Wills: What is a will and why do I need one?

Have you made a will?

You may think the Queen is wealthy enough, but did you know if you don’t make a will your assets could end up in the hands of the Crown? Estimates suggest as much as 70% of people – some 300,000 a year – die without having made a will.

Sue Medder, a partner in the Contentious Trusts and Succession Group at law firm Withers, says: “Everyone should make a will to ensure their property is disposed of according to their wishes and for the benefit of those close to them, particularly if you’re married or co-habiting or have dependents reliant on your support.”

The structure of a will is set out in law. For it to be legally binding, it must be a written statement signed in the presence of at least two other people. That said, how you distribute your assets is completely up to you – you can leave everything to your spouse or the local cats’ home, depending on your inclination.

If you have no will in place, your assets will be allocated according to the laws of intestacy. This is likely to be problematic if you have more informal living arrangements. For example, Simon, 34, and Amy, 31, from Peterborough have lived together for eight years in Simon’s flat. They haven’t made a will or changed the names on the deeds of the house. So if Simon was to die suddenly, the flat would pass to his parents or siblings rather than Amy. Even if you’re married, your spouse may not inherit your full estate if it’s over £125,000.

Wills can also help with inheritance tax planning. For the 2009/2010 tax year, the threshold for an individual for inheritance tax is £350,000 and without further planning, anything above that figure is charged to tax at 40%. By making a will, you can minimise the amount of tax for those who inherit and even donate a tax-free legacy to a good cause.

On a brighter note, a will allows you to make specific legacies. If you have items you want to go to certain people – anything from precious heirlooms to books or furniture – you can set this out in a will. This ensures there’s no unseemly wrangling between relatives and friends after your death.

Key points

• If you don’t make a will, your assets are unlikely to be distributed as you wish
• Wills have a specific structure, set out in law
• Making a will is particularly important if you have complex or informal living arrangements
• Wills can also help with inheritance planning
• Wills enable you to leave specific legacies to friends or family

Tags: assets, dependents, inheritance, solicitors, wills