Q&A: Writing a will

Millions of people put off writing a will day after day but this is a time-bomb waiting to go off. Each death without a will causes havoc. ‘Common law’ husbands and wives are devastated to realise they’ve inherited nothing; second husbands and wives wrongly assume they’ll be provided for – and end up in bitter probate disputes with their step-children, or have to leave the family home.

A new television series currently being aired on BBC2 at 9pm on Fridays called ‘Can’t take it with you’, is attempting to tackle this pressing – but little understood – issue. The first episode centred around a couple in which one person wanted to leave half of the family home to charity but the other wanted to leave it to the children.

In each episode Sir Gerry Robinson and probate expert Sue Medder, a partner in the Contentious Trusts and Succession Group at international law firm Withers, will help families navigate the emotional dilemmas and brutal legal facts around writing a will.

Every episode is based on a single theme, helping two families who do not have a will solve similar dilemmas. At the end of the programme, each family signs a legally binding will drafted to meet their needs and answer their concerns.

Sir Gerry Robinson and Sue Medder at Withers answer Financial Times’ readers questions on the emotional and legal aspects of writing a will.

My father-in-law has just passed away. He left everything to his wife and then to his three daughters on her death. However, she is in a nursing home with Dementia. Is there any situation where the nursing home would benefit from the estate and, if so, to what degree? Many thanks, Ian, London

Dear Ian, It depends whether the estate passed outright from your father in law to your mother-in-law. If it is in her estate outright then different councils have varying rules about when they will seek a contribution to nursing home fees. In the first place I would suggest that you check your local council’s website which should have a section on this issue.

If the estate is held in trust for your mother-in-law she may only be entitled to the income generated by the fund with the capital passing to her children on her death. In that case the capital should be protected from a claim for nursing home fees, but you will need to check the exact terms of the will.

We already have wills but we probably need to modify them because of a major financial ‘event’. It involves a house that we felt under pressure to buy (November 2009) for our daughter to live in together with her four year old daughter. Both had lived with us for over a year before that. Our daughter is not married and the father of the child lives separately. The house and mortgage are jointly owned by me and my wife.

Our daughter contributes to paying down the mortgage. We are not clear how we should deal with all the possible events that might arise in the next 10 to 20 years. I am 72 and my wife is 66. The mortgage debt might still exist in our names when we die. Another possible outcome is that our daughter could somehow take ownership of the house and mortgage. This would depend on her credit record being acceptable to the mortgage provider and her income, which is expected to increase. Another issue to be resolved is to make things fair for our son.

In our efforts to pay down the mortgage debt quickly, our daughter has now received effectively about £11,000 (and counting!) more than our son over the last ten years. We can probably address this issue either totally or in part in our lifetime. If not, I believe a codicil or letter of wishes may be required to supplement the will. In any event it appears that we will have to maintain a comprehensive log of transactions so that whoever administers the will can make it fair. Can you please advise us in our situation and make us aware of the pitfalls. Thank you, Christopher D M Wood, Hull

Dear Christopher, This is a complicated set of facts but not an uncommon scenario. I am slightly hampered without knowing the terms of your current will. Taking the simple scenario that ultimately you want your children to share your estate equally, having taken account of anything they have received from you in your life, you are correct that this can be done by a codicil. (A letter of wishes is not legally binding.)

You are also going to have to decide who will ultimately inherit the property and who will be ultimately responsible for paying off the mortgage. At present your estate/your wife as joint owner would be liable to pay the outstanding balance. Again your wishes on this could be included in a codicil.

It does appear that there are a number issues arising in respect of this property and the mortgage associated with it and I would suggest that it would be sensible for you to consult a solicitor. He may advise that it would be preferable to make a new will rather than a codicil.

Finally I agree that you should keep a comprehensive record of payments which will assist your executor in complying with your wishes. In addition you are of course correct that when there are any major life changes you should revisit the terms of your existing will.

Who can I get to write my will, who can provide me with inheritance tax planning? I am worried about the press reports on will-writing cowboys in business because the process is not regulated. Mum of two young boys, Central London

I would recommend that your best place to start is The Law Society, the body which regulates all solicitors. Unlike some will writers, all solicitors are regulated and have a code of conduct which they must follow. The Law Society’s website includes a directory of all solicitors and is very simple to use so as to find a solicitor who can prepare a will for you and provide you with inheritance tax planning. http://www.lawsociety.org.uk/choosingandusing/findasolicitor.law

Alternatively, you could speak to your friends and family and see if they have any personal recommendations.

I am separated from my husband with the likelihood of getting divorced. He signed the house over to me last year. With no will, who would inherit if something happens to me? Victoria Martin, Gosport

Although your husband and you are separated, as a matter of law you are still considered to be married and so, if you were to die without a will before any divorce is finalised then, under the intestacy rules, your estranged husband would inherit a proportion of your estate.

If you have any children then your husband would inherit all of your personal belongings (‘chattels’) and the first £250,000 of your assets. The remainder of your estate would be split in two, with half of the balance passing equally to your children at 18 and the other half being held on life interest trust for your husband (so that he would receive the income but not the capital) and would then pass to your children equally on his death. If you do not have any children, then your husband would receive the first £450,000 of your estate and would share the balance with your parents (if they are still alive) or failing which your siblings, nephews and nieces.

I would therefore recommend that you do put a will in place so as to ensure that if something were to happen to you, your assets would pass to the individuals you wish to receive them.

How do I set up a education trust for blood line grandchildren and their kids from age four to age 18. John Clarke, Merseyside

You can look to establish a trust for your grandchildren either during your lifetime or in your will. There are certain options open to you, ranging from the use of bare trusts to the use of more complicated, yet more flexible, discretionary trusts. All have different tax consequences. I would recommend that you approach a solicitor who specialises in private client work and discuss your requirements with him or her and they will be able to provide you with the best option in the circumstances. The Law Society website is a good place to start when looking to find a solicitor http://www.lawsociety.org.uk/choosingandusing/findasolicitor.law.

I am a beneficiary under a recent will. If I want to change it (by deed of variation) in favour of my children, can I just draft a simple statement to this effect, or do I have to pay a solicitor £600 (his quoted fee) for this routine task? Fred, Kent, UK

Deeds of Variation can be relatively complicated documents and there are certain requirements set out by statute which need to be complied with if they are to have the intended effect from both an inheritance tax and capital gains tax perspective. These requirements can be relatively technical and so it is important to ensure that they are all complied with correctly. As such, it is unlikely that a simple statement drafted by you will have the required effect for tax purposes and could in fact cause further problems. I would therefore recommend that you do retain a solicitor to prepare the deed for you.

I am recently married and we own our house as joint tenants. We don’t really have any other assets aside from a few thousand pounds each in our separate bank accounts. We have no children. Do we need to write a will? Katie Walsh, London

If you were to die (regardless of whether or not you had a will) then your share in the house (which you hold as joint tenants) would automatically pass to your husband by means of survivorship. The remaining balance of your estate (i.e. your bank accounts and your personal belongings) would pass according to the intestacy rules. In your case, these rules would mean that all of your personal belongings and the first £450,000 of your estate (which would easily cover all of your assets) would pass to your husband. The same would be true if your husband were to predecease you. As such, if this is what you would want to happen to your assets on your death then there is technically no reason to have a will at the moment.

However, if you were to both die in a common accident then all of your respective assets would pass to your respective parents equally, failing which to your siblings, nephews and nieces and then to other distant relations. This may not be your wish and so in such a case you may prefer to have a will so as to provide where such assets would go in such a scenario.

If you were to have children then I would strongly recommend that you each put a will in place. This will enable you, perhaps most importantly, to appoint guardians for your children in the event that both you and your husband were to die whilst the children were under 18. The intestacy rules can also create certain problems if one spouse dies leaving the survivor together with some children as the rules provide that anything in excess of £250,000 is divided between your spouse and the children and which is often not what is wanted.

I have just had a baby and think it’s time to draw up a will with my husband but we just never seem to have the time to do it. We have very simple finances – just a house, pensions and some savings. How long will it take to do and should we just go with an online service? Annie, Birmingham.

It does not need to take a long time to draw up a will and in very simple situations the process can often be completed in a matter of weeks. Although the online services are, on the face of it, appealing, being quick and easy to do, in my experience nothing can replace the process of interaction, either in a meeting or over the telephone, with an experienced solicitor or will draftsman in relation to your will and your affairs.

For example, based on your summary of your affairs, some of the issues you will need to consider, and which you can discuss with a solicitor, include who should be the guardian of your infant child and the provision you should make for the child if you were both to die in a common accident. You will also need to consider what should be done with your pension policies and pension death benefits (which do not normally pass under your will and you will need to complete some kind of nomination form). A solicitor can talk through these issues with you and ensure that everything is in place to protect your baby should the worst happen.

Ten years ago I drew up my will and have kept it in my desk at home ever since. I am now wondering whether this is a safe place for it and if it isn’t where I should keep it? Will the bank hold on to it? Tony Hall, Dollis Hill

There is no real right answer to this question. The key when storing a will is to ensure that it is safe and that your family know where it is kept so that they are able to find it if the need arises. Many people will store their will with the solicitor who drew up the will in the first place. Many others will keep it in the bank (in a safe deposit box), whereas others will keep it at home in a desk. In most circumstances, it is worth having a copy in another location just in case the original were to be lost or damaged. If you feel uncomfortable looking after your will at home then I would suggest you approach the bank and see if you can deposit it with them.

I haven’t made a will yet and am worried about what will happen if I don’t make a Will and die without ever having made one? Stuart Smith, Glasgow

If you die without making a will then your estate will pass according to what are known as the intestacy rules. Depending on whether or not you are married or have children, there are a number of provisions, set out in statute, which govern where your assets will pass to. Often, many people find that these do not accord with their wishes and result in family members with whom they have no relationship receiving some of their estate. In the worse case scenario, if you have no wife, children, living parents, siblings, or more distant relatives, your estate could pass to the Crown, the Duchy of Lancaster or the Duke of Cornwall! I would therefore recommend that you look to put a will in place, especially if you are having these concerns.

My Uncle died in 2007 leaving his estate to 6 of his nephews and nieces but not to the Executor of his will. The total estate is worth around £280,000 with 50 per cent coming from the sale of his flat.

After my uncle’s death there was no communication about the will but in October 2008 I did an online search in the Northern Ireland Court Service database and discovered that a will had been made and I was named as one of the 6 beneficiaries.

My letter to the Executor seeking an update in 2008 triggered the following advice; ‘the uncle’s estate was selected for review on 18th March 2008 by HMRC who have indicated that there is a tax liability.’

As at today’s date there is still no definitive communication from the Executor. HMRC refuses to discuss the matter with me in my efforts to identify what the problem is and what efforts have been made to resolve it.

My questions are:

1. Are the duties and responsibilities of an Executor clearly spelt out and if so, where can this information be obtained?

2. Can there be a Grant of Probate before HMRC clearance in respect of any tax liability?

3. Are there any indicative timescales for finalising the distribution of legacies after the Grant of Probate?

4. Would a HMRC review in respect of an estate of £280K where the deceased had been retired from business for more than 15 years take this length of time to resolve?

5.Can HMRC be persuaded to disclose the details of the ‘review’ to beneficiaries?

6. If an Executor fails to communicate in a satisfactory way are there any sanctions which a beneficiary can apply?

6. Can an Executor be replaced and if so what is the procedure?

7. Is it necessary for all the beneficiaries to agree before action to be taken?

Liam Dugdale

The Inheritance Tax (IHT) position relating to excepted estates (see below) is the same in Northern Ireland as in England & Wales. All other issues stated below relate to the position in England & Wales and should be checked with a Northern Irish solicitor.

From the information you have given I assume that probate has been granted out of Northern Ireland and that you obtained a copy of the Will and Grant of Probate (not just a copy of the Will). Presumably the figure of £280,000 you mention is stated as being the value of the estate on the grant of probate.

When the Executor applied for the grant of probate he would have had to have dealt with the reporting requirements regarding IHT. On an estate (inter alia) worth less than the nil rate band (currently £325,000) an application can be made on an ‘Excepted Estate’ basis This is a short form application and Form IHT205 is submitted to the probate registry with the required probate papers. Probate will then be issued and the probate registry will send the IHT205 to HMRC.

The nil rate band at the time your uncle died was either £285,000 or £300,000, depending when in 2007 he died. Either way, this is very close to the £280,000 estate you mention. HMRC do ‘spot checks’ on a small number of Excepted Estate applications and my guess is that this is what has happened here, particularly bearing in mind how close the value of the estate and the nil rate band are.

Unfortunately HMRC will take as long as they need to investigate and there is no knowing how long the process will take – not least depending upon how efficient the Executor is in dealing with enquiries. HMRC will only deal with the Executor and not any beneficiary.

There is not one set of rules spelling out the duties and responsibilities of Executors as they are prescribed by various statute and case law, but the overall duty they have is a responsibility for collecting in the deceased’s assets, paying his debts, settling any tax and distributing his estate in accordance with the terms of the Will. The Executor will normally be personally liable to creditors of the estate, including the tax authorities, but would have a right of indemnity out of the assets of the estate in respect of those liabilities unless they have acted outside their powers or are in breach of their duty to the creditors and beneficiaries to administer the estate properly.

There is therefore no timescale re the distribution of your entitlement under the Will as the Executor has to agree the final position with HMRC and pay all appropriate tax due. If a worst case scenario of tax payable is known then the Executor could be in a position of being able to make an interim distribution, provided he has kept back a sufficient reserve. If you had a legacy under the Will, rather than an interest in the residue, then legacies which are unpaid after one year of the date of death are paid with interest (at a rate set by the court).

If the Executor has not acted appropriately or fails to communicate it is always open to the beneficiaries to bring an action to have him removed. An Executor can only be removed by a court order. All the beneficiaries would not need to agree before any such action was taken.

Why is it so difficult for anyone involved with will writing to state the golden rules that a will should conform to eg must be of sound mind, be in writing, witnesses by two people (not beneficiaries), include names of executors, be dated etc. Most people have very simple plans that do not justify a solicitor. For the person married once and with children of their partner, a will doesn’t have to be complicated. Barrie Mitchell

I am not sure that it is so difficult to get across the basic requirements for a valid will and of course you do not have to engage the services of a solicitor. There are a number of online and over the counter options for purchasing will packs. Given the rise in second marriages and cohabitation and the complexity of modern family life regrettably for many people it is not such a simple task and to ensure their loved ones are properly protected they may require legal assistance.

Dear Sue/Sir Gerry: I’m confused about whether writing a new will would supercede/undo the terms of an investment bond written under trust. I invested in it 20 years ago. If the will is silent about the bond, presumably the terms per the bond’s Declaration of Trust will still govern how things are shared upon death? I’m worried about tweaking with the bond because I have read about discretionary trust reporting requirements/tax being invoked if terms are changed. All the trust actually says (its quite specific) is if both children are unmarried, 50 per cent to each, otherwise 100 per cent to one child so I’m not even sure if it is therefore discretionary? Any help gratefully appreciated! Thanks Rik Sterr, London

The usual rule is that Investment Bonds such as these if written in trust pass outside the terms of the will. A new will does not affect the terms of a pre-existing trust which will stand alone and devolve in accordance with the terms of the trust. In the absence of a copy of your declaration of trust I am unable to comment on whether it is fully discretionary or otherwise. You may be able to obtain some clarity on the terms of the trust from whoever set up the trust (I assume the Investment Bond provider). If you still have concerns you should consult a solicitor.

Hello, I am a single mum in full time employment. I have property in London and in France. I am not married and live with my daughter. I have no family in Uk apart from my brother. Should I have a will in place for my daughter to inherit it all? Kind Regards, Ana Nisic, London

Dear Ana, I do not know whether you are English or French and this could make a fundamental difference to my answer.

If we assume you are English and English law applies (if you are French the following advice could differ) then without a will the London property would pass under the rules of intestacy to your daughter at 18. The French property will pass in accordance with local French law and you should take French advice.

As soon as you have assets in two separate countries you are not just dealing with English probate law. In this case you will be dealing with French and English succession law and possible conflicts between them.

I would always advise making a will rather than relying on the rules of intestacy which may not result in your estate passing to whom you want and on the terms that you would like. One of the primary reasons for you to make a will is in the unlikely event of your death you can appoint a guardian to look after your daughter. I do not know the circumstances of your relationship with her father and it is likely, although this is not always the case, that your appointment of a guardian would only take place following the death of your daughters’ father.

I would strongly recommend that you get advice from a solicitor with experience of dealing with French and English estates.

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