This episode of The Money Compass podcast was published on 8th March 2023. You can listen again by heading to our Episodes page, or on your favourite podcast player.
Have you put a Will in place?
In the latest Money Compass podcast, Emma Knights and Lukas Spyrou explain the process of making a Will and discuss the important things to think about beforehand. Writing a Will is one of those things that so many people avoid, however this is extremely important for the correct distribution of your estate.
WILLS – WHAT YOU NEED TO KNOW
Emma Knights
Today we are going to be talking about Wills. It is one of those topics that a lot of people don’t particularly like to talk about.
Lukas Spyrou
Cheery subject.
Emma Knights
It is. I don’t know if it is just a Norfolk thing, but it seems to be that, “if I make a Will, that means I’m going to die”. People just seem to avoid doing it and that comes across to me, that is an awful thing. I found out that 31 million adults in the UK don’t have a Will. That is 59% of the adult population in the UK.
Lukas Spyrou
Quite scary when you think about that.
Emma Knights
That is a huge amount of people. What is even worse, possibly, is that only 6% of those adults that don’t have a Will have actually thought about making one. That is a lot of people that haven’t thought about it, let alone done it. Basically, their estate would pass under the rules of intestacy. I know we have talked about that in the past. We are not going to go into that in too much depth today. Making a Will is a really important thing to do to make sure that you choose who your estate passes on to so that it doesn’t just get left by a set of rules that you have no say over.
Lukas Spyrou
I think the last couple of years have really shown everyone that things happen that you don’t expect. It’s vitally important that you at least start thinking about putting this in place.
Emma Knights
Most definitely. To make a Will, you need to be over the age of 18. You also need to have what is called testamentary capacity. Which means the person who is making the Will needs to understand what a Will is, the extent of their estate and who they will be passing it on to. They also need to understand what assets they actually have, they need to know the moral and legal obligations they have to certain people and they need to know that if they have children under the age of 18, they need to make provisions for them.
Lukas Spyrou
Can anyone write a Will, Emma? Or does it need to be someone professional or someone specific that needs to do it for you?
Emma Knights
It just needs to be in writing, and it needs to be signed and witnessed. Anybody can do it, you can do it yourself, you don’t have to pay a small fortune to have one done. They can be done at very, very low cost as well. It is just a case of doing a little bit of research and making sure that you’re going to be happy with it. Ultimately, if you did it yourself, and then you pass away, how would you feel if you could kind of look back down onto what is happening once you have gone and find actually, what you have done wasn’t valid? So, sometimes it is worth paying a little to make sure that all the I’s are dotted and the T’s are crossed, to make sure that exactly what you want is going to happen.
Lukas Spyrou
You have touched on the points of the things that have to happen to create the Will. Like you said, you have to be over 18, but there are other things that you should be considering and that need to be covered in the Will. One of the most important things is who your executors and/or the trustees are going to be. Your executors are those people that really are going to be the ones who are going to carry out your wishes. Therefore, you really need to carefully select who you wish to use. Ideally, it needs to be someone that you trust to carry out your wishes.
Emma Knights
And that they have the ability to do it because some people just wouldn’t be able to. There is nothing wrong with that, but some people wouldn’t have the capability, so you need to choose someone that is going to be able to do it. At the end of the day, the things they are going to be doing are, if you have any debts, for example, they will need to repay any debts using your estate. They will need to follow your Will basically step by step to distribute things as you have chosen and carry out your wishes such as what is going to happen at your funeral and things like that. So, you need to choose someone that you can really rely on, it is not a small task.
Lukas Spyrou
We do Wills with the sister company to Face to Face Finance, with our Estate Planning arm of the business, but what we tend to find is that most people would use their spouse or the partner as the first executor to carry out those wishes. As we said, that is likely to be someone that we would like to think is someone that you trust, and you know is going to be capable. It is important to always remember that, depending on your age of when you are putting it in place, it could be in an ideal world, someone who is younger than you. Although it is not guaranteed that they will outlive you, there is a higher chance, so obviously that needs to be considered if you are thinking of putting a spouse or a partner in place as your first executor.
Emma Knights
It is always just worth having more than one executor anyway so that they both have to work together, or it can be that your spouse or partner is your executor and then if they can’t or don’t want to act, then you can choose the backup. So, it is always worth having some options in there. Not being funny, if something happened to you, Lukas, I would like to think that Zoe would be pretty upset.
Lukas Spyrou
She might need some assistance.
Emma Knights
So, it is thinking about what situation they are going to be in at that time, and what help they might need as well.
Lukas Spyrou
They are quite vulnerable at that point, aren’t they as well.
Emma Knights
Definitely, it is a big burden to leave.
Lukas Spyrou
I agree with that. Another thing that you need to think of when the worst should happen, is what you would like to happen at the funeral. Do you want to be buried? Cremated? Cast adrift on a Viking longboat? They are all types of things that need to be considered.
Emma Knights
A lot of people often say as well that they would like to go into medical science. I don’t think people realise that you can’t just put that in your Will, and it will happen. You actually have to apply right now to be able to be given to medical science when you are gone, so you almost have to qualify for their criteria. It might be that if you get illnesses or anything later in life, actually they might not want you anymore. If medical science is important to you, it is definitely worth finding out about, but it is always a good idea to have a backup option, just in case they can’t take you for any reason at that time.
Lukas Spyrou
Yes to go alongside the Will, we would always recommend that you write a letter of what you want to happen. This is so that, number one, things can be changed rather than having to change the whole Will, it gives a bit of guidance to your executors about what needs to happen.
Emma Knights
So, making sure those things are in black and white so that your executors know exactly what you would have wanted. Again, it takes away that burden from them at a time when they are really upset, that actually, you have told them exactly what you want, they don’t need to think about it. They don’t need to worry about “would they have wanted this, or would they have wanted that”, they have got written down exactly what you would have wanted. In that letter, you can include loads of different things such as, “I’d like family flowers only”, “I’d like donations to go to this charity”, “I’d like a humanitarian service or a religious service” or whatever it may be. You can be as specific as you want to or you can be really, really vague and say, I leave it to you, or, actually, I want the most minimal service possible, and I don’t want to wait. It can literally be whatever you want it to be.
Lukas Spyrou
Following on from that, another major part of any Will, particularly if you have got children, is thinking about who you would want to become their guardians. Again, it is not a nice thing to think about but if you have got young children, who, if the worst was going to happen, is going to be there for them. So again, this needs to be that person that you can trust, and someone that can actually take on that responsibility. It is a bit of a myth that, if you die without a Will, that your children will be taken into care. They would just be placed with who is deemed to be the most appropriate member of your family or the closest member of family, but that might not particularly be the same person as you would have chosen. So again, like we said, writing your Will and your letter of wishes of how you want your children to be brought up ultimately is a really important factor. If you have got young children, I know there will be a lot of people, as we mentioned earlier, that haven’t even thought about doing a Will, they might think, “oh I’m not old enough to do a Will yet”, if you have got young children, I couldn’t stress enough how important it is to get something in place, even if it’s not for yourself, but for your children in the future.
Emma Knights
Yes. You can literally, again in that letter, put anything. It could be the way you want them to ideally be educated, particular school you might like them to go to, or a particular place you might want them to go or to ensure that they continue to have contact with particular family members. There can be so many things that are really important to you that if you were here, you would do. But actually, if you weren’t here, somebody else might not think to do that. You can be quite specific about the things that you would wish to happen. Children are obviously very, very important, but to some people, they may not have children, they may have pets, which may be equally as important as children.
Lukas Spyrou
Some people’s pets are their babies aren’t they. It is something we have actually seen quite a lot of now and that is part of it when we are taking Will instructions from people now, we have got a section about what you want to happen to your cat or your dog.
Emma Knights
It is not necessarily the cat or dog you have right now it could be the cat or dog at the time of your death. I know, and I’m sure my mom and dad won’t mind me sharing this one, they have an African grey parrot that can live for around about 50 years. She’s maybe about 20 now. I have explicitly said I do not want that bird if anything happens to you. All she has ever done is bite me, I do not like her. So, I know my mom and dad have got in their Will that Ruby, the parrot, will go to my sister, and they have even then left her an additional gift of money to make sure that she can continue to provide for her for the rest of her natural life.
Lukas Spyrou
Continue to live her life of luxury.
Emma Knights
Most definitely. Eating all the nuts that she wishes to eat, and not chewing on Emma’s fingers. So, it can be done. It’s just important to take that into consideration. Now some people would say, “I’m not putting my pets in my Will” and that is absolutely fine. There is no right or wrong that you must put it in, or you must not, but it is just something to consider.
Lukas Spyrou
Something else to consider isn’t it. So, we have set out who is going to carry out your wishes for you, who is going to look after the children and pets. The next thing you need to consider is if you want to make any particular gifts. Now, they come into two categories, we have got pecuniary legacies, which quite simply is a posh word for gifts of money. If there is anything or anyone that you want to receive a specific amount of money, this is the section that you put it in. So, if you want a niece and nephew to receive £5,000 before your estate, your house and all of those bits, are divided up.
Emma Knights
It could even be a charity, it could be, I don’t know, you were always a Girl Guide, and you want £500 to go to the Girl Guides or to your local church or a group that you are part of. It can literally be anybody, but it just tends to be a token amount of money. So, it is not necessarily a considerable chunk of your estate.
Lukas Spyrou
Yeah, not the whole value or half of the value of the estate.
Emma Knights
It is a specific certain amount of money that you would like to go to a person or kind of company really.
Lukas Spyrou
Yes. Then after the money, we have got legacies, which are then just particular gifts or physical gifts, if you will. Again, this could be you have got a special ring or a special bracelet.
Emma Knights
Antique clock, a car, anything like that. Any physical asset that you want to pass on to ensure that a certain person has. I think probably one of the most common ones that we will see is a mother that might have two daughters and then she will choose one of her daughters to have the engagement ring and one to have the wedding ring, it just saves any arguments. Now, I would like to say that when a parent or anybody passes away, that everybody is very amicable and understanding of “oh no, I understand you would like that”, or “I would like that”. You see it so often, that is the time when the vultures come out and actually, everybody is out for themselves not necessarily mourning that person, they are just in it for what can they get out of this.
Lukas Spyrou
Trying to get the best thing, the best deal out of it for themself which is quite sad really.
Emma Knights
From your point of view, that is why it is important to make sure that you set out anything that you would like to happen, because at least then nobody can argue about it, you have put it in black and white, if that is what you want to happen, and there can be no arguments. All I would say is you need to be a little bit careful, because you don’t want to go down to the minutiae of every single plate that you own and all these types of things, you just need to stick with the most valuable, the most sentimental items that you want to pass on.
Lukas Spyrou
Yes, after we have done the gifts, the rest of your estate is known as your residue. After all the gifts, if there are any gifts to come out of it, the rest of your estate is then distributed according to how you want. Most people tend to leave everything to their spouse, I mean, naturally, it would go that way if you didn’t have a Will anyway. But we often think again, what we talked about earlier is if that person wasn’t there, it is always worth thinking about the second and third level of residue if, the first person you wanted to receive anything, isn’t there. Again, it is the spouse generally and then to children if you have any. But this is the point where again, it needs to be written down in black and white, so you don’t fall into the realms of the unknown and things going where you might not want them to go.
Emma Knights
Yes, this is where it always becomes a tricky conversation when you are talking to people because they say, “okay, they are the last surviving partner, and they want it to go to their children equally”, and then we start talking about, well, what happens if something happens to one of your children before you. It’s just thinking about all the possibilities, and we are not saying that any of them are going to happen and hopefully it will be whatever you have put down as your first option will happen, that would obviously be the ideal scenario. But you just never know what life is going to throw at you. Actually, having some alternative options will just save you having to update and change your Will, with the smallest events happening in life, so definitely a good idea to do. Another thing to think about is whether you are excluding somebody from your Will, who might expect to be receiving something. It could be a child or grandchild, it could be a spouse, you need to think about it very, very carefully. If they are financially dependent on you in any way, if you exclude them, they could still contest the Will and rightfully benefit from your estate. Even if they have no financial dependency on you whatsoever.
Lukas Spyrou
It is a bit more difficult, isn’t it?
Emma Knights
It is more difficult, and you might be choosing to exclude them for a particular reason. Now, there are two ways in which you can do this. Number one could be, you leave them something, but it could be a small token gesture, £100 or so.
Lukas Spyrou
I suppose from that point of view, at least it is a bit more difficult for them to say, “I was forgotten about” let’s say, because they are in the Will.
Emma Knights
They are in there in black and white, “you haven’t been forgotten, we have thought about you”.
Lukas Spyrou
Even though it is a smaller gift, you have covered them then, haven’t you?
Emma Knights
Yes. The other way to do it is to basically name them in your Will and say that “I have deliberately not left this particular person anything”. I could say, “I deliberately have chosen not to leave anything to Lukas”, now, doing that, again, it shows that you haven’t forgotten about them, because you have named them in your Will, but it could still be questioned. So, what we always suggest to people is that they write a letter that goes alongside their Will. It is a personal letter, so it is not something we would ever ask to see. But we will always say to them is to write down their thoughts and feelings, the reasons that they have done this. You want to try and keep it nice and friendly because at the end of the day, whoever is potentially going to be reading this letter, you’re going to be leaving it to them after you are gone, and you don’t want to cause more problems and drama after you have gone. But you want to be clear and concise about the reasons that you have done it, to make it clear that you you haven’t done it, and you have really thought the situation through and, this is what my wishes really are, so it can be done but it just needs to be thought about quite carefully.
Lukas Spyrou
Yes, I mean, so ultimately, the Will can be really as simple, or as complex as you want it to be. The more complex Wills we see, are when people start putting in trusts and things like those in play. What would be the advantages, Emma, of putting in the use of trusts in a Will? What would be the reason for doing that?
Emma Knights
It would tend to be to protect your beneficiary (whoever the money is going to). It could be that they had a substance abuse problem, or it might be something a lot more light-hearted, that actually, they are just not particularly good with money, so you want to make sure that the gift that you leave them isn’t just going to be frittered away. It could be that they are in a relationship, and you don’t particularly trust their partner and you want to make sure that whatever you give them is ring fenced for them, for their use, and not just wasted on on unnecessary things. In that case, you could put in place a trust, to make sure that somebody oversees the looking after of that money, so it then gets used in ways that you would approve of basically. It could be other things such as, this is your second marriage, and you want to make sure that your children are going to benefit from your first marriage. You don’t want to risk everything going to your spouse, and then your children ultimately not getting anything because your spouse then changes their Will and leaves everything to their children. So, there are lots and lots of different things that you can do.
Lukas Spyrou
You can set age limits as well, when the beneficiaries can, like you said, if they are at the point where you think they might be too young to receive some money, if the worst were to happen, you can pick a time and the most usual times that we see are age 18, 21, 25 to receive some money or a gift, particularly.
Emma Knights
Yes, there are loads and loads of different things that you can think about with your Will. Like I say, you can be as specific as you want to be. You can be a little bit more relaxed and say, “well, I’m not too worried. I would ideally like this to happen, and after that, I don’t mind too much”. But you just need to make sure that what is important to you is written down and to make sure that those wishes are carried out because like I said, without having a Will, your estate will pass under the rules of intestacy and families are very, very complex situations. I think we all have a complex family whether or not we think it. We like to think we all have happy families. But there might be things that go on in your family and actually under the rules of intestacy, the people that you want to benefit wouldn’t be the ones to benefit. It is just really important to make sure that you have got it written down, signed, it is witnessed, and everything is there. Therefore, one day, if it happens, you have got everything in place.
Lukas Spyrou
It is a bit of peace of mind isn’t it, knowing that once you are gone, everything will be as you would want it to be.
Emma Knights
Exactly. Then it is really important to not just write your Will, and put it in a cupboard, or in a safe, or wherever you put it and forget about it forever. Because actually, you do need to review these things and update these things. It could be you have more children, it could be someone in your Will, your executor passes away and you want to update it and add another executor. We always recommend that you review it every year. Some people think well, that is far too often and think five years is enough, but it needs to just be a period that you are comfortable with. It is not to say that you will ever need to update it, you could make a Will and it could be in place for 25, 30 years. Actually, it would still carry out your wishes exactly as you want them to be from day one to year 30 and beyond.
Lukas Spyrou
They are not a final thing are they. A lot of people think they write it and that is done. It is only a snapshot in time, ultimately, and as I said, some people’s Will may be almost valid or sufficient for 20, 25 years. With the complexities of the modern world and changing families, things do change so reviewing it, as Emma said is really important.
Emma Knights
Definitely. If anyone has got any questions or anything else they want to know about Wills, feel free to drop some comments or send us messages, and we would be more than happy to help. If you have enjoyed listening today, why not head over and join our Facebook group, The Money Compass.