Sorting out your estate before you die

Transcription

1 Sorting out your estate before you die This information is an extract from the booklet Sorting out your affairs, which is part of the financial guidance series. You may find the full booklet helpful. We can send you a free copy see page 9. Contents Writing a will If you own something jointly Funeral plans Dying without a will Younger people and wills What sorting out your estate involves Whatever you leave when you die is called your estate. It s made up of everything you own (or your share of things you own jointly), minus everything you owe (debt). Writing a will By writing a will, you can make sure your estate goes to the people you want it to. It also means the people you care for can go through less complicated financial processes to access your estate. You can also use a will to appoint people called executors to sort out your estate. If appropriate, you can use your will to appoint guardians to take care of your children. And you can use a will to arrange your tax affairs. Questions about cancer? Ask Macmillan Page 1 of 9

2 DIFFERENCES ACROSS THE UK In Scotland, if you leave behind a husband, wife, civil partner or children, they automatically have a right to claim part of your estate. This applies whether or not you have written a will. These are called legal rights. In the rest of the UK, there are no similar formal legal rights, but someone who relied on you financially can go to court so their claim to a share of the estate is considered. You can write your own will. But unless your affairs are very straightforward, it s safer to use a solicitor. This could reduce the risk of problems or disputes in the future. When you re looking for a solicitor, you should shop around for the best deal. You can t get financial help through the legal aid system to help pay for the cost of writing a will with a solicitor. If you re a member of a union, you may be able to get a free or reduced-cost will written through their legal services. Charity will-writing services Some charities offer a free will-writing service. They hope you will use your will to leave them a gift (a legacy), but you don t have to. If you use a will-writing service, it s always a good idea to speak to an independent solicitor. Macmillan has a discounted will-writing service. We have chosen a range of will-writing organisations you can trust and that can offer you a reduced price. You don t have to leave a gift to Macmillan to get a discount. Visit macmillan.org.uk/willwriting to find out more. There are several other ways we can support you to make or update your will, including helping you leave us a gift if you want to. We have legacy advisers in your area who can call or visit you for a confidential chat. To find out more, call us on , visit macmillan.org.uk/legacies or leavealegacy@macmillan.org.uk Page 2 of 9 Questions about cancer? Ask Macmillan

3 There are different ways of finding charity will-writing services: Contact a charity to find out whether it offers a free will-making service. Free or low-cost charity will-writing services include willaid.org.uk and willreliefscotland.co.uk For a list of charities that offer a free annual will-making service to people aged 55 and over, visit freewillsmonth.org.uk Our leaflet Your step-by-step guide to making a will could help if you want to make a will. We also have a booklet called Charitable legacies and inheritance tax, which you may find useful. JARGON BUSTER Estate Everything you own when you die. This means all your possessions (including property), any money (including savings), and also any debt. Your estate is worked out by calculating everything you own minus everything you owe. Executor A person named in a will who sorts out the estate. Will Legally binding instructions about who should receive (inherit) your estate when you die. Trust A legal arrangement where a person or company (the trustee) holds an individual s property (money or assets) on behalf of other people (the beneficiaries). For example, you might put money into a trust to provide for your children, or a person with a disability. You can set up a trust in your will, so that your assets are passed on when you die. Beneficiary Someone who receives (inherits) your belongings and/or funds after you die. Legacy A gift left to a person or organisation in a will. Questions about cancer? Ask Macmillan Page 3 of 9

4 If you own something jointly You may own something jointly with one or more people, for example a property. There are two ways of owning things jointly. What happens to the possession after you die depends on the way it is owned. Shares that cannot be distinguished Where more than one person owns something and they all have an equal share, this is known as: joint tenants in England, Wales and Northern Ireland joint owners in Scotland. When you die, the survivor(s) will inherit your share. Joint bank and savings accounts are always owned in this way. Transferring money to a joint account is a simple way to make sure your partner has immediate access to cash if you die. Distinct shares When each owner has their own share of the possession, this is called: tenants in common in England, Scotland and Wales owners in common in Scotland. The shares do not have to be equal. When you die, your share will become part of your estate. This means it will be passed on in the way you ve written in your will. Or if you don t have a will, it will be passed on according to the law (see page 5). I wanted to make sure that both my wife and I had up-to-date wills in place. My wife doesn t understand all the financial dealings of the family, and I wanted to get that down on paper so that she will have a good understanding of what the arrangements are. Bernard Page 4 of 9 Questions about cancer? Ask Macmillan

5 Funeral plans A funeral plan lets you arrange and pay for your own or someone else s funeral in advance. You pay either a lump sum or instalments, to the plan provider or a funeral director. There are safeguards to make sure your money is safe until it s needed. Before you buy a funeral plan, check what the total cost will be and what will be included in the package to make sure you re happy with the deal. For more information, visit moneyadviceservice.org.uk/en/articles/funeral-plans Dying without a will If you die without making a will, the law decides who will inherit your estate. The law favours a husband, wife or civil partner and your children (including adopted children but not step-children). When you die, your estate may be split between your spouse or civil partner, and your children. An unmarried partner has no legal right to inherit anything. But they may be able to apply to a court for financial support from your estate. Other relatives and friends may also be able to do this. If you don t have a husband, wife, civil partner or children, your estate may go to your parents or siblings (depending on which UK nation you live in). If there are no relatives, the state gets everything. This may not be the way you would like to leave your money and possessions, so writing a will could be very important. To find out exactly what the law says about inheritance without a will where you live, use the online tool at gov.uk/inherits-someone-dies-without-will Questions about cancer? Ask Macmillan Page 5 of 9

6 Younger people and wills If you live in England, Wales or Northern Ireland, you have to be at least 18 to make a will. If you live in Scotland, you have to be at least 16. If someone dies before they are old enough to make a will, the law decides how their estate is passed on. If they were married, their husband, wife or civil partner will normally inherit everything. Otherwise, their parents will normally inherit everything. Their estate might include money that has been invested for them in a Child Trust Fund or Junior ISA. It s not normally possible to withdraw money from these accounts before a child is 18. However, if a child is terminally ill, it may be possible to cash in a Child Trust Fund or Junior ISA early (visit hmrc.gov.uk/tools/childtrustfundclaim/claimform.htm). If a child dies, the money from these accounts is passed on to whoever inherits their estate. JARGON BUSTER Child Trust Fund A scheme where children born between 1 September January 2011 have an account that the government paid money into. The government no longer contributes to these accounts, but family and friends can add to them. Since April 2015, Child Trust Funds can be transferred to Junior ISAs. Individual savings accounts (ISA) A savings account that gives a tax-free return (a cash ISA), or a way of holding share-based and similar investments that gives an almost tax-free return (a stocks and shares ISA). ISAs that have been set up since April 2013 are sometimes known as NISAs (meaning new ISAs ) due to some changes in the rules about how much you can save. Junior ISA An individual savings account for a child who doesn t have a Child Trust Fund. The government does not contribute any money to these, but family and friends can pay in. Page 6 of 9 Questions about cancer? Ask Macmillan

7 What sorting out your estate involves If you make a will, the executors (who you appoint in your will) have the job of sorting out your estate. If there s no will, usually your next of kin do this, for example your partner or grown-up children. Sorting out an estate involves: tracing all the things you owned and all your debts reporting these to HMRC and paying any tax that s due getting probate, or confirmation in Scotland (see below) paying any unpaid bills and other debts tracking down beneficiaries (people who should inherit anything from you) possibly selling a property and other possessions. Your executors can either do this themselves or hire a solicitor to help with some or all of the tasks. I ve talked with my children about what my wishes are. My younger brother is my executor, so I ve also told him what my wishes are. Stefan Getting probate or confirmation Your estate can t be distributed to your beneficiaries until a certificate has been granted, stating the amount you owned and owed when you died. This is known as probate in England, Wales and Northern Ireland, and confirmation in Scotland. Your executors names are on the certificate, and it allows them to sell or transfer your estate so that it can be distributed. The time it takes to get probate or confirmation will vary, depending on the circumstances. If the estate is straightforward, it may only take a few weeks. But in more complicated cases, it can take many months, and in some cases it can take years. Questions about cancer? Ask Macmillan Page 7 of 9

8 Some money and possessions can go straight to your beneficiaries without waiting for probate/confirmation. These include: money or things you held jointly as joint tenants, for example money in a joint savings account the payout from life insurance held in trust a lump sum or income from a pension scheme where you have chosen who should receive it. JARGON BUSTER Probate The process of proving what someone owned and owed when they died. Confirmation The name in Scotland for the probate process. For guidance on sorting out an estate and paying tax, call the Probate and Inheritance Tax Helpline on or visit gov.uk/wills-probate-inheritance in England, Scotland and Wales nidirect.gov.uk/applying-for-probate-in-northernireland in Northern Ireland. NEXT STEPS Write a will. Make sure your executors know where to find your will. Store a list of the things you own and the debts you owe with your will. Make sure your family know about any funeral preferences. Page 8 of 9 Questions about cancer? Ask Macmillan

9 More information and support More than one in three of us will get cancer. For most of us it will be the toughest fight we ever face. And the feelings of isolation and loneliness that so many people experience make it even harder. But you don t have to go through it alone. The Macmillan team is with you every step of the way. To order a copy of Insurance or any other financial guidance information, visit be.macmillan.org.uk or call We make every effort to ensure that the information we provide is accurate and up to date but it should not be relied upon as a substitute for specialist professional advice tailored to your situation. So far as is permitted by law, Macmillan does not accept liability in relation to the use of any information contained in this publication, or thirdparty information or websites included or referred to in it. Macmillan Cancer Support Registered charity in England and Wales (261017), Scotland (SC039907) and the Isle of Man (604). Registered office 89 Albert Embankment, London, SE1 7UQ REVISED IN JUNE 2015 Planned review in 2016 Questions about cancer? Ask Macmillan Page 9 of 9