Talk Money Week: Talking to Your Family About Your Will

What is Talk Money Week? 

Talk Money Week is a yearly campaign set up to encourage people to have open and honest conversations in relation to their finances. The theme of the campaign this year is ‘It All Counts’; it aims to focus on realistic and manageable action.    

At Prosperity Law, we believe a manageable action that we could take in Talk Money Week could be to begin conversations with your family members regarding your Will and estate planning.  

Preparing a Will is more than just deciding who inherits your estate; it helps to outline to you your current financial position and the possible inheritance tax position of your estate. With a better understanding of your financial position, you can make better financial choices throughout your life. For example, you may wish to start making lifetime gifts in order to reduce the size of your estate.

Wills, inheritance tax, and protecting your family

Currently in the UK, inheritance tax is typically paid at a rate of 40% on estates exceeding £325,000. There are other reliefs available, but with the rising cost of living, more and more estates are becoming taxable.  

By creating a Will, you can take advantage of the reliefs available and make decisions regarding the distribution of your estate, which could be more tax-efficient. For example, you may wish to leave 10% of your estate to charity, which would mean the rest of your estate’s IHT liability is reduced to 36%. 

By creating a Will, you can make an informed decision as to what happens to certain assets and who receives them. This can help prevent family disputes, as your family will have your intentions clearly set out. It can also help to protect assets; for example, if your beneficiary is a child or vulnerable, you may wish to incorporate a trust structure to protect the asset whilst ensuring that the beneficiary still benefits from it.  

In the UK, if a person dies without making a Will, their estate will pass via the rigid rules of intestacy. Moreover, if the deceased had a Will but it does not effectively dispose of the estate, this can result in certain assets being distributed via intestacy. These rules set out a specific order in which people should benefit from your estate, and this specific order may not align with whom you wish to benefit from your estate. 

The rules of intestacy do not account for unmarried couples, so it is even more important that, where you wish for a partner to benefit, they are included in a Will. This could also prevent costly and complex claims against your estate.  

Why this conversation matters 

The case of Chung highlights the importance of engaging in these conversations and having your clear intentions outlined in a Will.  

Irene Chung died in 2016 without writing a Will. Her estate was therefore divided equally between her three children, but her son Robert initiated proprietary estoppel proceedings, stating he was promised the house. The judge found little to substantiate the claim and dismissed it. 

Recorder McDonald stated that the case was a tragedy. The family home intended to benefit all their children had become the subject of costly litigation. 

How to start talking to your family about your will 

Perhaps choose a date to sit down with family and friends to begin your discussions. Pick a time that feels relaxed and begin by explaining your current wishes and perhaps your reasoning for these. Speak to the people you wish to act as your executor and ask them if they would be happy to take on the responsibility.  

If you are making your Will with a professional, explain this to your family and friends and discuss the storage of your Will so that, when the time comes, there is not the added stress of trying to locate your Will. 

Engaging with family members and friends in relation to estate planning can help them to also consider their own estates.  

When to seek legal advice  

Where the family dynamic is particularly complex (estranged children or remarriage) or you are unsure how best to protect the assets you have (family business or farmland), you should seek legal advice. 

A solicitor is experienced in dealing with complex matters and can provide you with the necessary advice and options regarding your estate, minimising IHT and protecting your assets and loved ones.