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Stowe guests: the importance of making a will by wealth management company, Equilibrium

In this instalment of Stowe guests, we catch up with Equilibrium Asset Management about the importance of making a will that is right for you and keeping it up-to-date as part of your wider financial planning.

An award winning Chartered wealth management company, Equilibrium Asset Management offers personalised financial planning including intergenerational, retirement, tax and defined benefit pension reviews.

Headquartered in Wilmslow, Cheshire, Equilibrium Asset Management specialises in developing long-term financial plans that make a positive difference to their clients’ lives.

Writing a will is a hugely important part of financial planning. Here are just some of the reasons why it is worth considering setting one up now.

Quicker, easier

Writing a will helps ensure there is a legally binding process and set of decisions regarding your estate after you die. If you don’t leave a will, then your assets will be distributed under standard rules called ‘intestate’ and whoever takes charge of your estate will need to apply for a grant of representation in order to be able to divide up your assets. This can add extra administration, delays and uncertainty to a time when your loved ones will be in mourning. A will can help remove this unwanted hassle and confusion.

Tax implications

Even in death, tax needs to be considered. Inheritance Tax carries with it a punchy rate of 40% for assets over £325,000 (the ‘Nil Rate Band’). Writing a will can help you plan how your assets will be distributed in a way that incurs lower tax liabilities. For example, if you leave at least 10% of the net value of your estate to a charity then the Inheritance Tax rate on the rest of your assets drops to 36%. In addition, a will could reduce the burden of Inheritance Tax on your family home via the newly-introduced main residence nil rate band (MRNRB). This allowance is currently £125,000 for the 2018/2019 tax year, but this is set to increase to £175,00 by April 2020; although, if an estate is valued over £2,000,000 there will be a tapered withdrawal of the allowance of £1 for every £2 the estate is over this threshold.

This allowance can only be received if the property is being left directly to children (including adopted children, stepchildren and grandchildren) and a will is a great way of ensuring this allowance is used and there is no ambiguity over who is inheriting the property. Overall there are numerous ways Inheritance Tax can be mitigated and writing a will can be the first step in tackling this. Please note that while this is a very important part of the process, a will on its own is only one component and should be accompanied by sound advice and a thorough financial plan.

Control over decisions

As discussed, if you do not leave a valid will then your estate will be divided up following standard ‘intestate’ rules which won’t take into account your personal wishes. For instance, under intestate rules, non-blood relations and unmarried partners miss out on all automatic distributions of wealth. It’s a very complex area of law and difficult to challenge, therefore offering little flexibility if there is a disagreement over the estate. Writing a will offers clear and concise instructions, leaving little room for misinterpretation and outside intervention.

The right will for you

A will allows you to express your final wishes and instructions, making your decisions legally binding and letting you have a personalised say on what happens to your wealth and assets. None of us likes to think about our mortality but writing a will can be a very helpful way in ensuring your loved ones are looked after when you’re gone – not only by providing for them but by offering some direction and certainty in a difficult time.

Keeping your will relevant

Having a will is a very important part of the entire financial planning process and you should be applauded if you already have one. However, ensuring a will is kept up to date as your circumstances and wealth evolve is crucial if it is to have the impact you want for your loved ones.

Therefore, if you already have a will it is very worthwhile checking it to see if needs updating. Aside from checking your will every five years, it is definitely worth reviewing your will at significant milestones of your life such as;

  • If you get divorced
  • If you get married
  • If you are moving home
  • If you become a parent (or already have children but decide to have more or adopt)

It is important that your will accurately reflects your current estate and circumstances. Though we don’t like to think about it, accidents can happen, and should you die prematurely it would very unfortunate for your loved ones if your will was out of date and redundant in places (or if you didn’t have one at all). Therefore, taking the time to establish a will sooner rather than later (and keeping it regularly reviewed and updated) should help give you peace of mind should the worst happen.

Equilibrium encourages all their clients to give them a copy of their will along with the details of their solicitor. They’ve seen first-hand the confusion and angst the lack of a valid will can lead to, making everybody all too aware of the importance of timely and concise estate planning.

You can find out more about Equilibrium Asset Management  by visiting the website.

The information provided is based on the opinion of Equilibrium Asset Management and is for general information purposes only. It is not, and should not be construed as either financial or legal advice. We strongly recommend seeking the opinion of a legal professional before setting up or amending any legal documents. Rates of tax, tax benefits and allowances are based on current legislation and HMRC practice and depend on personal circumstances. These may change and are not guaranteed.

The blog team at Stowe is a group of writers based across our family law offices who share their advice on the wellbeing and emotional aspects of divorce or separation from personal experience. As well as pieces from our family law solicitors, guest contributors also regularly contribute to share their knowledge.

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