Making a will is an important step in your financial planning for lots of reasons. It’s sometimes called a last will and testament and it’s a key legal document that contains your instructions about what you want to happen to your money and property when you die. If you want, you can include your final wishes for your funeral in your will too.
You can write a will yourself, but if you want some help, you can ask a solicitor to write it for you.
Not sure if you need a will? Here are 5 reasons why it’s a good idea to think about making a will.
A will is a legally binding document that records your wishes
Your will is a legally binding document as long as it’s properly made. This means that a court will use it to find out what you want after you die. And because everything’s written down in one place, there’s less risk of confusion or disagreements happening after your death.
A will explains how you want your estate to be divided and records your wishes for everything you own and leave behind. Your estate is the total value of things like your property and any assets you have, so you can decide who you’d like to leave this to before you die.
You can say who you want to carry out the wishes noted down in your will too. This is called appointing executors.
You decide who your estate goes to, even if you don’t have any living relatives
Writing a will means you have a say in who your estate goes to, even if you don’t have any living relatives.
If you die without a will, the law says that the government might be able to inherit your estate. If you don’t want this to happen you need to have a will in place so it’s clear who you want to leave your property and assets to. If you don’t have any living relatives then you can choose to leave everything to a friend or a charity if you’d like to.
You can include your funeral wishes in your will
There isn’t a law that says the funeral wishes you write down in your will have to be carried out but making a note of them here is a good idea. This is because whoever organises your funeral will know what you want to happen. For example, you can say that you’d like to be buried or cremated, or you might want a specific burial ground. You can also say where the money to pay for the funeral will come from.
If you have a funeral plan (a type of cover to pay for your funeral) you might also include some or all of your funeral wishes there.
You might be able to reduce the amount of inheritance tax due
Having a will can reduce the amount of inheritance tax that needs to be paid on your estate. Inheritance tax is often called IHT for short.
There’s normally no IHT to pay if the total value of your estate is below the threshold, which is £325,000. The standard IHT rate is 40%. It’s only charged on the part of your estate that’s above the £325,000 threshold.
If you’re married then you won’t have to pay IHT if you leave anything to your spouse in your will. The rules are the same if you have a civil partner.
If you die without making a will, your family might not receive as much as you’d like them to after inheritance tax has been taken out of the pot.
You can make sure your children are looked after
There are two main things to think about when it comes to making sure your children are looked after when you die.
Looking after your children financially
The best way to make sure your children are looked after financially is by naming them in your will. You can say how much money should be put aside for things like their education or buying a home. There are different options to do this, including setting up a trust which allows you to set rules about how and when the money is accessed.
This also goes for any grandchildren, stepchildren and foster children.
Arranging who cares for your children
If you die without a will and there’s no other parent who has legal responsibility, the court decides who will take care of your children. By writing a will you can say who you would want to do this, so it can help with putting your mind at rest.
The final thing is to remember that if your situation changes after you’ve made your will, you’ll need to update it too.
Learn more about planning your final wishes
Making a will is one way to make sure your wishes are followed when you die – particularly when it comes to money. Here are some other things you might want to think about: