Preparing for the management of your estate after your death can seem like a daunting task. Careful planning, however, will help to make your wishes clear for your friends and family during what will be a very difficult time.
There are a number of common misconceptions when it comes to estate planning that can have a huge impact on what happens to your assets after your death.
1. Wills are only for rich people, my affairs are very simple.
Many people believe that estate planning is only for the wealthy and, therefore, they don’t need to bother with a Will. However, the most basic Will can set out your key priorities, such as stating who you would like to be the guardian for your children, and which family member or friend you would prefer to be the executor or administrator for your estate. It also allows you to determine what happens to your most cherished possessions, as well as making charitable bequests.
If you are over 18 and want to have control over your assets and provisions for your family, it is vital that you write a Will no matter your net worth.
2. My common-law spouse will inherit everything so I don’t need a Will.
At present, the UK intestacy laws don’t provide any protection for unmarried partners and ‘common law marriage’ is simply a myth. This means that if you are cohabiting and unmarried and die without a Will, your assets could be divided in a way that your surviving partner might not be expecting, leading to distress, confusion and possibly financial hardship at a time of grief.
3. I made a Will years ago, I don’t need to do it again.
Even if you have organised a Will, it’s not always the case that it will remain current.
A well-written Will can cover many different scenarios, but it still remains a living, breathing document, that should reflect your current wishes at any given time. Your wishes can change due to a number of different reasons, including births, deaths, marriages, divorces and fluctuations in your financial situation. Any amendments to estate planning and taxation laws can also mean your Will becomes outdated.
Don’t forget that the beneficiaries of your life insurance policies and retirement accounts will receive the money, no matter what is written in your Will. They are not dealt with as part of the probate process. So, if you do update your Will, make sure you update all your beneficiaries on any such plans you may have. Changes in circumstances, including deaths, births and divorces, may impact the decision you make on who those beneficiaries should be.
Therefore, it’s always a good idea to update your Will and any other plans that you may have taken out, at the same time.
4. My family all get on fine – they won’t fall out.
There is nothing like the prospect of a windfall to put a strain on the tightest of family groups. Marriages end, businesses fail, loved ones become distant and children move away.
It is common to see rows break out between second spouses and children from first marriages when no clear instruction has been left. It also isn’t uncommon for ex-wives to inherit whole estates because provisions weren’t made in the Will for separations. Ensure that your Will covers all possible ‘what if’ scenarios to avoid assets falling into the wrong hands.
5. What about my bank account and online passwords.
You may well have a whole online world full of password-protected assets and information that you would like to share with your surviving loved ones. Careful estate planning can ensure that passwords for cloud-based bank accounts and investments, as well as any digital copies of important documents that you may be storing online, are passed to the people you chose.
Digital assets can also include your social media accounts. Your power of attorney, trustee, or executor must have specific authority to manage those assets. Therefore, if you have a particular wish for them to continue, or be deleted, it must be clearly recorded.
Here at Thomas Westcott, we can offer guidance about organising your Will, keeping it up to date and planning your estate. For further information, please contact me or your local Thomas Westcott office.
Ann Jackson, Partner