When Should I Update My Will?

This is such a common question, either when considering a Will for the first time, or if you have an existing Will which you are concerned may be out of date. In short, you may ask: When Should I Update My Will? The answer really is “it depends”.

In theory, a correctly drafted Will could be suitable for the rest of your life. Unless something has happened to revoke a Will, it is deemed to walk with you throughout your life, fixing on the assets you own at the date of your death. There are however several things which would give you a reason to bring your Will under review:

1. Divorce or marriage;
2. Change or disposal of assets named in the Will;
3. Change in circumstances for a beneficiary; or
4. Tax

Divorce or Marriage

While marriage can be a very romantic event, in the eyes of the law it creates a contract between two people. This is reflected in the fact that spouses have greater rights than anyone else to an estate under the Inheritance (Provision for Family and Dependants) Act 1975. As such, it is important to check that your Will takes into account all the people who would ordinarily be expected to inherit your estate and that you understand any potential claims that could arise.  This is particularly important for second marriages, where you may each have your own families.

Additionally, any Will executed prior to the marriage would be revoked by subsequent nuptials, leaving your estate to pass under the intestacy rules. Remember to ask yourself, When Should I Update My Will? whenever there are major changes in your personal circumstances.

What does Intestacy mean?

‘Intestacy’ is where someone has died without a Will. This is because spouses have the first (but not necessarily only) call on an estate. The exception to this are Wills created in contemplation of marriage; and not just any marriage! The clause must specifically refer to the person you actually married.

Divorce has a slightly more palatable effect on Wills, as the document is read as though the former spouse has pre-deceased the testator. The ‘Testator’ is the Will-maker. Note however that separation alone does not have this effect, and it can lead to huge uncertainties or unintended consequences where the former spouse was an executor and/or beneficiary of the estate.

Change in Assets

Most professionally drafted Wills are written to capture all estate assets, and it is relatively rare to single out assets and specifically gift them under your Will. That being said, significant assets such as a property or businesses are sometimes gifted specifically for a variety of reasons, and it is very common to see homemade Wills which try to list and give away every asset that the testator owned at the date the Will was written.

If these assets change form (e.g. business sale or merger, sale of a property, closure of accounts or sale of investments) then it is important to review the Will to ensure that assets still pass as intended. Professionally drafted Wills normally try to cover off scenarios under which a property is sold (to give the proceeds of sale or the replacement property instead), or a change in corporate structure, however it will always be worth undertaking a Will review, even if you believe this to be the case. In summary, When Should I Update My Will? Key life changes around assets often mean it is time for a review.

Change in Beneficiary Circumstances

A ‘Beneficiary’ is someone who is given something in a Will. If a beneficiary under your Will goes through a big life change (marriage, divorce, children) then it is worth checking whether your Will remains appropriate. It is sometimes possible to structure your Will to give assets in a protected manner, to provide for minor grandchildren (if you so wish) or to ensure that assets remain within your family on a divorce, usually through the use of trusts. A ‘trust’ is any arrangement whereby one person (a trustee) holds assets on behalf and for he benefit of someone else (the trust beneficiary). This does need a caveat, as family courts can and do treat trust beneficiaries as owning or having a right to assets, even where their entitlement is discretionary and subject to the approval of trustees. There are however some remaining options when looking to protect family wealth.

Another prompt for reviewing your Will could be if any beneficiary is or becomes disabled and therefore entitled to means tested benefits. If you would still wish to provide for this person, then your Will can be drafted to make funds available to them as and when required. Once again, this is through the use of a trust. A beneficiary cannot put their inheritance into trust themselves, and so this protection would not be available after your death if not included in your Will, as it would be treated as a deliberate deprivation of assets by that beneficiary. For this reason your beneficiary’s circumstances is an important consideration when preparing your Will. Similarly, asset protection is possible if a beneficiary is profligate and at risk of bankruptcy. Also, asking yourself When Should I Update My Will? is useful to ensure your estate planning reflects any such changes.

Tax

Lastly, the inheritance tax rules feel as though they are constantly changing. The tax treatment of your estate, and whether or not there are any ways to mitigate this, can be a key concern, particularly if your estate includes business or agricultural assets, property passing to anyone who is not a spouse, child or grandchild, if you are cohabiting (regardless of the value of your estate) or if, as a married couple your estate assets total more than £1 million (and definitely if this exceeds £2 million).

In each of these circumstances it would be worth reviewing your estate’s tax position and seeing if steps can be taken to reduce the potential inheritance tax liability, either through your Will or using lifetime inheritance tax planning.

If you would like to arrange a Will review, or discuss any of the other points raised then please contact us on 0333 344 6302 to arrange an initial meeting. In conclusion, it is always wise to consider whether or not you should update your Will whenever there are significant changes in your life or financial situation.