Preparing a will is not straightforward and it can be very easy to fall foul to the unrealistic optimism of ‘it won’t happen to me’ says Andrew Wilkinson from Shakespeare Martineau
Death is a subject that nobody likes to dwell on for too long. It is inevitably uncomfortable to consider one’s own death and even worse to confront what are believed to be the worst-case scenarios. However, the recent news of multi-millionaire Richard Cousins leaving £41 million to Oxfam in his will after dying alongside his family in a plane crash last year highlights the importance of planning for the unavoidable as well as the unimaginable.
The main purpose of a will is to say what happens to an individual’s assets after death – but it can also do many other things, from setting out who is to look after the children, to explaining specific funeral wishes. Given the large number of issues that can be covered in a will, it is important to consider every outcome to ensure that a will is robust enough to suit every possible circumstance.
Mr Cousins had a ‘common tragedy’ clause within his will. Without this clause it is likely that he would have been deemed to have died intestate, with his estate being passed down through a list of potentially distant family members until someone inherited. Whilst dying alongside the rest of their family is often considered unlikely, by planning for the nightmare scenario, testators can alleviate the worry of the estate being passed into the wrong hands.
Related
A ‘common tragedy’ clause details where the testator’s assets would go if their immediate family died at the same time, and a popular choice of ‘default’ beneficiary is a charity – an organisation which is likely to outlive all of us.
With cohabitation, second marriages and complex family structures becoming increasingly common it has never been more important for wills to be kept up to date, and deal with as many of the ‘what-ifs’ as possible. In situations where both partners have children from previous marriages there is an increasing number of potential beneficiaries and ensuring that assets end up in the right hands, and hopefully avoid creating a dispute further down the line, is more important than ever.
There are often concerns that assets might be vulnerable to attack from people outside the immediate family, for example, spouses, or the creditors of family members who are in financial difficulties and at risk of bankruptcy. Structures can be put in place (often trusts fit this purpose) which can protect assets from those risks. It is important that those structures are properly understood so that they can be used effectively.
In this time of rising disputes around wills, a so-called no-contest clause can be included to protect a will from being challenged. This is a clause which gives an individual a specific gift, but only on the condition that the will is not challenged. The idea is that such a clause discourages disputes – although, if not used properly, can have the opposite effect.
Content from our partners
Leaving a legacy to a charity, as in the case of Mr Cousins is a selfless, generous and increasingly popular option, although of course a charity doesn’t have to be the beneficiary of the entire estate. It is also worth bearing in mind, that a gift to charity can reduce and, in some cases, eliminate inheritance tax liability. A legacy to charity is paid free of inheritance tax. Furthermore, where more than 10 percent of the net assets are left to charity, there will be a reduced rate of inheritance tax.
Preparing a will is not a straightforward process and it can be very easy to fall foul to the unrealistic optimism of ‘it won’t happen to me’ when considering what might happen in the future. However, Mr Cousin’s death comes as a stark reminder of the importance of taking good advice and considering every eventuality.
Andrew Wilkinson, partner and will dispute specialist at law firm, Shakespeare Martineau.
Related…
‘Lazy’ Lehman coverage unhelpful as wealth managers prepare for ‘2020 recession’
Spear’s Briefing: How ETFs can help build compelling portfolios
Bull market ‘nears end’ as wealth managers talk Trump, bears and recession
HNWs and crypto investment: closer than you think?
