Writing a will First steps
Writing a will is always of benefit if you have a significant other or any dependants
Add up your assets
The first thing to do is work out what you are worth. If you own a property, its value is the market price on that day, less any mortgage owed.
If you share ownership with a spouse or partner, your worth is half its market value, less your share of the mortgage.
You should detail any life insurance policies, cash in bank accounts and all investments, and where the documents are located. Also consider valuables such as antiques or jewellery, plus general possessions such as cars, furniture and household equipment.
You will need to make some deductions to cover funeral expenses and mortgages or loans. At the end, you should reach a total figure of your ‘worth’.
Inheritance tax
Changes in the inheritance tax rules announced in October 2007 mean that many people no longer have to worry about inheritance tax.
If you die during the tax year 2009-10 and your estate is worth more than £325,000 (including money, property and investments but after deducting any debts), 40% tax will normally become due on anything above £325,000.
For example, if you leave behind an estate worth £500,000, the tax bill will be £70,000 (40% on £175,000 - the difference between £325,000 and £500,000).
However, married couples and civil partners are allowed to pass their possessions and assets to each other tax-free, and under the new rules the surviving partner is now allowed to use both tax-free allowances (providing one wasn't used at the first death). This effectively doubles the amount the surviving partner can leave behind tax-free (up to £650,000 in the current tax year).
If you're concerned, it’s best to seek legal advice.
Things to consider
Making bequests
Most wills are made up of cash legacies, bequests and the residue. You can leave cash to relatives, friends or charities – these are usually fixed sums to named individuals. You can also bequeath your possessions (including property) and treasured objects to whoever you wish.
What’s left after all the debts, tax and fees have been paid is the ‘residue’. This can be left to one person, or it can be shared out among several individuals.
Children
For children under 18, you should say who you wish to be their guardians if both parents die, and where the money will come from to look after them. This is usually made in the form of trusts.
If children inherit money and/or property, it is held in trust until they are 18 (or until they marry if earlier). If you don’t specify how the trust should be managed, it will be dealt with according to the ‘trustee laws’, which let the executors deal with the fund.
Putting it on paper
A valid will must be in writing – typed or handwritten – and written voluntarily and without undue pressure from anyone. Do a draft copy first so you avoid making corrections to the final version. If you do need to, make sure you do it in front of the witnesses and both you and they initial the alteration.
The will must be signed by you in the presence of two witnesses, and signed by them at the same time. Neither a witness, nor the married partner of a witness, should be a beneficiary of the will. Remember to date the will and destroy draft copies.
Storing your will
You can keep a will at home, or ask a solicitor or bank to keep it – most will make a charge for this. (See Problem solvers for more information.)
For expert advice and more information on making a will the hassle-free way, read the best-selling Wills & Probate guide.
Which? money advice RSS feed
For regular money updates, subscribe to the Which? money advice RSS feed here. If you have an older web browser you may need to copy and paste this link into your newsreader: http://www.which.co.uk/feeds/advice/money.xml. Find out more about RSS in the Which? guide to news feeds.
Or why not get weekly updates and money saving tips delivered to your inbox by subscribing to the Which? Money Email?