Making a will is one of those jobs that most of us put off for as long as we can. Once it’s done, at least you can sit back and forget about it, right? Sorry, but no. While you might not need to review your will all that often it’s still important to do it once in a while. You’re never too young (or old) to review your will and make sure you have all the right documents in place. Here are a few reasons why it’s important to carry out a review.
Your circumstances have changed
Your life can change in all kinds of different ways. Some good, some less so. All of these changes can have an impact on your will and what you choose to do with your estate when you’ve gone. For example, if you start a new relationship and gain some stepchildren you may want to make provision for them in your will. I’d also suggest that you review your will if you buy a significant new asset, for example a house. There can be tax implications and other legal issues that need to be addressed.
The life change that has the biggest impact on your will is getting married. A lot of people don’t realise that marriage automatically revokes any existing will unless it has been made in contemplation of marriage. It can cause some nasty surprises so don’t get caught out! When you review your will you could find that the provisions you made before don’t match your current wishes. Even if they do, you’ll need to have a new will prepared with either a contemplation of marriage provision if signed before your wedding or if without such provision if signed after the date of your marriage. You can include sections to future proof your will beyond that. For example, you can leave a legacy to children that you may have in the future. However, marriage itself will revoke your will so it’s important to update it.
The law could have changed
Changes in the law relating to wills usually involve tax. These changes don’t come along very often, but they can have a massive impact when they do. The most recent changes have affected inheritance tax generally, but especially when you’re passing on the family home.
Every tax payer in the UK has a nil rate band for inheritance tax. This means that you don’t pay any tax on inherited assets if they are worth £325,000 or less. In 2007 the nil rate band rules were changed so that married couples could use each other’s nil rate band and leave more of their estate tax free. Before that you needed to have a discretionary trust to do this so it was more complex. In fact, you still need this type of trust if you’re not married and want use each other’s nil rate band allowance. In 2014 the residence nil rate band was introduced, which lets you save even more tax if you leave the family home to your direct descendants (children, grandchildren).
The simple version of all this is that if you have a trust in your existing will, it may not be needed any more. A trust that is not required will cause additional costs when it comes to administering the estate. Certain trusts can even prevent your estate from claiming the residence nil rate band allowance. It’s possible to vary a will after someone has died in certain circumstance, but the ability to change a will after death is not guaranteed and involves extra costs as well. Sometimes it’s better to leave things as they are, but it’s important to discuss this with an advisor before you decide.
Do you need to review your will? Get in touch using the form below or call us on 0116 380 0752.
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