Importance of Preparing a Will
Khushi Kanodia
Solicitor
Preparing a will can often be a daunting but necessary process for UK residents and non-UK residents with assets in the UK. Whether you are considering your tax position or aim to provide for your dependents, preparing a will is essential.
Consideration of the Legal Framework
The UK has recently undergone the process of changing its long-established domicile rule, and understanding its impact on you and your family is essential. The UK now abides by a long-term resident test in determining Inheritance Tax (IHT) liability on an estate.
Under the new rules, one would also need to consider a ‘tail’ for IHT that may have followed you upon leaving the UK if they have moved away recently. The tail means that the UK IHT laws may follow you for up to 10 years, depending on the length of residence in the UK. An important factor to bear in mind is that, even if you are not considered a long-term UK resident, you are still likely liable to pay IHT at 40% on your UK assets.
For non-residents, when managing assets in a foreign country, it is crucial to consult with local experts to ensure you receive up-to-date advice and have a thorough understanding of the applicable laws. In addition to succession planning, it is also ideal to understand the UK probate process and receive advice on the appointment of executors and trustees. Since inheritance laws and taxes differ around the world, it may even be necessary to consider drafting separate wills for different jurisdictions that are in alignment with each other to ensure there are no discrepancies in the distribution of your worldwide estate.
Importance of a Will & Proactive Planning
Making a will helps clarify important questions, such as the beneficiaries of the estate, the specific share of their entitlement, and the trustees who will be responsible for minor beneficiaries, among others. A clear and well-drafted will, which is tailored to an individual’s wishes and circumstances, prevents conflict in the future.
Correctly drafting and executing a will ensures that your estate is distributed as per your wishes. Among other factors, if a will is not executed validly, then your estate may fall under the intestacy rules. Challenging and proving otherwise may also be a costly affair for your next of kin. Navigating the rules around IHT, Capital Gains Tax, and trusts can be challenging without expert advice and guidance. A well-drafted will can help efficiently plan for IHT liabilities and reduce the costs and administrative delays associated with intestacy. You will be able to explore a detailed succession plan, ensuring that all your intended beneficiaries are looked after.
It is also essential to bear in mind that a will should be reviewed every few years, depending on changing laws and family circumstances. Some of the common circumstances that will warrant a review of the will are marriage, remarriage, divorce, birth or adoption of children. Crucially, marriage can revoke an existing will, and divorce also affects any appointments and legacies left to a spouse. Accordingly, an expert can assist in considering whether a new will is required or whether a codicil is sufficient to update an existing will.
Proactive planning can save your loved ones significant stress and costs in the future. A solicitor with experience in estate planning can draft a valid and tax-efficient will. We can help you navigate the above challenges in drafting your UK will and ensuring that your wishes are correctly reflected.
For specialist advice and support. Please get in touch with our corporate solicitors in London by contacting the GOOD LAW INTL office.
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