With an increasing number of wills being contested in the UK, it pays to think about who you are leaving your money to. This month is 'free will month', where charities offer members of the public over the age of 55 the chance to have their wills written or updated free of charge via solicitors across the country. And it might be worth taking up this opportunity because getting your will right can be complicated.
According to law firm Hodge Jones & Allen, the most common considerations for over 55s when making a will include managing competing family claims, disposing of foreign property and paying inheritance tax. Blended families, second marriages and cohabiting couples are common in the UK, and can make writing and maintaining a will complicated.
"Making your will when you're over 55 will present very different challenges to those you would have faced if you had made it in your 30s," says Nicola Waldman, private client solicitor. "By the time they have reached 55 many people may have divorced, remarried, had second families and be enjoying greater wealth. So it is vital that, as well as considering basic details, such as who your beneficiaries will be and who your executors are, that individual lifestyle circumstances are fully recognised, too."
So even if you think your will is in line, make sure you've considered the following important points.
Managing competing demands among first and second families
There are more than 130,000 divorces every year in England and Wales. Many people could find themselves in second or third marriages with complicated family structures and a large number of relatives they want to leave assets to.
One answer to this issue is to create a trust in a will that allows the second spouse to use the deceased's spouse's assets during his or her lifetime, but which guarantees that after the second spouse's death, the first spouse's children receive the assets.
Gifts to grandchildren
If your adult children are wealthy in their own right you might wish to leave your assets to grandchildren instead. If the grandchildren are young a trust might be appropriate, but be sure to discuss this with your children before doing it.
Property abroad
You may need to make a local will to dispose of any property you own overseas, depending on the law of the country in which that property is situated. In that case, you must make sure your two wills are consistent with each other.
If the property is in a European Union (EU) country, it might also be affected by the EU Succession Regulations. The default position under that law means that the succession of assets on death will be governed by the law of the country in which the individual dies a resident, but you can now choose to have the law of your nationality applied to the succession and administration of your estate.
"A particular danger to look out for is the forced heirship rules that apply in some countries," says Ms Waldman. "These say that a proportion of your property must pass by law to certain direct descendants, regardless of your wishes."
EU Succession Regulations mean you might be able to opt out of those rules and apply UK law to your assets instead.
Also watch out for foreign inheritance tax, which can be punitively high, particularly if you want to pass land and buildings on to anyone who is not a family member.
Tax
The inheritance tax threshold is currently £325,000, but there are exceptions and reliefs available for certain types of gift and property. There is also no inheritance tax to pay on gifts left to a spouse, civil partner or UK-registered charity.
"If you have been widowed and remarried you need to ensure that your will is structured to make maximum use of all available nil-rate band allowances," advises Ms Waldman. "It is possible that if your current spouse dies before you, that you can take advantage of two nil-rate bands."
There is also a new residence nil-rate band which starts at £100,000 per person, providing an additional relief on top of inheritance tax for deaths on or after 6 April 2017, for those leaving a main residence to direct descendants.
Lasting power of attorney (LPA)
Alongside making a will, over 55s are strongly advised to think about making a lasting power of attorney. A LPA gives someone you trust the legal authority to make decisions on your behalf if you lack the mental capacity to do this yourself in the future. LPAs can be made in relation to financial decisions, and health and care decisions. You can set up a LPA either through a solicitor or by contacting the Office of the Public Guardian for advice.
