Perhaps it goes without saying, but often the very first question from a financial planner is: "Do you have a will, and is it up-to-date?"
This is because without a relevant will, it is difficult to plan clearly for life’s later events; and not even life’s self-confessed singletons are immune from such considerations.
It is a question I always ask, and I am surprised by the increasing regularity with which we come across a blank sheet or a will that is well past its sell-by-date.
The importance of a will
UK individuals without a valid will die intestate, which means the intestacy law will determine how and to whom the estate is distributed. Interestingly, the assets do not always automatically go to the surviving spouse.
If there are children involved, the spouse only receives the first £250,000 plus personal possessions. The remainder is split equally between the spouse and the children.
For clients’ heirs, intestacy can be a difficult and distressing time, involving copious paperwork and potential guardianship issues, bewildering delays and missed (financial planning) opportunities; it can take many years for a complicated estate to be settled.
One other thing to note is that marriage automatically revokes (nullifies) a will made beforehand, the exception being one made ‘in contemplation of’ the specific marriage, whereas a divorce (or annulment) doesn’t actually revoke a will.
The ex-spouse is treated – for the purpose of interpreting the will – as having died on the date of the divorce. An exception is made where any gifts to the former spouse are specified in the will and remain valid.
The role of the financial planner
I don’t actually write the will but I leave this to a specialist instead. My role is to make clients aware of the importance of having a will and to point out certain aspects and complications that they will need to consider.
For example, a lot of my clients have property in other jurisdictions and all I would ask them is whether this has been considered when their English will was written. If there are many clients that do not have a will at all, there are even more clients that have not considered the inheritance tax (IHT) implication of holding a non-UK property.
We live in an increasingly international world and with that comes complexity. Many of my clients have complicated circumstances, which can include foreign property or assets, international relationships and families, dual or non-UK residence and domicile statuses.
Beware – domicile and residence are not the same. They are two different concepts and complex rules apply when determining a client’s domicile or residence status.
Again, as the financial planner, I have sufficient knowledge to raise awareness with the client and point out considerations but advice should always be referred to a specialist.