There is a lot of money owed by a lot of people in this world. Most of it is manageable, although not entirely pleasant. Some of it is difficult. A little is entirely impossible. But no matter the affordability of the debt that you have, there is something that you should know about it – it does not die when you do. Someone will still need to service that debt when you are gone.
Most of the time, it is your estate that will need to pay off the debts. If there isn’t enough money within your property and possessions, the leftover debt is passed on to loved ones. This is just one of the reasons why writing a will is so important. And it is a good reason to keep an eye on the debt that you are accumulating. Is it really worth it if it will become a massive burden to those you love when you die? You may think that by paying off the minimum from your debts each month is a good idea, giving you more in your pocket in general, and allowing you to save up money to leave to your loved ones. But that saved money will actually be needed to pay off the debts that are left, so you may as well get rid of them while you’re still alive.
Doing this will enable you to then go on to save money after your debt is paid, and that money will be able to be passed on to whomever you want it to go for. That’s a much better legacy than leaving a pile of unpaid bills for family members to sort out.
We’ve said in the past that writing a will is one of the most important things you can do for your family, and it’s true. But talking to your family about your will – particularly those who are mentioned within it, or whom you wish to be your executor – is just as important. Although it may feel uncomfortable and awkward, but it is an important way to ensure that there will be no feuds and fights after you have gone.
This talk is your chance to explain exactly why you have done what you’ve done. It will help your family to understand, and prepare them for what your will says.
The first thing to do when preparing for this talk – because preparation is essential if you want to make sure that you get everything said that you want and need to say – is to decide exactly what the outcome of the talk should be. You need to think about what your will says and spell it out in at least general terms. Let your spouse or partner know that they will be provided for, for example; let you children know that you have thought about them and your grandchildren in your will; if you are intending to leave any money to a charity, now would be a good time to pass on this information.
Remember that no one can make you change your will. If they do, and you do end up changing it, then it might be seen to have been written under duress and considered invalid. And anyway, it is entirely your decision as to who receives what.
Don’t spring the talk on your family and expect them to be happy to sit down and chat. Introduce the topic carefully and arrange a time in the near future to speak to them about it, preferably when everyone will be together to save you doing it more than once. This allows them to have time to get used to the idea, and will make them more receptive.
Make sure that you give reasons for your legacies, particularly if they are unusual or unexpected. This way your family will understand why you have chosen to leave money or property to people or charities. Let them know what you hope your will will achieve.
When you are done, ask for their suggestions – you don’t have to do anything with these, but it is a good way of making everyone feel as though they have contributed. As for their opinions too; you never know, something they say may make you rethink what you have initially written.
It could be a difficult conversation, but it will be worth it in the end.
How to ensure your grandchildren receive their inheritance
A recent survey by insurance company Sunlife has revealed that a large number of grandparents intend to leave part of their estate to their grandchildren, but surprisingly, don't trust their own children to ensure that these instructions are carried out.
The results of the survey showed that seven in ten grandparents plan to leave their grandchildren an inheritance. 55 percent of those grandparents are looking for ways in which they can protect this aspect of their legacy, without having to rely on their children to pass it on, according to their final wishes.
In some instances, such a legacy is not as straightforward as simply leaving a sum of money in a will. It may be that the grandparents wish to leave a property such as the family home instead – the problem being that children under the age of 18 are not legally able to own property.
One way to get around this problem is to leave assets in trust for the grandchildren. When doing so, it is vital to consider an appropriate age for the child to receive the inheritance, so that they are mature enough to use it wisely. An age contingent trust such as this is normally written into the will.
It is worth remembering however, that any assets left in a trust may incur an inheritance tax charge every ten years, of up to six percent of the value of the trust, above the IHT threshold.
The key to ensuring that your grandchildren will benefit from your estate as you would want, is to take control now and have a will and trust drafted, which both reflect your wishes and family circumstances. Through effective estate planning, it may also be possible to identify ways to reduce any inheritance tax payable on your assets.
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Death isn’t something anyone particularly likes to think about; it’s not the most lovely of ideas to dwell on. And yet, it is inevitable. One way or another, we will all die, so although it is an unpleasant thought, it is something that must be discussed at least once – and that it when you write your will. Without a will, ensuring that your legacy is passed on in the way you want it to be will be almost impossible, and no will can also cause long lasting disputes and family feuds. Is that the legacy you want to leave behind? Is that how you want to be remembered, as the one whose death sparked an argument that broke a family apart?
That’s not a legacy anyone wants to leave.
Therefore, it is essential that everyone writes a will, to stop this kind of thing from happening.
We spend our entire lives building up a collection of possessions and money. We work for it, we strive for it, we sometimes make ourselves ill because of it. So making sure that it is all passed on in the way we want is the least we can do for ourselves and others.
Leaving the writing of a will until retirement can mean it is left too late. It is best to write one much earlier. Some people feel it is the right time to write a will when they have children, or buy a house, or get married. It is something big in their lives that means their death will directly affect others – a child, spouse, or the person who is left to look after the house. And with some people (a growing number) marrying twice or more, making a will becomes even more important. In order for children from all relationships to gain an equal share of the estate, a will has to be written, otherwise the intestacy rules could preclude some from what they are entitled to. Equally, if you are still legally married buy separated, and have moved on to a new relationship, it would, with no will, be your spouse who would inherit, even if you didn’t want them to.
Many people don’t write a will because they believe they have nothing to leave after they die. With fewer people owning their own house, that consideration isn’t thought of. But it’s not just about money and property. Finances don’t necessarily come into it, and anyway, the value of an estate could be much higher than anyone realises due to various bank accounts and other assets that haven’t been thought of in a little while.
Legacy letters, otherwise known as ‘ethical wills’ have been around for a long time. 3,500 years, if estimates are correct. And it’s quite incredible that so few people have heard of this interesting and heart felt way of letting loved ones know exactly what is expected of them, or exactly how they are thought of, after someone has passed away.
The term ‘ethical will’ is a little misleading; it’s not a will in the sense of it being a legal document that will distribute your earthly material possessions to friends and family once you have passed away. That’s why ‘legacy letter’ makes more sense as a title. But whatever you call it, it is an excellent way to share your values, hopes, dreams for the future, life lessons, advice, and of course your love with anyone whom you wish to read it.
You may have considered writing a legacy letter without even realising what it was you wanted to do. Many people find that when they come to a turning point in their lives – perhaps they have been diagnosed with a terminal illness, maybe they have had children and want those children to know how special they are, or they want to make a big change – they also want to write a legacy letter so that, should anything happen to them, their friends and family will know they were loved.
It’s a way of saying all those things we all want to say but feel slightly strange and embarrassed actually speaking out loud. It can be a cherished and lasting memory for your friends and family.
In medieval times, legacy letters were common practice, and it was usually fathers who wrote them to their sons. They were used to teach lessons that would be useful when the father passed away. These ‘wills’ were, in fact, popular right up until the 18th century, when they were used to ensure that certain beliefs were passed on through the generations. They fell out of favour somewhat after this, but they have never disappeared completely. You may even have written a legacy letter without knowing it!
You can write anything you want in a legacy letter – it doesn’t have to be about passing on beliefs (religious or otherwise), and it’s certainly not restricted to fathers and their sons. Whatever words of wisdom or information you want to write down to be discovered once you have died, you can. What about including a family history or family tree? How about some favourite inspirational quotes? And what about all those things you wanted to say but somehow never found the words for?
The only thing that can’t be included in a legacy letter is anything of a legal nature; you will need a valid and legal will for that as any bequests within a legacy letter are not considered legal.
Man leaves £2.3m legacy to Sidmouth
A generous-hearted millionaire left a fantastic legacy to the town of Sidmouth in Devon, leaving it £2.3m – part of which, he insisted should be spent on creating a "valley of a million bulbs".
This unusual request was granted after investment banker Keith Owen passed away, and last year saw the planting of 178,000 colourful daffodil bulbs by all members of the community, with more to be added as time and resources allow.
Mr Owen, who was 69 when he died, was born near the town and stayed there regularly as a child. His mother continued to live in Sidmouth, with her son returning regularly to the area, to visit her.
In 2007, he was diagnosed with terminal lung cancer and informed that he had only a few months to live. Rather than dwelling on the darker side of living and dealing with cancer, he chose instead to ensure that the town continued to prosper. Mr Owen changed his will at that point, leaving £1.5 million in cash and property worth £800,000 to Sidmouth's civic leaders.
The money is also set to help support individuals living within the area, including the local Scout troop, who are reaping the benefits of having a brand new Scout hut.
This unusual yet fantastic bequest means that Mr Owen will continue to be remembered and honoured within the town he loved so much, for many years to come.
Are there any unusual things you would like to do with your legacy, if you could give away over a million pounds?
London hospice received £250,000 legacy
I read a heartwarming article recently, about how a London hospice received a £250,000 legacy from a gentleman, by way of thanks for the care he received at the end of his life.
Sometimes I think we become hardened to the subject of charitable legacies. We're bombarded with marketing literature, TV advertising and doorstep salespeople, all trying to encourage us to leave a legacy to a particular charity. Of course, there's an additional incentive to do so – provided by the government who has allowed us to use legacies as a means of reducing inheritance tax liability. But rarely do we take the time to understand precisely what that cash injection can do for a charity.
In this instance, Mr Eric Rawson, who died in November 2012 aged 89, left £250,000 in his will to St Luke's Hospice in Kenton.
In March last year, five months after his death, the hospice was presented with the cheque and expressed its delight and gratitude to Mr Rawson.
The hospice's director of fund raising stated that this money will fund an impressive 40% of its Home Care teams, who looked after Mr Rawson in his own home.
Interestingly,the deceased's executor also revealed that by leaving this charitable legacy, Mr Rawson's estate saved almost £200,000 in inheritance tax charges.
What a very fitting and wonderful end to this generous gentleman's life.
Have you thought about leaving a charitable donation as part of your estate planning process? Contact the team at IWC Ltd who will be able to discuss your individual circumstances and highlight the benefits of charitable legacies in more detail.
A government trial has revealed that the percentage of those leaving money to charity in their will, depends on the approach taken by the will writer.
In the trial, 3000 prospective customers were separated into three groups in order to have their will drafted.
In group one, the will writer simply asked if they wanted to donate money to charity in their will. 10.8 percent agreed.
With group two, the will writer emphasised that many people leave charitable donations in their will and asked if there were any particular causes or charities which would interest the person. 15.4 percent agreed.
Charitable donations were not mentioned at all to anyone in group three and as a result, only 4.9 percent asked to leave a charitable legacy.
It was also noted that individuals in group two left a donation of around £6,661 on average, whilst those who agreed in group three left around £3000.
It seems therefore that the will writer has a large part to play in the success of charitable legacies. This is supported by an earlier study which indicated that 35 percent of respondents wanted to leave money to charity in their will but only 7 percent actually did so.