 3. Be wary of professional executors, such as solicitors, who may charge a percentage of the value of the estate as this can make the eventual cost much higher than you anticipate. Find out more in our free guide. 4. Talk through your decisions with your chosen executors. Make sure they are happy to be your executors and explain your wishes clearly. 5. Keep your paperwork in order, with all documentation clearly labelled and sorted. 6. Consider making your executor aware about professional probate services such as those offered by Saga. The cost of this would come out of the estate and could make your executor s life much easier particularly if your affairs are not straightforward. You can request this in your Will or even in a non-legally binding letter of wishes. An executor can decide to use a supporting service at any time. 7. Talk through your decisions with your loved ones. If you are leaving less to someone than they would expect, consider explaining your reasons which could help to avoid disputes after you re gone. 8. Consider whether any dependants such as children or spouses will need quick access to money when you die. 9. Consider planning your digital legacy. We re all spending a great deal more time online, and there are numerous practical and financial implications. For more information click here P14

15 How to feel better prepared Putting off today what we can do tomorrow is tempting. Unlike taking that trip of a lifetime or tackling the big DIY project, delaying writing a Will could have severe consequences for your loved ones after you die. Having an expertly drawn up, up-to-date and valid Will helps to ensure those closest to you are provided for in the way you wish, if the unexpected happens. If you don t have a Will, or think you might need to update the one you have, Saga can help. Call us on for a fixed fee quote. To find out more about The Saga Probate Service, or if you are currently the executor of a Will and think you could use some help call us on Other resources The Saga Guide to Probate and Executors The Saga Guide to LPA The Saga Guide to Conveyancing The Saga Guide to Digital Legacy The Saga Guide to Inheritance Tax The Saga Guide to Charitable Legacies The Saga Guide to Planning Your Financial Future The Saga Bereavement Guide P15

16 Jargon buster We have translated some of the words, phrases and terms often found in Wills and estate planning, into plain English. Administrator a person appointed by the court to take care of the estate if a Will has not been made. Assets anything you own of value including property and land, investments, cash, and items such as paintings, antiques or valuable jewellery. Beneficiary a person or institution, such as a charity, who is set to receive something under a Will, Trust or intestacy. Chattels personal belongings that usually include items of furniture, art, antiques, jewellery, watches and so forth. Crown another name for the government or state for instance if someone dies without a Will and there is no family, the estate goes to the Crown. Codicil a legal document that is often used to make minor changes to a Will but in order for it to be valid, the same formalities with regard to signing are applied. Estate this usually includes any assets and chattels owned by you (including your share of joint assets) or the value of anything held in Trust that you are a beneficiary of. Executor the person(s) named in a Will to administer your estate after your death. Grant of Probate the legal document issued to the executors by the Probate Registry that authorises them to deal with the assets in the deceased's name. Without it, money and property cannot be collected in and then distributed according to the Will. IHT Inheritance Tax. Intestate this is when someone dies without a valid Will in place and their estate is distributed according to the strict rules of intestacy. Issue children, grandchildren, adopted children. Joint tenancy a common arrangement for property owned by two or more people. When one owner dies, their ownership passes to the surviving owner(s). Legacy a gift included in a Will that is either a fixed sum of money or a specific item. Legatee is the term used to describe someone who receives a legacy. Letters of Administration gives the same authority as the Grant of Probate but is issued when there is no Will. Personal representative (PR) - general term for both administrators and executors. Probate Registry the public body responsible for issuing Grants of Probate and Grants of Letters of Administration. Real estate or realty land and buildings owned by a person. P16

17 Residue what is left of the assets to share out after all the debts and legacies have been paid. Tenants in common the alternative way to hold joint property as opposed to joint tenants. Tenants in common own specific shares of an asset that can be passed on under their Will (and do not pass to the surviving owner as it does with joint tenants). Testator the person who's Will it is Testatrix is sometimes used if they're female. Witness a Will must have two witnesses to the testator signing it and they must not be beneficiaries of the Will, or close family members of beneficiaries. NSL-LG0318 P17