Figuring out what to do with your finances once you’re gone is a core part of financial planning. With Free Wills Month returning this October, here’s why it pays to get your affairs in order
Have you got your will in order yet? No? Then you’re behind the curve. The number of people making their wills increased significantly in the first year of the pandemic, as the realisation of how quickly health can change focused their minds and encouraged them to take action.
To encourage more people to get their affairs in order, group of charities have got together to launch Free Wills Month. The yearly campaign, which takes place every October, offers members of the public aged 55 and over the opportunity to have their simple wills written or updated free of charge by using participating solicitors across England, Northern Ireland and Wales. Here are just a few reasons to get your will written sooner rather than later.
It gives you valuable of mind
The number one reason to write a will is that it means you can relax knowing that your loved ones are taken care of. “Writing a will remains one of the most important ways you can protect your family and wealth on your death,” says Emma Watson, head of financial planning at Rathbone Investment Management.
Elizabeth Buko, founder of finance website Wealth From Little, agrees, with the level of control it affords being key: “A will lets you exercise control over what happens to your estate — such as your belongings and assets — after you die. It ensures your property, belongings, finances and assets are distributed exactly the way you want them to be and to the beneficiaries (such as family, friends and organisations) you want them to go to.”
Elizabeth adds, “It can also state what you want to happen to your body, with respect to your funeral and burial wishes. And, for parents with children under 18, a will can state your preferred guardian for them, otherwise this would be decided by a court.”
They’re a great way to support your favourite charity
For many, a key reason to write a will is the tax benefits it can provide — because when done properly, a will can be a great way to reduce inheritance tax.
“wills can be drafted to help mitigate the potential bill and not just the inheritance tax due,” says Emma. “Many people choose to make gifts to charities, but not all will realise the potential to cut the tax bill for their beneficiaries.
“If 10% or more of a net estate is left to a registered charity, the rate of any inheritance tax applied falls from 40% to 36%. If the gift is less than 10% but more than 4% of the net estate, it could be more cost-effective to increase the gift to 10% than be subject to inheritance tax at 40%.” Failure to write a will also means your estate will be divided according to intestacy rules, which, according to Emma, may not be the most tax-efficient.
You could double your inheritance tax-free threshold
Elizabeth, meanwhile, highlights the importance of keeping things in the family to reduce a tax bill, too. “For married couples, you can apply to claim your spouse’s inheritance tax-free threshold in addition to yours, thereby doubling the threshold to £650,000,” she says. “If you leave your main home to your children, the tax-free threshold is increased to £500,000.”
It can be a complex process, but the benefits are clear — and thanks to Free Wills Month in October, there’s no reason not to get it sorted. Find out more at freewillsmonth.org.uk.