Why do I need a will?
What should I include in my will?
I have lost my will. Can I use a copy?
Can I draft a will myself?
What should I do if I have assets outside England and Wales?
Can we make a joint will?
What is the difference between a mutual will and a mirror will?
Who will look after my children if I do not appoint a guardian?
What does an executor do?
How do I obtain probate?
What shall I do if there is no will?
All the executors are dead. Who applies for probate?
Which tax forms do I complete?
How do I calculate the Inheritance Tax liability?
What is Inheritance Tax?
When is Inheritance Tax payable?
Is probate always necessary?
Which taxes does an executor need to consider?
Can an executor be paid an hourly rate for his or her trouble?
What is a deed of variation?
What is a trust?
How can I avoid Inheritance Tax?
What are estate accounts?

 

 

 

 

Why do I need a will?

The existence of a will dictates what will happen to the testator’s property on death. If a person dies with a will in place, the deceased’s estate will be distributed in accordance with the terms of that will.

If a person dies intestate (i.e. without a (valid) will), the estate will pass in accordance with the intestacy provisions, which are a set of statutory rules. Without a will, spouses may not automatically inherit all of the deceased’s estate; any children will automatically receive their share at 18 years; and unmarried partners will not receive anything.

It is important to have your will drafted as soon as your able: a will is not valid if it has been drawn up when the testator no longer has his/her mental faculties.



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What should I include in my will?

A will should include the following:

1. Revocation clause;
2. Executors and trustees: these are the people who will administer the testator’s estate;
3. Guardians: if you have any children under 18, it is important to include a guardianship clause and choose you would like to look after your children on your death;
4. Directions for burial: you might like to include a wish that you want to be buried or cremated;
5. Beneficiaries: these are the people who will inherit your estate. You can leave your entire estate to one person, a number of people, or make specific gifts;
6. Attestation clause: this is where the will is executed and witnessed.

Your will can be as simple or as complicated as you like. The above is only for the most basic of wills. There are many other inclusions which can prove very useful.



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I have lost my will. Can I use a copy?

No. It is only the original will with the original signatures which is valid.



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Can I draft a will myself?

Theoretically, a will can be drafted by anyone. It is though, important to get both the contents and the execution of the will correct. Otherwise your intentions may not come to fruition.

If your will does not dispose of all your property, you will die partially intestate. The intestacy provisions will apply to the assets you have not included in your will (please see Why do I need a will?).

A poorly drafted will may mean that gifts may fail: it may not be possible to identify a beneficiary, or a gift.

A solicitor should also be able to give you advice on estate planning and the tax implications of making particular gifts in your will and to whom.

Wills can be challenged. If your will is poorly drafted there is a greater likelihood of it being challenged.



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What should I do if I have assets outside England and Wales?

If you have assets outside England and Wales, we strongly advise you to have a will drafted in the relevant country, as well as a will for England and Wales. If you do not do so, you could potentially be setting up a conflict of laws by trying to force a country to adopt your English will. This will often be refused.



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Can we make a joint will?

No, but you can make mirror wills.

A joint will is one Will made by two or more Testators. In England, it is not possible to make a joint will.



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What is the difference between a mutual will and a mirror will?

A mirror will is where two people each write a will which directly mirrors the other’s. For example, the couple could appoint each other and another person as their executors and would each leave everything to the other.

A mutual will is much more rare in practice. It is the same as a mirror will except for the fact that it restricts the survivor of the two testators’ from changing his/her will after first death. The couple are locked into an agreement amongst themselves and neither of them are able to change the will when the other dies.



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Who will look after my children if I do not appoint a guardian?

If you are an unmarried couple, the father may not automatically inherit the right to look after your children, even if he is the natural father. It is necessary for the father to have obtained parental responsibility for the child.

A father has automatic parental responsibility if he is or has been married to the mother or if he is registered on the birth certificate and the child was born after 2003. A father can obtain parental responsibility through a formal agreement with the mother, or by court order.

If a guardian is not appointed in your will, the authorities will choose someone on the parent’s behalf. This will not always reflect the testator’s wishes. If you have children under 18 years, it is advisable to appoint a guardian(s) in your will.



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What does an executor do?

An executor must collect and get in the real and personal estate of the deceased and administer it according to the law. This means that the executor must collect in the deceased’s assets, pay the deceased’s funeral and testamentary expenses and any outstanding debts, distribute legacies (gifts) and distribute the remaining estate in accordance with the terms of the deceased’s will.



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How do I obtain probate?

The first step in obtaining probate is to obtain the original of the deceased’s last will. The next steps differ depending on whether the executors instruct a solicitor or act for themselves. As a firm of solicitors, we are experienced at dealing with probate matters. The executors provide the solicitor with details of the deceased’s property, assets, debts and liabilities. The solicitor then prepares the necessary HM Revenue and Customs (HMRC) Inheritance Tax (IHT) form(s) and drafts the oath for the executors to swear. If the value of the deceased’s estate requires the payment of IHT, HMRC clearance must be obtained before applying for probate. If there is no IHT liability, your solicitor will make a paper based application for the grant of probate.



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What shall I do if there is no will?

If there is no will, the law specifies who is entitled to deal with the estate. This person is known as the personal representative of the deceased. He or she may apply for letters of administration. The personal representative will become the administrator of the estate and will be the deceased’s next of kin – i.e. their spouse, a child over 18, a parent or sibling etc. Once it is established who will apply for letters of administration, the process is very similar to that followed if the deceased did leave a will (please see How do I obtain probate?).



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All the executors are dead. Who applies for probate?

Rule 20 of the Non-Contentious Probate Rules 1987 lists, in order of priority, those persons authorised to obtain a grant of probate where the deceased left a will. If all the executors are dead, the following may apply:

1. Any residuary legatee or devisee holding in trust for any other person;
2. Any other residuary legatee or devisee (including one for life) or where the residue is not wholly disposed of by the will, any person entitled to share in the undisposed of residue;
3. The personal representative of any residuary legatee or devisee (but not one for life, or one holding in trust for any other person), or of any person entitled to share in any residue not disposed of by the will;
4. Any other legatee or devisee (including one for life or one holding in trust for any other person) or any creditor of the deceased, provided that, unless a registrar otherwise directs, a legatee or devisee whose legacy or devise is vested in interest shall be preferred to one entitled on the happening of a contingency; or lastly
5. The personal representative of any other legatee or devisee (but not one for life or one holding in trust for any other person) or of any creditor of the deceased..



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Which tax forms do I complete?

The tax form you are required to complete largely depends on the value of the estate. If the estate is an ‘excepted estate’, HM Revenue and Customs (HMRC) form IHT205 must be completed. The estate may be an excepted estate if its value is less than the Inheritance Tax (IHT) threshold, currently £325,000, or if the deceased’s spouse died before the deceased it is possible that up to a maximum of double the IHT threshold can be used in the IHT calculations. Where it is likely that IHT is due, HMRC form IHT400 needs to be completed. Please note, however, that this is only a brief guide and there may be other factors relating to the estate that could mean that you will have to complete other forms. Please consult a solicitor for further advice.



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How do I calculate the Inheritance Tax liability?

The first step is to identify the estate. This is all of the property which the deceased was beneficially entitled to. It could include gifts made, if the gift was made within the last 7 years of the deceased’s life.

The next step is to value the estate. This is the current market value of all the deceased’s assets minus the funeral expenses and any debts.

You then apply any relevant exemptions, the most common of which are gifts to charity and property passing to a surviving spouse.

If the estate exceeds £325,000, Inheritance Tax (IHT) must be paid at 40% above this figure, unless your spouse predeceased you and left all of their assets to you, in which case IHT is payable at 40% on assets above £650,000 on the second death.



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What is Inheritance Tax?

Inheritance Tax (IHT) is a tax on the assets of a person who has died. IHT is paid out of the estate before it is distributed to the beneficiaries. Most estates do not have to pay IHT as they fall under the threshold or nil rate band of £325,000.



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When is Inheritance Tax payable?

If the estate exceeds £325,000, Inheritance Tax (IHT) must be paid at 40% above this figure, unless the deceased’s spouse predeceased them and left them all of their assets, in which case tax is payable at 40% on assets above £650,000. The tax must be paid within 6 months of the last day of the month in which the person died. If the IHT is a large sum, it is possible to pay it in instalments.



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Is probate always necessary?

No. If the total value of the assets in the deceased’s estate is less than £5,000, you do not need to obtain a grant. You do not need to obtain a grant to sell items such as cars, furniture or jewellery. Any property held in joint names will pass straight to the survivor without a grant, as will any assets that were held in trust, such as pension benefits, life insurance policies etc.

If the deceased has any assets which do not fall into the above categories, probate should be obtained.



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Which taxes does an executor need to consider?

The executor of the deceased’s estate must consider the following taxes:

• Income Tax

• Capital Gains Tax; and

• Inheritance Tax



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Can an executor be paid an hourly rate for his or her trouble?

Any expenses that an executor incurs fulfilling the role can be claimed back from the estate. The executors cannot be paid an hourly rate unless the payment is specifically referred to in the will.



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What is a deed of variation?

A deed of variation is a document which varies the terms of the deceased’s will. This is ordinarily a direction by a beneficiary to the executors to transfer all or some of the property to a particular person or persons (the recipient). The recipient does not have to have been a beneficiary under the original will. You can enter into a deed of variation under any circumstances, provided it is done within 1 year of the testator’s death.



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What is a trust?

A trust is where one or more people (there is a minimum of two people if the trust contains property) known as trustees legally own an asset (which can be money or property etc.) for the benefit of someone else (the beneficiary). The trustees can only use the assets contained in the trust for the benefit of the beneficiary.



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How can I avoid Inheritance Tax?

You can take your estate out of Inheritance Tax (IHT) by reducing the size of it. One way to do this is to make lifetime gifts. A gift may attract IHT, however, if it is made less than 7 years prior to your death. You could also consider making gifts which fall into the lifetime exemptions category for IHT purposes, such as the annual gift exemption (transfers of up to £3,000 in each tax year are exempt), the small gifts exemption (a gift of less than £250 to any one person in a tax year is exempt) and gifts in consideration of marriage or civil partnership: £5,000 made by the person’s parent; £2,500 made by the person’s grandparent; and £1,000 made by anyone else. These will reduce your estate but will not attract IHT.



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What are estate accounts?

Estate accounts record the administration of the estate. They state the value of each asset at the date of death, the income received during the administration (such as interest on bank accounts etc.), the value of any assets sold during administration (such as the deceased’s property), everything paid out of the estate (debts, funeral expenses, Inheritance Tax etc.) and give the end balance for the estate. In essence, they are a form of profit and loss account. Estate accounts will also show how the estate is divided between the beneficiaries.



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Davies is the trading name of Davies Solicitors Limited (registration number 5699025). The registered office address is 30 Woollards Lane, Great Shelford, Cambridge CB22 5LZ,
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