Updating Your Will: Why It’s Crucial
Recent changes in legislation and increasing property values may render your will outdated. Continue reading to learn why and what steps you should take.
The Impact of Property Value Increases on Inheritance Tax
The surge in property values may have raised concerns about the potential inheritance tax implications for your estate. It’s also essential to review the drafting of your will due to possible changes in your family situation or recent legislative updates.
The Impact of Finance Act 2000 Amendments on Wills
Recent changes introduced by the Finance Act 2000 have rendered wills older than two years likely outdated. Additionally, most new trusts created since March 22, 2006, including lifetime interest in possession trusts and accumulation and maintenance trusts, are now subject to similar taxation rules as discretionary trusts for inheritance tax purposes.
If a trust is established upon death, it will inevitably incur a chargeable transfer. Depending on the asset values involved, this may result in periodic charges every ten years and exit charges when property exits the trust or when an absolute interest is appointed.
Four Notable Exceptions Include:
- Bereaved Minor’s Trust (BMT) – Not commonly chosen.
- An 18-to-25 trust – not a common choice.
- A Disabled Person’s Interest (DPI) – A well-known option.
- An IPDI (immediate post-death interest) trust – A widely used trust type today.
Additional Reasons to Update Your Will:
- Arrival of a Child: If you’ve welcomed a new child into your family, it’s essential to appoint guardians and ensure they are provided for in your will.
- Divorce: In the event of a divorce, you may want to revise your will to remove your former spouse as a beneficiary or executor.
- Estrangement: If a child or other beneficiary has become estranged or turned against you, you may wish to reevaluate their role in your will.
- Increase in Wealth: Significant increases in your wealth should prompt a review of your will to ensure your assets are distributed in accordance with your current wishes.
To determine if it’s time to update your will, consider the following checklist:
- Do you want to ensure that only your intended beneficiaries benefit?
- Do you need to provide for minor children or other vulnerable beneficiaries?
- Would you like to avoid post-death hassles, disputes, and additional expenses for your loved ones?
- Do you wish to personally decide the terms of any trusts that activate upon your death or leave it to others?
- Are there transferable nil rate bands available?
- Do you understand the potential inheritance tax (IHT) liabilities that may arise upon your and your spouse’s demise?
If you’ve concluded that you should update your will but are concerned about the cost, it’s essential to remember that your will is arguably the most critical document for your family. Creating or amending a will is an important decision, both emotionally and financially, for the ones you cherish the most.
For those seeking excellent value, have you considered a “Will for Life”? While it comes at a higher cost than a standard will, and has a annual fee of £15 per year, this fee not only covers the safe storage of your original will but also includes up to three rewrites per annum at no extra charge, ensuring your will always reflects your wishes.
Does this option resonate with you?
To learn more, please contact us on 01189 347 920.
Don’t wait for a life-altering event to prompt you into action – check out how well your family is protected by viewing our free video TODAY!
Ray Best
Like his academic development, writing came late to Ray. He has written several published works, “Inheritance Tax Planning – My Way” and “Shareholder Protection & Partnership Protection” and has had four feature articles published in Tax Adviser magazine, but the publication he is most noted for is the joint collaboration with Tony Granger “Inheritance Tax Simplified”.
