Over half of adults in the UK are neglecting the need to make a will to ensure efficient inheritance tax planning.
A new poll for the Barnardo’s, the children’s charity, has this week revealed that while 58% of the general population have no will, almost three-quarters (74%) of cohabiting couples have no will in place.
Barnardo’s indicated that a third of those who had neglected to write a will said they had simply “never got around to it”.
Writing a will is crucial for good inheritance planning. It will ensure a smooth inheritance process for your family. If you have no will in place, you have made no formal plan for dividing up your estate, when you die.
Having no will in place could leave large portions of your wealth subject to inheritance tax, which is paid at 40% on any funds above the tax threshold (currently £325,000 per person or £650,000 for a married couple).
While this tax threshold, or nil rate band, for inheritance tax may sound generous, it is important to remember that it is levied not only on your property, but on your entire estate, which includes payouts from insurance policies, and other savings and investments as well. Consulting a financial adviser for qualifed inheritance tax advice is an important element of inheritance planning, and essential to avoid inheritance tax.
A will can also be used to nominate preferred guardians for children, if they are orphaned before they turn 18.
The Barnardo’s research revealed that 25% of over-55s surveyed believed that all their wealth would pass to their family, even with no will in place. However, if you die without a will, specific rules apply to dividing your wealth, and a surviving spouse is not automatically entitled to inherit everything.
In the case of a married couple in England and Wales, the surviving spouse receives only the first £125,000 from your estate, plus a half of the remainder, with the other half of the remainder passing to the children when they turn 18.
*Source: Barnardo’s survey of 2,221 UK adults, March/April 2010
