Estate Planning FAQs

A Will is a legal document that allows you to make decisions about what happens to your money, property and possessions upon your death. If you die without a Will, you die ‘intestate’ — and the people who receive your assets might not be those you’d want to.

A Will can generally be made by any person who’s over the age of 18 and of sound mind.

Someone under the age of 18 can only make a Will if they’re a soldier on active duty or a sailor at sea.

Making a Will gives you peace of mind and enables you to leave your assets to those beneficiaries who you wish to benefit. It can also provide a tax planning opportunity.

If you don’t make a Will and are domiciled in England and Wales, any assets that are held jointly will automatically pass to the survivor. 

The rules of intestacy govern who inherits assets that are held solely or as tenants in common. The order of priority is set out in Section 46 of the Administration of Estates Act 1925. The family members included in the order of intestacy include half-blood relations but not step-relations. 

As of 26 July 2023, a spouse or civil partner would inherit the first £322,000 of assets and all the deceased’s personal possessions, as well as half of the remaining estate with the rest passing to any children at 18. If there are no children, the surviving spouse or civil partner would inherit the entire estate. 

If there are no surviving members of the deceased’s family, the estate will pass to the Crown.

It’s important to note that an unmarried partner has no legal entitlement to anything under the intestacy rules. 

If you die without a Will, your estate will pass in accordance with the rules of intestacy. This means that you can’t choose your beneficiaries. Instead, your estate will pass in the strict order set out in the intestacy rules depending upon which blood relatives you have surviving.

In the event that you have no living relatives, your estate will pass to the Crown. 

The intestacy rules are set out in legislation and explain who is entitled to take out the Grant and who receives the estate if the deceased didn't leave a Will.

There’s no guarantee that all your assets will pass to your desired beneficiaries unless investigations are sought as to how you hold your property, accounts and assets. 

We can advise on the best way to ensure that your assets pass in the way that you want. 

Any assets that you hold as joint tenants with an unmarried partner (such as a bank account or a house held as joint tenants – but not tenants in common) will automatically pass to the surviving partner. However, an unmarried partner has no legal entitlement to anything under the intestacy rules. An unmarried partner who hasn’t been left any provision may have a potential claim under the Inheritance (Provision for Family and Dependents) Act 1975.

It’s advisable to use a solicitor when making a new Will. ‘Will writers’ or ‘DIY Will packs’ are available online and may appear to be more cost-effective alternatives. However, using these options can lead to additional stress, time and costs for your friends and family during the administration of your estate. 

For instance, if the Will is invalid or a clause is unclear, it may cause your gift(s) to fail and result in your gift(s) — or even your entire estate — passing via the intestacy rules. 

If your Will has been poorly drafted, there could be a need for your executor to pay to instruct a barrister to interpret the Will and ensure that the estate is correctly administered. 

Having your Will drafted by a solicitor also ensures that you can make the right decisions about your estate by properly considering your financial circumstances and having any relevant tax planning options made clear to you.

In England and Wales, you have the legal right to leave your estate to whoever you wish in your Will. You can therefore choose to exclude certain people from your Will. However, there may be people who are entitled to challenge your failure to make reasonable financial provision for them under the Inheritance (Provision for Family and Dependents) Act 1975. 

While there’s nothing you can do to prevent your Will from being challenged after your death, there are things that you can do to help limit the chances of the challenge being successful. 

Minors can be named in a Will to receive a gift. However, those under the age of 18 will be unable to receive the gift immediately. It will be held by the executors of the Will as trustees until the child reaches their 18th birthday (or a later age if the Will specifies).

Yes, you can change your Will by either making a new one or amending it via a codicil. 

Once your Will has been validly signed and witnessed, changes can’t be made by, for example, simply crossing out clauses. It’s always advisable to amend your Will officially to ensure that the changes are legally valid and take expert legal advice before doing so.

It’s advisable to review your Will every two to five years or after any major change in your life. This will ensure that your Will continues to reflect your wishes and that no changes in the law have impacted it. 

Such life changes may include having a child, moving house, marriage or divorce, separating from a partner, the death of a beneficiary or a named executor passing away or being unable to act. 

Other circumstances that could trigger a review of your Will include changes to your financial situation or family dynamics. 

To cancel your Will, the easiest option is to create a new one that states your revised wishes and includes a revocation clause to revoke the previous Will. 

Alternatively, if you wish to cancel the Will, the document must be destroyed by you or someone under your specific instruction. The document itself must be destroyed in your presence. If a Will is known to have been in your possession and can’t be found after your death, it will be presumed that you destroyed it during your lifetime, so it’s always best to store your Will with a solicitor. 

Getting married or entering into a civil partnership automatically revokes any existing Will unless it was made specifically in contemplation of the marriage or civil partnership taking place. 

The act of divorce may not revoke the entire Will but will revoke any reference to your ex-spouse or ex-civil partner — so if you have ongoing financial obligations towards your former spouse, this needs careful planning.

A codicil is a legal document that acts as a supplement to your latest Will. It either adds, removes or changes something in your current Will without you needing to make a new one. 

Codicils are often used to make simple changes to your Will, such as altering the appointed executors or adding a gift. Any significant changes would warrant making a new Will entirely.

You can choose to leave gifts of any digital assets in your Will. This works in the same way as leaving cash or specific item legacies. However, it’s important to leave instructions on how your digital assets can be accessed and maintain an up-to-date inventory (particularly where cryptocurrencies are concerned). 

Outlining how to access your digital accounts and electronic devices can be important to ensure that any sentimental digital items (such as photographs) aren’t lost simply because the executors can’t access your accounts. Not all social media platforms recognise the authority of executors, so you may need to nominate someone to take over your profile(s) after your death.

To make a valid Will, a testator — the person who makes a Will — must have mental capacity. This is tested by satisfying certain requirements.

The person making a Will must:

• understand the nature of making a Will and its effect
• understand the extent of the property that they’re disposing
• be able to comprehend and appreciate any potential claims against their assets
• not suffer from any disorder of the mind that affects their decision-making.

The level of understanding required by the test varies according to the complexity of the Will, the testator’s assets and the claims upon the testator.

An executor is an individual appointed in a Will to administer the deceased person’s estate, which comprises all their property and finances. 

The job of an executor can be onerous — particularly where large and complex estates are concerned. Appointing a professional executor (such as a solicitor) will remove this burden and in turn provide you with time to grieve and come to terms with the loss of a loved one.

Yes, an executor can also be a beneficiary in your Will. This is a common approach, particularly when leaving assets to spouses, partners or children. However, some people choose to appoint someone who has no beneficial entitlement in their Will, such as a friend, relative or professional.

If you have children who are under the age of 18, you should appoint guardians to care for their welfare in the event of your death. Any parent with parental responsibility for their child may appoint one or more individuals to be the child’s guardian(s). However, if someone with parental responsibility survives you, you can’t override their parental responsibility. 

A guardian appointment must be made in writing. While a Will isn’t the only way in which you can appoint a guardian, it’s often the most convenient. If you don’t appoint a guardian and there’s nobody else with parental responsibility, the court may appoint guardians for you. This might not be the person(s) that you would have chosen.

A Lasting Power of Attorney is a legal document that allows you to appoint someone you trust to make decisions about your health, welfare, property and finances on your behalf, especially if you become unable to make decisions for yourself due to mental incapacity.

If you don’t make a Lasting Power of Attorney and you lose mental capacity, your loved ones must apply to the Court of Protection for a Deputyship Order. This can be time consuming and costly because nobody automatically has the power to manage your affairs — not even your spouse.

Any person who’s 18 years or older and has mental capacity can create a Lasting Power of Attorney.

For a property and finance Lasting Power of Attorney, an attorney can pay the donor’s bills, sell or deal with their property or investments and operate their bank account. The attorney can use the LPA while the donor still has capacity unless the donor specifies otherwise in the LPA — although, in this circumstance, the donor still makes all the decisions. Once the donor has lost capacity, the attorney can make decisions for the donor. All decisions must be made in the donor’s best interests.

For a health and welfare Lasting Power of Attorney, an attorney can make decisions about the donor’s diet, where they live, how the donor spends their time and medical treatment (unless the donor specifies otherwise in the LPA). If granted the authority, they can also make decisions about life-sustaining treatment. A health and welfare LPA can only be used where the donor has lost capacity. All decisions must be made in the donor’s best interests.

You can limit the power that you give to your attorney by providing specific instructions in your Lasting Power of Attorney. This may include how you’d like decisions to be made. For a health and welfare attorney, the LPA can’t be used until the donor loses mental capacity. Similarly, the donor can specify whether they want their property and finance LPA restricted until they lose their capacity or that their attorney can act without restriction while they still have capacity. 

You can appoint anyone as your attorney so long as they’re over the age of 18 and have mental capacity. 

Many couples appoint their partner or spouse as their attorney and if you have children, you could appoint them too — either as your main or replacement attorneys. 

If your affairs are particularly complex (especially when it comes to your finances), you might wish to appoint a professional attorney such as a solicitor. This can be done either in combination with your family members or friends if you wish. 

It would be fairly unusual for you to appoint a professional attorney for a health and welfare LPA.

If you have any concerns about someone failing to act in your best interests or lacking the right attitude or skills to take on what can be an onerous role, you should probably not appoint that person.

In the UK, there are two main types of Lasting Power of Attorney — one for health and welfare decisions and another for property and financial affairs. 

You can choose to either create one or both types of LPA, depending on your needs.

Enduring Powers of Attorney are legal documents that allow you to appoint someone you trust to make decisions on your behalf for matters concerning property and finance only.

EPAs that were made and signed before 1 October 2007 can still be used today.

Mental capacity concerns your ability to make a decision — whether that affects your daily life or more significant decisions such as whether to undergo a surgical procedure, buy a house or make an investment. 

The Mental Capacity Act states that an individual is unable to make a decision if they can’t understand the relevant information, retain information and use or weigh-up that information as part of the decision-making process. 

If mental capacity is uncertain, it may be necessary to seek professional medical advice in relation to a capacity assessment. Just because someone makes an unwise decision, it doesn’t mean that they lack mental capacity.

Life sustaining treatment is any treatment that a doctor deems necessary to keep the donor alive. This could be anything from an operation to giving a course of antibiotics. A donor must decide whether or not to give their attorneys the authority to give or refuse consent to life-sustaining treatment on their behalf. It should be noted that the power to consent to or refuse treatment is the same as the donor would have had themselves with the capacity to make decisions. It isn’t a power to force treatment to be given.

Anyone (including health and welfare attorneys) who assists with suicide or attempted suicide could potentially be charged under the Suicide Act 1961. 

A Lasting Power of Attorney that includes instructions to attorneys to carry out unlawful acts such as assisting in suicide (whether within or outside of the UK) would be severed by the Office of the Public Guardian when the LPA is registered. 

An Advance Decision (sometimes known as a ‘Living Will’) is a legal document that enables an individual to express the terms on which they refuse medical or surgical treatment if they lack the mental capacity to make that decision themselves or are unable to communicate that decision (for example, if they’re unconscious). Most often, the individual will consent to receiving hydration, being fed and receiving pain-relieving treatment.

This is a complex area of law. A Lasting Power of Attorney for property and finance allows an attorney to exercise rights and make decisions in relation to an individual’s property. An attorney should be able to deal with the donor’s sole trader business but whether they can deal with the donor’s interest in a partnership may depend on the terms of the partnership. 

While an attorney can exercise the voting rights of a shareholder, they generally can’t exercise the functions of a director. There are circumstances where an attorney could exercise director functions, though these are prescribed through the Companies Act — not via an LPA. It’s essential to take expert legal advice on this area, particularly for sole shareholder or sole director businesses. 

It’s possible to have more than one LPA in existence at the same time. As such, a donor can create an LPA that appoints different attorneys to deal with their business interests than those they appoint to deal with their personal affairs. 

Inheritance tax (IHT) is a tax payable on a person’s estate (their money, property and other assets) when they die. Lifetime IHT charges may arise if a person puts assets into a trust above a certain value.

Inheritance tax isn’t payable when you pass your estate to a husband, wife or civil partner, or to charity, when you die. Otherwise, IHT is only payable when your estate (including the value of your undrawn pension) is worth more than £325,000. There is an additional allowance of up to £175,000 if you leave your home to your children or grandchildren (if you have them). The allowances can be transferred between spouses and civil partners. This means that on the death of the second partner there could be a total tax-free allowance of £1m. The standard IHT rate is 40% and only charged on the part of your estate that’s above the combined allowances.

Inheritance tax is payable on the net value of a person’s estate. Their executor — the person who deals with the estate — will pay it from the assets within the estate. Any inheritance tax due on your pension will be paid by the pension provider directly to HMRC.

IHT isn’t usually charged on the beneficiaries of an estate. People who have received a gift during the lifetime of the person who has died may have to pay IHT but only if the person who makes the gift gives away more than £325,000 and dies within seven years of making the gift.

Assets that you gift to your spouse — whether on death or in your lifetime — will pass free of inheritance tax.

Thanks to Business Relief, inheritance tax on business assets can be reduced or even eliminated under certain conditions. 

The business must be a trading business, not an investment company. A similar relief called Agricultural Relief can apply to farm property. 

It’s important to plan ahead to ensure that your business assets qualify for business relief and the relief isn’t wasted when considering business succession. Recent changes to the taxation of business interests will mean many now having to find tax that wouldn’t previously.

Planning for inheritance tax can involve several strategies to legally minimise the amount of tax due on your estate, including having an up-to-date Will, making use of allowances and exemptions, lifetime gifting and trusts. The specifics of IHT can be complex, and vary depending on personal circumstances, so it’s strongly advisable to seek professional advice.

Our team contains STEP (Society of Trust and Estate Practitioners) qualified specialists in dealing with inheritance tax who can assist with calculating your potential IHT liability and advise on ways to mitigate it. We help executors with calculating IHT when someone has died, as well as calculating IHT on trusts.

The rules are the same for civil partners as for married couples, so you don’t have to pay inheritance tax (IHT) when you leave assets to each other on death or in your lifetime.

Lifetime gifts to individuals are treated as potentially exempt transfers (PETs), which means that there’s no immediate charge to inheritance tax when the gift is made. 

PETs are ‘potentially’ exempt because if the donor (the person making the gift or deemed to be making the gift) survives for seven years from the date of the gift, the gift becomes fully exempt from IHT. 

If the donor fails to survive for seven years, the gift becomes chargeable and will use up (all or part of) the donor's nil rate band (currently £325,000 or up to £650,000 if they’re a surviving spouse or civil partner). 

For any amount over the nil rate band, the longer the donor survives after making the gift (subject to surviving at least three years), the lower the IHT. This relief is called ‘taper relief’. 

It should be noted (and this is commonly misunderstood) that taper relief only reduces the amount of tax payable on a failed PET. It doesn’t reduce the ‘value’ of the PET itself.

There’s no limit on the amount that you can gift to others during your lifetime. However, it should be borne in mind that a person’s available nil rate band of £325,000 will be used up by any such gift. Therefore, if you make a gift of £1m and die within seven years of making that gift, £675,000 will be liable to IHT at 40% and will be payable by the recipient of the gift. This rate will be ‘tapered’ if you survive for more than three years. 

Generally, when assessing your IHT exposure after you’ve died, your executors will look at all the gifts you’ve made in the seven years prior to your death.

While you’re able to gift all or part of your home to your children, there are some risks that you should bear in mind.

Gifting your property to your children means that you’re in effect relinquishing legal ownership. This can put you in a vulnerable position — particularly if you intend to stay at the property — if your children decide to exercise their legal right to sell the property and evict you. 

If your child is bankrupt or going through a divorce, the property may be used as part of a settlement or to pay off debts.

Additionally, if you gift all or part of your home but continue to live in it, this may fall within the ‘Gift with a Reservation of Benefit’ (GROB) regime, which can have serious tax consequences on your death.

If you give a property away and continue to enjoy the benefit of it, although you’re not the legal owner and may not enjoy legal rights in relation to it, HMRC doesn’t consider that you’ve fully given the property away for inheritance tax (IHT) purposes. 

In fact, on your death HMRC will treat the value of the item gifted as though it’s part of your estate, even though you don’t own it. 

For example, if you gift your house to your children with the view that it’ll reduce the size of your estate for IHT purposes but continue to live in the house, even though you don’t own it the value of the house will be counted towards your estate for IHT and your estate could pay up to 40% tax on this. 

While there are ways in which this risk can be avoided and HMRC does have some leeway and exceptions, given the potential risk you should seek expert legal advice before arranging such a gift.

Gifts to individuals out of excess income generally have no immediate tax consequences.

If a gift is made out of spare income and the following conditions are satisfied, the gifts shouldn’t be taken into account for inheritance tax purposes if you die within seven years.

While the gifts must be made out of available income, you must still be left with enough income to maintain your usual standard of living. HMRC’s assessment of ‘your usual standard of living’ is specific to you (not a universal standard).

The gift must be ‘normal’, meaning that it’s habitual or typical for the specific donor (the person making the gift). This will usually be apparent where there’s a pattern of gift-giving, though this isn’t always required. However, the requirement for gifts to be typical does rule out gifts for a specific purpose (such as a wedding gift). 

In most cases, there should be a discernible pattern of gift-giving over a reasonable span of time (HMRC prefers for this to be around three to four years).

HMRC will also consider a range of factors in assessing the above conditions, including the frequency of gifts, amount of each gift (and how they compare to each other), nature of the gifts, who the recipient is and what the reasons for the gifts are.

If a lifetime gift becomes liable to inheritance tax because the donor (the person making the gift or deemed to be making the gift) dies within seven years of making the gift, the IHT payable will be the liability of the recipient of that gift — though this will depend on the terms of the deceased’s Will. If you’re considering making gifts and are worried about this, you may wish you to review and amend your Will. 

The Residence Nil Rate Band is an additional inheritance tax-free allowance of up to £175,000 introduced in 2017. It applies to estates where the death occurred after 6 April 2017 and the deceased owned an interest in a property that’s ‘closely inherited’ by a lineal descendant. 

The definition of a lineal descendant includes children, grandchildren, great-grandchildren, a spouse of a lineal descendant and step children. The definition doesn’t include other descendants such as nieces and nephews or the children of an unmarried cohabitee.

If the value of an estate exceeds £2m, a taper is applied and the relief is reduced by £1 for every £2 that the value exceeds £2m. So, by the time a person’s individual estate exceeds £2.35m, there’ll be no RNRB left to apply. 

Married couples whose combined estates exceed £2m but whose individual estates don’t exceed £2m may be able to take steps to ensure that one RNRB can be claimed on the first spouse’s death, which could provide a tax saving of up to £70,000. 

When someone dies and leaves everything to their spouse, the value of their estate is exempt from inheritance tax because of the spousal exemption, so their Residence Nil Rate Band goes unused. 

Much like the main nil rate band, the executors of widows and widowers can claim any unused RNRB from their deceased spouse or civil partner, even if the first death occurred prior to 6 April 2017. It’s important to note that the RNRB can only be transferred between spouses and civil partners, not cohabitees. 

To qualify for the Residence Nil Rate Band, you must own or have owned an interest in an eligible property. An eligible property isn’t limited to bricks and mortar and can include dwellings such a static caravan or even a houseboat if it can be demonstrated that this was in fact your home. To do this, you must have lived in that property at some point during your lifetime. 

The Residence Nil Rate Band isn’t limited to the property that you live in at the time when you die. However, for the property to qualify for relief, you must have lived in it at some point during your lifetime. A property that you own but have never lived in — such as a buy-to-let property — isn’t a residence and is therefore ineligible for the RNRB.

Where a property has been sold prior to someone’s death and either a new property hasn’t been purchased because they have moved into permanent residential care or a smaller, less valuable property has been purchased in its place, it may be possible to claim a downsizing addition to make up for the amount of Residence Nil Rate Band that has been lost.

The downsizing addition is available where:

• the person sold, gave away or downsized to a less valuable home on or after 8 July 2015
• the former home would have qualified for the RNRB if the person had kept it until they died
• the person’s direct descendants inherit at least some of the estate.