Making a Will

According to the Law Society at least six out of every ten people in the UK fail to make a will, as if the very planning of it will somehow invite death. However, the chaos and disappointment, not to mention the problems of inheritance tax, leave behind very real trauma which can only increase that of the bereavement itself for many families.
For some reason people think their husband or wife will inherit everything – which is not going to happen in the majority of cases.  A substantial part of your estate would be tied up in expensive and inconvenient statutory Trusts.  Common law husbands and wives will get NOTHING – unless they sue for it and win (at vast expense).  You will not even have had a hand in deciding who should look after your children, leaving that responsibility to Social Services and the Courts. More information below.

Solicitors & Will Writers

It is still advisable to employ a professional at the outset, to ensure that wishes are met and inheritance tax liability minimised. Lawyers can also help determine which assets are not covered by the will. Many substantial assets can be passed of any will, including property and bank accounts. Others outside the estate may include life policies written in trust for other people and death in service benefits.

It is important to understand that writing a Will can have untold complexities which the average person has no hope of being aware of.  It is therefore essential to use a firm which is a member of a professional body (The Law Society and the Society of Will Writers are the two largest), carries full professional indemnity insurance, and also carries out Continuing Professional Development specifically on the subject of Wills.  Some feel that a 30 minute lecture at Law College 20 years before is adequate, or that buying a Will Writing program qualifies them to care for your family.  This is just not true – the author of this article has been writing Wills and books and articles on the subject for over 15 years, and attends professional body workshops at least 10 times a year and STILL learns new things all the time.

I have no time for firms who ask YOU what you want to do and never bother to discuss the myriad options and pitfalls, much less find out whether they might affect you.  What sort of ongoing service do they offer – things change all the time – family stuff, deaths, inheritances, births, adoptions, marriages, gender reassignment, overseas assets.  There are hundreds of factors which can cause problems.

The average cost of going to a professional is around £120 for a single will or £200 for a couple. Additional advice on inheritance tax may bring the cost closer to around £600+++, and far more if serious planning is needed.  But it is still worthwhile investment for peace of mind. If you don't already have a Will, then like all services, it is worth shopping around but bear in mind that it is the quality of the advice which matters, not (in the long term) the price. If your adviser cannot confirm, in writing how much training they have carried out on the specific subject of Wills over the last 3 years, choose another one.

Quite a few firms only write wills so they can be appointed as executors, a practice some might consider a touch sharp, as you often save a couple of hundred pounds on the will only to cost your beneficiaries as much as 5% + VAT of your estate, which is more than twice the going rate.  As long as they agree, in writing, to relinquish their executorship should all the beneficiaries request it at no cost (or at least, just the reasonable cost of time spent) there is no great harm, and a potential advantage if no executor survives.  Another danger is charging an up front fee for probate work which may not be required in 30 years time – if the money is not kept in a properly protected trust fund, with a major bank as trustee, the chances are the firm may die before you do, and your thoughtful gesture will be a waste of cash.

Families can contest a will, but it is hard to change the wishes of the deceased if a will has been properly drawn up, signed and witnessed. If you think you have a valid claim and have been excluded from a will it is important to obtain advice from a lawyer who regularly deals with such disputes. Claims require the applicant to show why they should be entitled to something and the income position of the applicant is important.

Executor

Appoint at least two executors to administer your affairs after your death. An executor is a personal representative, required to act with 'utmost good faith to administer and distribute and estate diligently and correctly'. Many people chose their spouse or children to act as executor and it is worth checking that anyone named is happy and capable of carrying out the job. Professional executors such as banks, solicitors and accountants can charge fees for their time and scales should be checked before appointment.  One of our sponsors offers the guarantee that they will walk away if they are not wanted, as some professional advisers will not relinquish their appointments unless they are paid their full fee. It can be very reassuring for everyone to have a professional adviser on board to deal with or advise on difficult aspects.  With Tax Planning Wills, that is essential.  But they should not be left in sole charge.

Trusts

Trusts are often used to set aside funds for children without allowing them access to the capital until they reach a specified age, usually 18 or older depending on the funds. This can be a difficult are as there is now a market in beneficiaries selling their future interest when they reach the age of 18 if they wish. Ways to avoid this are to use discretionary and protective trusts. A discretionary trust means that the trustees have discretion as to when the capital is handed over. If there is no future certain date, then no one is likely to buy the future interest.  Sadly, new tax rules also mean there is often a price to pay for this flexibility in many cases – but not generally one high enough to stop the use of a trust being well worthwhile.

A protective trust is designed to protect a beneficiary from themselves. A clause can be inserted to disqualify someone from eventually inheriting if they sell their interest or become bankrupt.

Making a Will

List all the assets you own and their value. Once the value of your estate is known, inheritance tax planning can begin. The present threshold is £300,000 in 2007/08 and the balance is taxed at 40 per cent.  If you own the marital home as a joint tenant with your spouse, then it will pass automatically to your spouse outside your will.

Appoint at least two executors to administer your affairs after your death, ideally with a professional as reserve and advisory executor.   Many people make the mistake of appointing executors older than themselves , which is fine when you are young, but pretty silly if you are in your 60’s!

Appoint a guardian for children under to age of 18 who can take over in the case of the death of any surviving spouse.
Outline whether you wish to be buried or cremated near the beginning of the will so that your executors can find out as soon as possible about your wishes. Also make a note of any required obsequies.

Outline any legacies of cash gifts to specific people or charities
Outline any specific personal chattels (personal items such as jewellery, pictures, furniture and cars) you wish to leave to specified people or you can leave all of them to a specific person.  However, you can use an informal Expression of Wish letter, ideally kept with the will, to give smaller gifts (say under £1,000).  Why pay a professional extra to type out a long list of small gifts that will probably be out of date in 5 years) – you can update your letter at anytime, free. Remember if you leave your holiday home to your friend, but have sold it before you die, the friend will get nothing.
Having made any specific bequests, then the remainder can pass to a surviving spouse outright or in trust, as long as they survive you by 30 days.

If you don't have immediate family, then the estate can be divided up between relatives, friends and charities.

The will should be signed by the testator (person making the will) and two witnesses (one in Scotland) who must be present at the same time and neither they nor their spouses can be beneficiaries. The testator must be over 18 and of sound mind.

Multiple Death

Make provision should you and all your immediate family die together and plan where the estate should go. If such an accident was not provided for, then the law of intestacy would apply.

Failing to Leave a Will (which can be found!)

Your estate will be distributed under the rules of intestacy. Live-in lovers have no automatic rights, even if it has been a long-term relationship.
 
Apart from property jointly owned, if you die leaving a surviving spouse or children, the estate will be distributed as follows; your spouse will receive your personal chattels and receive up to £125,000. The rest of the estate will be divided into two; one half held in trust for your children until they reach the age of 18. The other half will be held in trust for the spouse to receive the income during his/her lifetime and will be distributed to the children on the spouse's death.

Failing to leave a will means that your spouse will not necessarily inherit the whole of your estate.

If there are no surviving children, a surviving spouse would receive £200,000 and other relatives such as parents, brothers and sisters would benefit from the remainder.

The lawyer often keeps the will and gives you a copy. Keep the will or copy in a safe place and tell executors where it and the original are kept, and make sure you are aware if they move, amalgamate or go out of business.

Keep clear records of financial assets such as shares, life assurance policies, savings, current accounts and tell someone where they are kept. Throw away ones which you are sure are no longer relevant.

You must review the will from time to time, as tax, the law and family circumstances such as having children change.  You should ask your professional adviser what arrangements they have to alert you to changes, and give you ongoing advice.  In most cases it will be no more than – we have no such arrangements, just make an appointment if you are concerned.  Not a lot of help in reality. If your adviser is this out of touch, consider the services of www.WillCustodian.co.uk  who store will securely and send out an annual newsletter covering tax and legal issues which might affect you, plus a checklist covering many personal issues which might mean you need to re-consider your will.

Remember a will which cannot be found is almost certain to fail: and many are destroyed, after death, by people who discover them but don’t like the contents.

We have recently come across the useful independent financial website www.fool.co.uk which has a useful article on making a will. www.fool.co.uk/news/your-money/2008/01/16/cost-of-dying-without-a-will.aspx

It is possible to draw up your own simple will, as long as it is witnessed and a pre-printed form is available from most stationers. However, be careful as any mistake may render it invalid and can result in long and expensive court cases to resolve matters.

Probate

The executors of the will are required to apply to the probate registry for a grant of probate which confirms their powers to process the will. If person died without a will, the executors have died or are unwilling or unable to act, then the relatives apply for similar powers, known as letters of administration.

Ideally as always shop around and try to choose a solicitor who specialises in probate work. Charges vary from an hourly rate, a minimum fee plus a percentage of the value of the estate.
It may be possible to do some of the work yourself, such as gathering details of the banks, building societies and trusts and funds that might be involved.

Probate Registry, Principal Registry, Personal Applications Dept, First Avenue House, 42-49 High Holborn, London, WC1V 6NP.
Tel: 020 7936 6939 or see 'Probate' in the phone book for your nearest office. Tel: 020 7936 6987 for deposit of wills or 020 7936 for booklets or forms
http://www.courtservice.gov.uk

Sorting out an estate after death can be a nightmare – but it need not be
 
If you know you are dying (or just getting old), make a special effort to keep your finances organised and simple. Having regular meetings with your financial adviser will help enormously, as their up to date “fact find” can simplify the executors job – as long as they know it exists – make sure you ask for a copy.  If you are a home owning couple, or with other significant assets, your last will and testament can be specially written to save Inheritance Tax or protect your home from Community Care “Tax” – which can pretty much wipe out an estate.  If you have such a Will, you should seek professional advice or you may lose the advantages.
 
If you should have had such a Will in place, but didn’t, it MAY still be possible to save the situation by using a Deed of Variation (also known as a Deed of Family Arrangement or Instrument of Variation).  These can write or re-write a Will within 2 years of death and can even result in a refund of Inheritance Tax already paid.  Get professional advise urgently.
 
Some professional advisers are willing to provide advice by the hour rather than insisting on doing everything – so you can do the leg work, and they help you with the more complex bit.

You should also take professional advice if the Will contains any trusts (there always will be if anything is left to children), if there have been substantial gifts in the last 7 or even 14 years, if members of the family (or others) may make life difficult, if you are not good with forms or figures, if you don’t have the time to process everything quickly. Overseas assets complicate matters too.
 
I need professional advice – who should I contact?   
 
Local Probate Registries contact details
 
The staff at the Probate Registry are very helpful, but they cannot do everything for you.  Banks charges for probate are typically rather high – of course, there will be exceptions, but the cost can be well over twice that of some other professionals.  Solicitors and accountants fees (and expertise) varies widely – perhaps from £140 to £250 an hour with extra charges for letters etc etc.  Worse still some solicitors add up to 1.5% as a “responsibility” allowance.  Bunce is a better word, perhaps! 
 
Trust Corporations are specialists at probate and we are aware of one whose fees for fully professional staff are £90 an hour, with local service throughout England and Wales – and a home visit.  You should always ask anyone you are considering working with if they are “STEP” members. STEP – the Society of Tax and Estate Planning Practitioners –  is the professional body which practically every real probate professional belongs to.
 
When someone dies, this is what you need to do:
 
What is probate?

When a person dies somebody has to deal with their estate (the money, property and possessions left) by collecting in all the money, paying any debts and distributing the estate to those people entitled to it.

The term probate means the issuing of a legal document to one or more people authorising them to do this.
 
The probate registry issues the document, which is called a grant of representation.
 
These are three types of grant of representation:

Probate
Issued to one or more of the executors (the person/s named in the deceased persons will).

Letters of administration (with will)
Issued when there is a will, but there is no executor named, or when the executors are unable to apply, or do not wish to be involved in dealing with the estate

Letters of administration
Issued when the deceased had not made a will, or any will made is not valid
 
The term grant will be used to mean whichever type of grant of representation you may need
 
Why is a grant necessary?

Organisations holding money in the deceased's name need to be certain the money is  paid to the correct person, and the grant is proof that the person named in it may collect the money. The estate left when a person dies passes to the people named in his or her will.
 
If there is no valid will it passes on to his or her next of kin in the amounts and proportions set out in the Rules of Intestacy – only relatively modest estates will pass totally to a surviving spouse – indeed, it is more likely that the survivor could be forced to sell the family home unless it is owned so as to pass automatically on death outside the will. The distribution of the estate to the correct people is the responsibility of the person named in the grant. The grant is proof to anyone wishing to see it that the person named in it is entitled to collect in and distribute the estate.
 
Is a grant always needed?

Sometimes a grant is not needed and you may wish to ask anyone holding the deceased's money whether they will release it to you without seeing a grant. If they agree they may attach conditions. It is for you to decide which is the cheaper or easier option. These are organizations that may release the money to you without a grant, if the amount held is small and there are no complications. Among these are many insurance companies and or building societies.  The trouble is that most will accept – but it only takes one before you are forced to obtain a grant.
 
You will not usually need a grant when a house is held in joint names and it is clear that the house automatically becomes the property of the surviving owner. If you are in doubt on this point you may need to ask whether a grant is needed to change the ownership. You will need a grant to transfer or sell a property held only in the deceased's name.
 
Do not advertise any house for sale too soon after the owner's death, as a sale cannot be completed until you have obtained the grant. The date of issue of the grant cannot be guaranteed to coincide with the final stages of any sale.
 
Am I entitled to a grant?

There are rules, which govern who may be given a grant, and whether or not one is issued may depend on the circumstances in a case.
 
The following points are a brief guide for you:
 
If there is a will with named executors they are the first people entitled to a grant. If there are no executors or the executors are unable or unwilling to apply, the next person entitled to a grant is any person named in the will to whom the deceased gives all his estate, or the remainder after the gifts have been paid.
 
If the deceased has not made a valid will, his or her next of kin should normally make application for a grant in the following order of priority:

1. Husband or Wife if not then:
   
2. Sons or Daughters if not, then;*
   
3. Parents – if not, then; *
   
4. Brothers or Sisters – if not, then; *
   
5. More distant relatives. (* Or if any have died in the lifetime of the deceased then their sons or daughters may apply.)
   

A grant cannot be issued to any person under the age of 18. Illegitimate relatives other than sons and daughters may not be entitled to a grant.
 
When more than one person is entitled to a grant you may all obtain a grant together, however a maximum of four applicants are allowed. In most cases only one person needs to obtain a grant, but there are circumstances when you and another person may need to obtain a grant together.
 
How do I apply for a grant?

The five stages for applying for a grant are set out below and explained later in greater detail:
1. Obtain the application forms; (choose an Office nearest you they will send you the forms you need)
2. Choose where you wish to be interviewed; 
3. Complete the application forms;
4. Return them, with the death certificate and the original will (use registered post or hand deliver) to the appropriate probate registry
5 Attend the interview
 
What forms are there?

The forms may be obtained from your nearest probate registry Office:
a) The probate application form
This asks for details of the deceased and yourself as applicant.
b) Account of the estate 
This asks you to give a full account of the deceased's estate. You should try to obtain the full value of all items shown, including any interest or bonus, which will be paid. Any money due from the deceased's employer should be included.
 
The full market value of any house should be shown, although a professional valuation is not normally required. The value of household goods, jewellery and belongings should be shown as the amount for which they could be sold.
 
What should I send?

1. The death certificate;
2. The original will (or any document in which the deceased expresses any wishes about the distribution of his or her estate). (You should make and keep a copy of any will you send)
 
Where do I send the forms? 

You must send your forms and any other post either to the probate registry where you wish to be interviewed or to the probate registry that controls the local office where you wish to be interviewed. Do not send any post to local (sub) offices.
 
You must attend at least one informal interview to enable a grant to be issued. You must state on the probate application form at section 1 which is the most convenient place for you to attend.  The interview can take place either at probate registry or at one of its local offices. It is important that you do not address any post to local offices, as this will cause delay. You may hand your forms in at the probate registry or local office (only when it is open). If you are applying for a grant with someone else that is unable to attend for interview at the place you have chosen, arrangements may be made for their attendance at a different place. However, this will mean that the issue of your grant will take longer.
 
Why do I have to be interviewed?

The purpose of the interview is to confirm the details you have given and to answer any queries you may have.
 
To complete your application you will be asked to sign a form of oath, and swear or affirm before the interviewing officer that the information you have given is true to the best of your knowledge. In most cases only one interview is required.
 
If you application is complicated there may be additional documents to be signed, or you may be asked to contact other people (for example a witness to the will) so that we can interview them or obtain their signatures to documents.
 
When will I be interviewed?
You will be given the earliest available date for interview at the probate registry or local office of your choice. However the number of applications waiting to be dealt with varies and it is difficult to say how soon you will be interviewed.
 
No appointment can be given until the probate registry has examined your application. If they are unable to send you a notice of appointment within two weeks of receiving your application you will normally be sent an acknowledgement of your application.
 
What about duty or tax? 

Inland Revenue's website http://www.hmrc.gov.uk/cto/iht.htm
In most cases no inheritance tax is payable – but around 50% of cases will either be marginal or will pay Inheritance Tax.
 
In cases where inheritance tax is payable a grant cannot be issued until tax has been paid. If the deceased's estate is very close to or exceeds the limit at which tax becomes payable the account of the estate will be sent to the capital taxes office after your interview. After the capital taxes office has returned the account to the probate registry we will notify you in writing of the amount payable.
 
Arrangements for payment will be explained to you at your interview. The issue of the grant does not imply that the Inland Revenue agrees all values submitted and correspondence may take place when the account is returned to the capital taxes office.
 
Please note that tax becomes due 6 months after the end of the month in which the deceased died.
Interest is charged on unpaid tax from and including the due date whatever the reason for late payment. If you have any queries about tax and interest, which you want to deal with before you apply for a grant, you should contact: HMRC Probate Helpline 0845 3020 900.
 
What happens after the interview?

After your interview the grant will be prepared by the probate registry and sent to you by post. The interviewing officer should be able to give you an estimate of how long it will be before the grant is issued.
 
When you receive the grant you should show it to any person or organization holding the deceased's money or property that has asked to see it. The money and property will then be released to you. Copies of the grant may be obtained from probate registry and are only valid if they bear the impressed seal of Court.
 
What are the responsibilities of the probate registries? 

They are responsible for making sure that an applicant is entitled to be given a grant, and that any will produced appears to be properly made. If there is any doubt as to whether the will left by the deceased is valid, or where it appears a will had been altered or amended we may wish to interview one of the witnesses. Please note that the responsibility of the probate registry ends when the grant is issued. 

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