Why contractors should draw up a Will
The sad reminder this week of the passing of Graham Dilley, an England cricketing legend, is proof that ‘having it all’ at one stage in life is no guarantee that it will show up in your Will. The former fast bowler died aged 52, penniless.
Even just considering making a Will can sometimes be difficult, as it does mean contemplating your demise. In Dilley’s case, there’s some suggestion he felt this difficulty, as his Will was reportedly only drawn up in a hospice the day before his death.
Nevertheless, it is important to contemplate what might happen if there is no Will. Among the things that can happen are:
- There can be a family dispute regarding the division of your assets – having a Will allows you to choose who will receive your assets when you die.
- There can be initial uncertainty as to who should administer your estate – a Will allows you to appoint your Executor.
- There may be minor children and no clear indication as to who should take responsibility for them – again you can nominate guardians under a Will.
- The position regarding children can be more complicated if you have children from a previous relationship
- If you are in a relationship which is not a marriage or a civil partnership then the absence of a Will means that your partner does NOT automatically benefit.
- Where there is no Will the laws that then determine who benefits (the laws of intestacy) can mean that some family members do not benefit as much as you might wish, or maybe not at all, and those that do benefit you might have wanted to exclude.
Where someone dies without a Will and is survived by his spouse or civil partner and issue (mainly descendants), the residuary estate is distributed as follows:
If the estate is worth less than £250,000 it all passes to the surviving spouse or civil partner.
If the estate is worth more than £250,000:
- The spouse or civil partner receives all personal chattels absolutely.
- The spouse or civil partner receives the first £250,000 free of inheritance tax
- The rest of the residuary estate is split equally into two halves. The spouse or civil partner has a life interest in one half (that is only entitled to the income arising from this half) with the remainder to the issue in trust if they are minors, or absolutely if not.
The surviving spouse or partner may not therefore be adequately provided for. Where there is no surviving spouse or partner and no surviving issue, assets can pass to more distant relatives such as aunts and uncles and so on.
- You might want to leave assets to a charity. This won’t happen without a Will.
- Any assets that end up in trust for your children will have Trustees that are not of your choosing.
- You may pay more inheritance tax than if you had a Will.
- Without a Will you may not leave a clear request regarding funeral arrangements and decisions about organ donation and medical research.
The conclusion must be that there are many reasons for having a Will. The distress caused to loved ones by not having a Will cannot be underestimated, not to mention the additional costs that might be incurred with further inheritance tax, professional fees and possibly the cost of going to court.
As told to ContractorUK by Mike Hayes, principal at chartered accountancy firm Kingston Smith LLP.