This factsheet is about making a will - a document that ensures your assets are distributed among beneficiaries according to your wishes after your death. We give you advice on how to avoid or resolve problems with your will. This factsheet is intended to help you understand the legal background of our advice. It also contains suggestions for practical steps you can take to save time and money.
Dying Without a Will:
Making a Will is the best way of ensuring that your assets will be dealt with as you want after your death. If you die without a Will, how your estate is distributed is governed by a mixture of Scots Common Law and a Statute of 1964 and will not necessarily pass to those people you would choose yourself. Additionally if you do not have a Will it is necessary to petition the Court to have Executors appointed involving additional costs and delay. There will also be no trust for beneficiaries such as young children if you die without a Will and they will inherit at 16.
In your Will you will appoint people to look after your assets, pay any debts due by you, and distribute your estate in accordance with your wishes after your death. You will need at least one Executor and it is preferable to have more than one. Your spouse, children over 18, a friend, or your solicitor maybe appointed. It is your Executors’ responsibility to obtain Confirmation (it is called Probate in England) and it is their job to distribute your assets according to the terms of your Will, which may involve selling or transferring investments and other property. A beneficiary under your Will may also act as an Executor in Scotland.
For reasons of public policy Scots Law has developed the concept of legal rights. If no provision is made in a Will for a surviving spouse, then the surviving spouse can claim legal rights in the deceased spouse’s moveable estate (essentially all assets other than land and buildings). If the deceased spouse has children (or grandchildren of a predeceasing child) then the surviving spouse may claim one third of the net moveable estate. If there are no children then the surviving spouse may claim one half of the net moveable estate. This rule can pose particular problems where a married couple are in the process of being divorced as this right continues until Decree of Divorce is granted. However, if a divorcing couple enter into a Separation Agreement prior to Divorce, the right to claim legal rights may be discharged in that Agreement.
Similarly, if no provision is made in a Will for children, and the deceased dies with a surviving spouse, the children can claim their legal right of legitim which, as indicated, is a right to one third of the net moveable estate. So, if there are two surviving children, each child could claim one sixth share of the net moveable estate. If there is no surviving spouse then one half of the net moveable estate may be claimed by the children. There are ways of minimising the consequences of legal rights, if wished.
Wills are for Married Couples:
Under Scots Law, a surviving spouse does not automatically inherit the whole of a deceased spouse’s assets. A Will is the best way of ensuring ‘that the maximum can pass to a surviving spouse, subject to the legal rights of any children as mentioned above,
Wills are for Children:
A Will is a sound method of ensuring effective financial provision is made for children. lmportantly, a guardian can be appointed to be responsible for the care and welfare of children until they reach 16.
If you do not wish to leave your assets outright to a beneficiary, a trust established in the Will is usually the best vehicle for achieving this. It will often make sense to set up a trust in a Will for the benefit of young children and the Morton Fraser team can guide you as to which is the most appropriate type of trust to use. An accumulation and maintenance settlement in favour of children is particularly tax efficient and where the trust is in favour of a surviving spouse both “liferent” trusts and “discretionary” trusts should be considered,
A Will is often used as the vehicle for making gifts to charities. There are tax advantages to making such donations and if you decide to leave a bequest to a charity it is easy to give clear instructions so that your wish is met,
With effect from 6 April 2007 there is usually, no Inheritance Tax (IHT) payable on your estate if at death your assets do not exceed £325,000 provided you have not made gifts over £3,000 in each or the seven years prior to death. If you make gifts to individuals and survive for seven years or more then there can be no liability to Inheritance Tax on such gifts. In working out the level of your assets, it is important to take account of any life assurance policies and death in service benefits under a pension scheme.
If you are a widow or widower and you inherited the whole of your spouses estate, then on your death the first £650,000 of your estate is free of IHT. This rule applies equally to Civil Partners.
A Will can be used not only to bequeath one’s estate but also by the use of more sophisticated Will Trusts it is possible to achieve considerable savings in IHT.
It is wrong to look at Will making in isolation from your financial affairs. Making a Will is an excellent time to conduct an overall financial review covering matters such as:- powers of attorney, long term care planning, estate planning, life cover, capital investment, regular savings, income protection, critical illness cover and mortgage planning. The Morton Fraser team will he happy to help in all of these areas.
Changes in your Circumstances:
It is important to appreciate that under Scots Law a Will is not revoked by your marriage (even remarriage) or divorce. Moreover, if your Will makes no provision for