With thousands of people aged 55 and over set to take advantage of the opportunity to get their will written for free as part of Free Wills Month, lawyers say the over 55s need to pay extra attention to ensure that their will is fully tailored to their specific lifestyle needs.
Nicola Waldman, private client solicitor at law firm Hodge Jones & Allen says that making a will in later life can be complex, she says: “Making your will when you’re over 55 will present very different challenges to those you would have faced if you were making it in your thirties. By the time they have reached 55 many people may have divorced, re-married, have 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.”
Nicola says five of the most common considerations for the over-55s are:
1) Managing competing demands amongst first and second families
With over 130,000 divorces every year in England & Wales, many over 55s are torn between what assets to leave between first and second families. Many find that the best way to meet these competing demands is to create a trust in their will allowing the second spouse use of the deceased’s spouse’s assets during his or her lifetime, but with the guarantee that after the second spouse’s death the deceased’s children will receive the assets.
2) Gifts to grandchildren
It is becoming increasingly common for adult children to be over-looked by their parents in their will in favour of their grandchildren. This often happens where the children are wealthy in their own right. There is nothing stopping anyone leaving their assets to their grandchildren rather than their children but you should ensure that you have had this conversation with your children before you die and if the grandchildren are young, some form of trust may be appropriate.
3) Property abroad
The law in England and Wales says that the law governing foreign property (land, buildings etc) is the law of the country in which the property is situated. Whether you can dispose of that property in your UK will, or you need to make a local will, depends on the law of the country in which your property is situated. Further, if the property is in a EU country, it may be affected by the EU Succession Regulations. Sometimes, you will need to make two wills – one in the UK and one abroad – and the two must be consistent.
The default position of the EU Succession Regulations is that the succession of those assets on death will be governed by the law of the country in which the individual died habitually resident. Alternatively, such an individual may choose, in their will, to apply the law of their nationality to the succession and administration of their estates.
A particular danger to look out for is the ‘forced heirship’ rules that apply in some countries. These say that a proportion of your property must pass by law to certain direct descendants, regardless of your wishes, although again, this may be affected by the EU Succession Regulations.
Another is inheritance tax. Land and buildings, in particular, are likely to be liable to local inheritance tax in the country where they are situated. Foreign inheritance tax can be punitively high, particularly if your beneficiaries are not family members.
This is a very complex area of law and it is essential you take advice.
The government raked in £4.7 billion in inheritance tax in the year end to April – up 22% on the year before.
The threshold for paying inheritance tax is currently set at £325,000 but there are exemptions and reliefs available for certain types of gifts and property. Plus, there is no inheritance tax to pay on gifts left to a spouse, civil partner or UK-registered charity.
Further, 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. It is possible that if your current spouse dies before you that you can take advantage of two nil-rate bands.
Finally, there is a new residence nil-rate band starting at £100,000 per person that will provide an additional relief on top of inheritance tax for deaths on or after 6th April 2017, where your main residence is being left to direct descendants, i.e. children, grandchildren, step, adopted or foster children.
5) 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 yourself in the future. LPAs can be made relating to financial decisions and for health and care decisions. You can set up a LPA either through your solicitor or by contacting the Office of the Public Guardian for advice.
Notes for Editors
1) Free Wills Month launches on 3rd October 2016. In October, Hodge Jones & Allen is supporting ‘Make a Will Fortnight’ in conjunction with St John’s Hospice.
Hodge Jones and Allen