Inheritance tax and wills

As Benjamin Franklin famously said, “In this world nothing can be said to be certain, except death and taxes,”¹ so it pays to plan for both. We seek expert advice on wills from Greg Fletcher of Cripps.

“When it comes to wills,” says Greg Fletcher, Senior Associate, at legal firm Cripps. “The most important points are to have one, ensure it is fit for purpose and keep it under regular review.”

Cripps is a legal firm with expertise in family dispute resolution, as well as estate planning, probate and trusts. Like Holden & Partners, they are B Corp certified,² committed to being a force for good.

Greg understands the issues that can arise from missing, outdated or unclear wills and is experienced in working with clients so that their wishes can be carried out after death.

Being prepared not only helps your family to know what to do, it can also mean you pass on your estate in a tax-efficient way. Following the changes to inheritance tax (IHT) rules, it is more important than ever to have a strategy in place.

We asked Greg to share his expertise on wills and inheritance – including how you can maximise the amount you pass on, as well as avoiding the major issues that can lead to legal disputes.

Contents

• When should you write a will?
• What happens if you die without a will?
• How can a will help me pass on more to my beneficiaries?
• How can I reduce the risk of disputes?
• How do you know if your will is fit for purpose?
• When should you write a will?
• What else should I think about?
• Letters of wishes
• Lasting Power of Attorney (LPA)

When should you write a will?

Greg jokes that everyone should walk into a lawyer’s office on their 18th birthday to prepare a will… but acknowledges that the purchase of a property is often the first time that people hold a substantial asset and find the focus to arrange a first will.

He explains about the ‘circle of life’ – the way your will needs to evolve over time. The process begins when, usually, your affairs are most simple and your wealth lowest, then changes as you build a family and assets. Life’s complications can come in, like new assets, divorce, remarriage and blended families. This is when your will might be at its most complex. Then, Greg finds that with retirement and, hopefully, sensible adult children, things become simpler again.

While children are teenagers or young adults, it can be worrying to imagine them directly inheriting a large sum of money. This is where trusts can be useful – either to defer the age of entitlement or control the flow of inheritance. People are often put off trusts due to fears about costs, but trusts written into a will only become active after your death, meaning there is no cost until then.

What happens if you die without a will?

Making a will is the only way to ensure your estate goes to the people and causes you choose. However, recent research by the Money and Pensions Service reveals that over half of adults age 50-64 do not have a will in place, and 22% of those aged 65 and over. ³

If you die without a will, the rules of intestacy determine what happens to your assets. This could result in the surviving spouse or civil partner not inheriting the family home, unmarried partners having no inheritance, and complicated processes that result in higher legal fees.

It can also increase the IHT liability, for example if the rules result in assets being passed upwards to a parent, rather than sideways to siblings, they then risk a second hit of tax when the parent dies.

The sad death of One Direction singer, Liam Payne, in 2024, raised awareness of the need for a will. He didn’t have one in place and left a sum of £24 million. ⁴ The rules of intestacy state that his wealth will pass to his eight-year-old son.

How can a will help me pass on more to my beneficiaries?

There are important reliefs and allowances to consider when reviewing your estate and potential IHT exposure. Having a will ensures you can control the devolution of your estate in a tax-efficient way.

The changes announced in Autumn 2024 Budget mean that IHT allowances will be kept at current levels until 2030. Unspent pensions will now be included as part of a person’s estate from April 2027. These changes will increase the potential IHT liability for many people, increasing the importance of having a will.

Business relief (BR) and agricultural relief can also form part of your strategy, but the Autumn 2024 Budget announced substantial changes to these reliefs leading to many people reviewing their tax planning strategies. For more information about business relief, look here.

A will is a vital part of your estate management planning. Taking full advice on how to structure your will considering the availability of IHT reliefs and exemptions can help ensure your beneficiaries ultimately receive more from your estate.

How can I reduce the risk of disputes?

The truth is that whatever the outcome, dispute and litigation is best avoided for the wellbeing and finances of all involved.

There is a presumption in UK law that a will is valid. However, as Cripps’ probate, estate and trust solicitors know, there are many cases of disputes and claims that involve either defending or challenging a will.

This can arise in the following situations:

• inheritance claims under the Inheritance Act, which allows certain individuals to claim financial provision from a deceased person’s estate if they believe they have not been adequately provided for.
• the interpretation of a will or a trust.
• disagreements between executors, trustees and beneficiaries.

Greg shared a case study of a family where the mother had appointed her three children as executors, however she had overlooked the fact that one was living abroad and the other two wouldn’t speak to each other. This resulted in a lengthy, complex and costly process that could have been avoided with different executors.

Whilst disputes do arise, Cripps works with trust, tact and diplomacy, and often finds it possible to resolve issues quickly by finding mutually agreeable outcomes.

How do you know if your will is fit for purpose?

The first piece of advice is to remember that creating a will is a formal process. Advice should be sought to ensure the document is legally binding.
Greg cautions against the use of DIY will packs, even if your circumstances are very simple, “Working with an advisor can head off trouble, because they’ll have the wider picture in mind and ask the right questions, for example by helping you work out who the best executors of your will would be.

Your sister who lives in Australia might not find it easy to administer what can be an onerous task.”

It’s important to use a professional advisor, ideally a lawyer who specialise in wills and probate.

What else should I think about?

Two additional areas to consider are letters of wishes, to support your will, and Lasting Power of Attorney (LPA), in case of lost capacity during your lifetime.

Letters of wishes

A letter of wishes accompanies your will (or trusts set up within your will). It’s not legally binding, but it can be a powerful way of communicating your requests to executors and loved ones. Your letter can be updated easily, without a formal process. It can also be helpful to share ahead of your death, to manage expectations and ensure everyone knows your wishes.

Lasting Power of Attorney (LPA)

Like a will, everyone should have an LPA in place. It’s a legal document that lets you appoint one or more people to help you make decisions, or to make decisions on your behalf, should you be unable to.

The first type of LPA relates to your health and welfare, and the second to your property and financial affairs. It gives your attorney/s the authority to manage your bank accounts, buy or sell property, and deal with pensions, investments and benefits. In fact, even paying utility bills can prove complicated without it.

At Holden & Partners, we are experienced in advising and helping families put a plan in place to manage their financial affairs. We work with legal specialists, such as Cripps, who handle wills and LPAs. Preparing this way ensures your finances and wishes are looked after, and you are ready for whatever the future brings.

Please do get in touch to discuss any aspect of your financial planning.

1. Benjamin Franklin’s last great quote and the Constitution | Constitution Center
2. B Corp Certification demonstrates a company’s entire social and environmental impact.
3. Over half of UK adults don’t have a will – what to do if your loved one dies without one | Money and Pensions Service
4. Liam Payne left £24m fortune without making a will – BBC News