What is a Will?
A Will is a legal document that sets out your instructions for what should happen to your possessions and money after your death.You will need to appoint ‘executors’ to handle your estate – friends or family who you can trust to ensure that your wishes are carried out. Your Will can also include any details of what you would like by way of a funeral or whether you wish to leave any organs for transplant or medical research. You should also include arrangements for guardianship of any dependant children.
When should I make a Will?
The sooner the better. If you are married or separated it is especially important. And both partners should make separate Wills. Wills are not just for those who are elderly. Anyone who has any significant assets (a house, a car, any savings etc.) or any financial responsibilities should have a Will.
What happens if I don't make a Will?
Sadly, very few people make a Will – only around one in four adults in the UK. Everyone knows it’s a good idea, but like tidying out the shed, or making a dental appointment, they just don’t get round to doing it.
If you have no family and have not made a Will, all your estate will pass to the Crown. Some people think – quite wrongly – that everything automatically passes to their wife or husband if no Will exists. If you do not make a Will, then the Law (Intestacy Rules), not you, will decide who gets what. That can be an expensive business with legal costs being paid from your estate. More tax may be payable as well.
Making a Will now will give you the peace of mind of knowing your affairs are in order and your next of kin will not be left with added stress at a time when they might already be experiencing much grief.
We know that planning for the future is important to you. It is important to us also. That is why we are taking this opportunity to share this information with you. We believe that having funds secured for the future will help us make long term plans that could change the shape of the church in the needy places where ECM missionaries are working.
Writing a Will
You can draw up a Will yourself using a standard form available at stationers or on the internet, but home-made Wills can be disastrous if you omit important details. Using a solicitor is by far the safest way of getting it right. Solicitors are bound by law to put their clients’ interests first. Solicitors have been known to make more money from sorting out poorly drafted Wills than writing them in the first place!
Changing a Will
Again, your solicitor can do this quite easily. If you have already made a Will, and would like to make an additional provision for a legacy to be left to ECM, your solicitor will advise you on the best way of doing this.
Who do you want to benefit in your Will?
Make sure you have made adequate provision for any members of your family.
If you wish to leave a legacy to ECM, it could be better to leave a percentage share of the residue of your estate rather than a fixed amount (known as pecuniary gifts), which may be worth much less than you intended over a period of time or more if your estate has been depleted by care home fees.
Who will be your executors?
It is best to appoint more than one (in case one of them dies before you do). They can be family members or friends, or your solicitor. It is quite acceptable for beneficiaries to be executors. If your children are aged under eighteen at the date of your death, their inheritance will be held upon trust and in these circumstances it is essential to appoint two executors who will then look after the trust fund during your children’s minority. Make sure you have their full names and addresses, and that you have informed them that you would like them to serve in this capacity.
Donations in memory, instead of flowers
You may wish to have a floral display on the coffin, which you can state in your Will.
Many people choose to suggest that the mourners make donations to a favourite charity of the deceased, in lieu of floral tributes at their funeral.
If this is stated in your Will, the executors can make your wishes known. ECM would be pleased to receive such donations in your memory.
Inheritance tax
Inheritance Tax (IHT) was introduced over a century ago as a way of taxing the wealthy, but due to the way property prices have escalated in recent years, many of those who own homes now have assets exceeding the ‘nil-rate’ band threshold of £325,000.
IHT is currently charged at 40% of any part of your estate that exceeds £325,000. Married couples have always been able to pass on assets to each other free of tax.
Changes introduced in October 2007 ensure that spouses can benefit from each other’s unused inheritance tax exemptions. In practice this means that after the death of the first spouse, the surviving partner’s combined tax-free allowance is now £650,000, regardless of how long they have been a widow or widower.
Additionally, if residential property is owned at death, or has been owned in the preceding years, then there can be additional inheritance tax relief totalling £350,000, depending upon the circumstances and the beneficiaries under your Will. Your solicitor will be able to advise you.
To reduce your liability to IHT, you can also give away money during your lifetime with the following limitations:
- gifts to charities, such as European Christian Mission, can be made tax-free;
- gifts of up to £3,000 in any one year can be made to any one individual;
- any number of gifts of up to £250 each per annum, to separate individuals;
- wedding gifts of up to £5,000 to your children or £2,500 to your grandchildren;
- larger gifts can be made as ‘potentially exempt transfers’ (PETs), but have to be genuine gifts with no strings attached. If you die within seven years of making such a gift, tax may be payable on a sliding scale depending on how many of the seven years have already elapsed since the gift was made.
There is also a useful exemption known as ‘normal expenditure out of income’. In other words, what the taxman is interested in is simply gifts out of capital.
You should take legal advice before giving away your home, even to your children, if you are continuing to reside there. Regulations exist to cover such scenarios, and there are some major pitfalls to be avoided.
The generosity of giving a gift to European Christian Mission either now or as a legacy in your Will, could leave your dependants with a smaller, but tax-free inheritance... and the satisfaction that you had invested even more in the Kingdom of God.
