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Functions of a Will

The main functions of a Will can be broken down into three sections:

1- Naming of executors- Put simply, an executor is a person or people which you elect to be in charge of the financial process when you die. It is important to try to select person(s) who are responsible and trusted, such as a close friend(s) or relative(s), and preferably one who is able to maintain a clear head despite the difficult circumstances. Alternatively you could name a solicitor or a bank, or they may automatically add themselves to your Will. However, frequently they will charge extortionate fees. Therefore, it is paramount to ensure this is only allowed if you have elected for them to be your executors.

The executors will be in control of your finances, including paying off any mortgages or debts out of the estate. You may find it useful to write down any internet passwords to online accounts for your executor, though for others to legitimately use your online accounts after death, they need to ensure they notify the website via the proper channels to avoid breaching the terms of the website and the resulting legal ramifications that may initiate. There is no obligation to make the writer of your Will an executor. Some may apply to your will by default, so make sure you check over your Will before signing anything.

2- Estate distribution- Everything you own at the time of your death is classed as your estate. In this section of your Will, you will want to seriously consider where you want specific portions of your estate to be distributed. The list is obviously extensive, but the top priorities in most Wills include: property, businesses, cars, savings, shares, investments, pensions, life insurance, jewellery and pets.

It is worth noting, however, that the people to whom you assign parts of your estate have no obligation to take what you leave them. No matter how small or big, they don’t have to take it.

If you die intestate (Will-less), your estate distribution will be subject to the following strict laws:

  • If you have any children - the first £250,000 will go to your spouse, with the remainder being distributed between the children.
  • If you do not have children: - the first £450,000 will go to your husband/wife, with the remainder to parents if they are still alive. If there are no surviving parents, the money will pass to any siblings. In the event that there are no parents or siblings, your spouse will receive the entire sum.
  • If you have not wed (including cohabitation) - If you have children, the money is distributed between them. If you do not have children it will go to any surviving parents. Without children or parents, the estate is distributed in this order: siblings, grandparents, aunts/uncles. If there are no relatives surviving, it will go to the state. On average per year the Government Treasury gains £64.5m from people who die intestate.

3- Mitigating inheritance tax- The strict rules surrounding dying intestate will raise two issues: Firstly, the money may not be distributed where you would like, and secondly, it is likely to be inefficient for inheritance tax purposes.

After death, the Government makes an assessment of what your estate is worth. If it is assessed at a worth of £325,000 or above and you haven’t planned in advance, you can expect 40% of this to be lost to tax. Therefore, if you have a larger estate, expect a potentially huge inheritance tax liability to be applicable if you fail to or neglect to plan in advance. It may be possible to reduce the amount of tax payable on the inheritance if advice is taken in advance and a Will is made.