When Should I Update My Will?
Updating your Will is often left longer than many realise as the years tick by thinking there is not much that needs changing or that you will get around to it one day. For many people, the preparation of a Will is a daunting prospect meaning it is quite usual for clients to come back without having updated a Will for twenty years or more. As advisors, we would always encourage people to review their Will on a regular basis: at least every three, five, or ten years. It may be that there is not a significant amount of change,
When should I review my Will?
There are a number of developments that may happen at any time during your life, which give you reasons to consider updating to your Will.
- Getting married or entering into a registered civil partnership
- The death of an executor or beneficiary
- The incapacity of an executor or beneficiary
- A potential new beneficiary being born or reaching a specified age
- The marriage or divorce of a beneficiary
- A beneficiary becoming bankrupt or finding themselves in a difficult financial position
- A change in the number of dependents who need support under the terms of the Will
- Any other substantial change in your circumstances.
Whilst many of these might seem obvious, it is easy to overlook the need to update your Will, particularly given how busy life can be.
Changes of Law and updating your Will
The preparation of Wills is still governed by the Wills Act of 1837, with the strict requirements relating to the execution of Wills remaining largely unchanged since that time. However, the areas of law that may change, leading to the need to review a Will, will not be limited to the procedural aspect.
Updating Wills in an evolving society
As society and technology evolves so too does the wording needed to cover the circumstances in which you can find yourself. For example, society’s understanding of how people identify themselves may mean that previous references become out of date. In addition, digital assets are becoming more and more commonly held.
Inheritance Tax and Nil-Rate Band Allowance
Furthermore, changes to legislation relating to taxation, in particular Inheritance Tax, may mean a refresh of your Will is necessary.
Many Wills have been prepared incorporating reference to a Nil-Rate Band discretionary trust. However, if the Will was prepared at the time before the introduction of the transferability of a Nil-Rate Band Allowance, and in certain circumstances where a the person who has died has been widowed previously, what is the effect of that wording and how many Nil-Rate Band allowances are being utilised?
Does the wording used extend to assets that are exempt from Inheritance Tax due to the availability of Business Property Relief or Agricultural Property Relief?
If you are making a gift of the maximum sum that can pass free from Inheritance Tax, has it been worded to include reference to the Residential Nil-Rate Band allowance? Do you want it to include such a proportion?
Updating your Will because of a change of assets
Perhaps the most likely reason for reviewing your Will on a regular basis will be due to the changing size and nature of your estate. In particular, if your Will makes reference to specific assets, which you then cease to own, that should be a trigger to review and update your Will. Alternatively, if you have made specific gifts of items, but their value has changed dramatically since the time the Will was prepared, that too may be a reason to update matters.
A further possibility, which is becoming increasingly common, is for people to acquire assets that are exempt from Inheritance Tax, as part of their tax planning strategy. This may include shares that are listed on the Alternative Investment Market, or specific products or investments that qualify for Business Property Relief or Agricultural Property Relief. If such assets are required then it will be important to review the terms of the Will, partly to make sure that it does not cause any adverse consequences, such as a reduction in the availability of the relief, or because it now presents an opportunity for further tax planning.
In summary, given how quickly life can pass by, how rapidly changes can occur, the importance of reviewing and updating your Will on a regular basis should not be underestimated, and it should become a matter of good practice to ensure that everything is up to date.
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Please note the contents of this article are given for information only and must not be relied upon. Legal advice should always be sought in relation to specific circumstances.