You may think that you’re a long way off needing a Will but the reality is, when it comes to protecting your loved ones, there’s no better time than the present. You may also be under the impression that only the elderly or the wealthy need Wills. But here's the thing, a Will could help protect your loved ones in a number of ways, regardless of your income or assets.
We’re going to discuss the possible outcomes of dying without a Will and how that could impact your loved ones. But don’t worry, we’ll also provide information about how our FREE Will Kit worth £100 (available for all new Smart Insurance customers) could help you to avoid these situations.
What is a Will?
A Will lets you officially document how you would like your ‘estate’ (money, property, and possessions) handled if you pass away. In your Will, you will state how you would like your assets to be divided. You will list all your assets and name the beneficiaries who will receive these assets - this can be one person, several people, or an organisation such as a charity. You can also use a Will to make your funeral wishes clear such as your preference for burial or cremation. Another thing that a Will can be used for is naming legal guardians for your children or deciding who will become responsible for pets.
Consequences of dying without a Will
So, what happens if you pass away without a Will?
Disputes over assets
Failing to put a legal Will in place could result in a dispute over your assets. Should this happen, your loved ones could end up having to take legal action. If you have any assets (house, car, heirlooms, jewellery, savings, investments) it could be best to name who is entitled to receive them should you pass away unexpectedly.
Probate could delay your loved ones claiming their inheritance
The probate process can slow things down significantly when it comes to claiming inheritance. If you’re unfamiliar with the term, probate is the process of applying for the legal right to deal with someone’s estate when they pass away. If you leave a Will, your beneficiaries will receive a ‘grant of probate’. If the person didn’t leave a Will, the person applying will get ‘letters of administration’.
Your assets may not be distributed as you would have liked
When someone dies without leaving a valid Will, their estate may be divided based on ‘intestacy rules’. If this happens, it can have serious repercussions for your loved ones depending on your circumstances. For instance, only married or civil partners and some close relatives can inherit under these rules.
There could be problems if you do not nominate a legal guardian
When you appoint a legal guardian for your children in your Will, you know that someone you trust will take care of them should something happen to you. It also gives important rights to that person to make key decisions throughout your child’s life.
If you do not appoint a legal guardian in your Will, the court may appoint someone. Unfortunately, there’s a chance that this may not be the person you would like to take care of your child when you die. For this very reason, it could be best to take precautions and include this information in your Will.
Your loved ones may owe inheritance tax on anything they receive
Inheritance Tax is a tax on the estate of someone who has died. Your loved ones may not have to pay any tax in the case that:
The value of your estate is below the £325,000 threshold.
Or
You leave everything above the £325,000 threshold to your spouse, civil partner, a charity or a community amateur sports club.
There are several factors in determining how much inheritance tax is owed on your estate but with some careful estate planning and a well-thought-out Will, you could potentially reduce the amount owed. It could be best to speak to a professional who can advise you on how to do this.
Your life insurance benefit may be considered part of your estate. This could potentially drive up the overall value of the estate, pushing it beyond the inheritance tax threshold. In this case it could be useful to look into placing your policy into a Trust.
Smart Will Kit
Every Smart policyholder receives a Will Kit worth £100. Our Will kit allows you to make a legal Will at home. With straightforward instructions, it’s easy to get started with planning your estate.
By making a Will, you’re taking another step towards financially protecting your family. It’s important to note that in some circumstances it may be best to seek professional or legal advice. This is especially true if you have a large estate or if there are potential complications around deeds and other such things.