Published December 2021
The end of the year is naturally a time to reflect on the past 12 months, and look ahead to the next. Yet as the ongoing pandemic has clearly demonstrated, you can never really know what the future holds. What you can do, however, is plan for it. As such, if there is one thing I would urge my clients to do in 2022 from an estate and tax planning perspective, it would be to check and update their will.
Your will is without doubt one of the most important documents you will ever sign. While wills are usually drafted so as to be effective for many years - indeed indefinitely - it is nevertheless wise to review your will every few years to take into account changes in circumstances and legislation.
In particular, you should ensure to review your will in light of any of the following:
Marriage or civil partnership – getting married or entering into a civil partnership will revoke any will you have in place already, unless the will makes specific provision for the marriage. Even so, especially for second marriages where you may already have children from a previous relationship, it is vital to ensure your will reflects your new circumstances.
Divorce – on divorce any gift you made to your spouse in your will takes effect as if they died on the date of the decree absolute, which usually means it falls back into your estate’s residue for the benefit of any residuary beneficiaries. However, as it is common to leave the bulk of your estate to your spouse, it is sensible to revisit your will upon separation or divorce to ensure your new wishes are properly reflected.
Changes to executors – if an executor dies or becomes unable to act due to ill health or any other reason, then it is important they are replaced with an alternative executor in your will.
Changes to beneficiaries – your intended beneficiaries can change for a number of reasons. A beneficiary may pass away or indeed be born! Family and friendship dynamics may also change. Whatever the case, any change needs to be mirrored in your will.
Acquiring property – buying a second property, either as a buy-to-let or holiday home, may need to be reflected in your will. This is especially true if you buy a property abroad, when it’s also wise to take specific advice as to the rules in the country you have bought the property in.
Selling property or assets – if you have gifted certain property or other assets to beneficiaries in your will, which you subsequently sell, this might need updating in your will to avoid disappointment or complications after death.
An increase in the value of your estate – with house prices continuing to rise, many may find themselves in a situation where they are liable for inheritance tax. There may be steps that can be taken to mitigate your exposure to inheritance tax, but you need to plan in advance.
Reviewing your will can also be a helpful prompt to ensure you have taken advice in relation to lifetime gifts and creating lasting powers of attorney in case you need assistance making decisions in later life.
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