Making a will and planning what to leave
When making your will, think about how much you have to leave and who gets what. This guide will help you work out the basics, so you can get started with writing your will.
You should set down the basics of your plan for your money and possessions – your estate – early on, before you visit a solicitor or discuss your will with your family.
Don’t worry, it’s easier than it sounds – just follow this step-by-step process.
You might include:
They include:
Whether you can include your pension will depend on the rules of your pension itself and you’ll need to check.
If you can include your pension, estimating its value might take some thought.
The value will depend on your scheme and when you die. Your first stop should be to read the death benefits advice opens in new window from the Pensions Advisory Service.
If things are more complicated, you’ll probably use a combination. For example:
Mike is married with one son. His wife has a son too, from a previous marriage. He leaves:
If your estate is worth more than this, when you die and it passes to a non-exempt beneficiary, such as a child, or doesn’t qualify for relief as an agricultural or business asset, then Inheritance Tax (currently 40%), will have to be paid on the excess.
The Inheritance Tax threshold can be reduced or eliminated by certain gifts made in the seven years before death.
A new tax free allowance of £125,000 (rising to £175,000 by 2020/21) provides each individual with an additional allowance to be used against their home, provided they leave it to their children or grandchildren and their estate doesn’t exceed £2.35 million.
The allowance can be transferred to a spouse or civil partner if it isn’t used up on the first death.
This means when added to the existing £325,000 individual allowance, a couple will be able to leave £1 million without paying inheritance tax by 2020.
The rules aren’t straightforward. If you think you’re near the limit you need to get more information on how to legally avoid it or minimize the amount – which could save thousands of pounds.
You’ll probably want to get professional advice to help with this.
Many people handle these issues by setting up trusts: this means that what you leave can be managed by people you trust to act in the best interests of your beneficiary.
Either for good or until a time when they can look after themselves.
- Making your will – step by step
- What to do once you’ve made your will
Making your will – step by step
Before you can write a will you need to decide who gets what.You should set down the basics of your plan for your money and possessions – your estate – early on, before you visit a solicitor or discuss your will with your family.
Don’t worry, it’s easier than it sounds – just follow this step-by-step process.
1. Make a list of who you want to benefit from your estate
It’ll probably take you just a few minutes to tick off this step – you can even do it right now.You might include:
- friends
- charities
- your partner or spouse
- children and other family members
2. Write down your assets and roughly what they’re worth
Start with assets that are easiest to value:- savings
- valuable objects, like jewellery or heirlooms
They include:
- your pension
- your business, if you own or part-own one
- stock market investments - shares, bonds & funds
- property – your house, plus any investment properties, land, or even a parking space that you own. Remember to factor in the value of any debts secured against your property.
Whether you can include your pension will depend on the rules of your pension itself and you’ll need to check.
If you can include your pension, estimating its value might take some thought.
The value will depend on your scheme and when you die. Your first stop should be to read the death benefits advice opens in new window from the Pensions Advisory Service.
3. Think about how you want to split your money and property when making your will
There are broadly five types of legacy you can leave.- “I leave £2,000 to my son” – this is called a ‘pecuniary bequest’. It means you leave a fixed sum of money.
- “I leave my jewellery to my daughter” – this is called a ‘specific bequest’. It means you leave a specific item which you own. The way to identify it will be to see what meets that description at the date of death. If there is no jewellery at that time, then the gift will fail.
- “I leave half my estate to my brother” – this is a ‘residuary bequest’. It means you leave a percentage of whatever your estate is worth after any debts, costs, liabilities, legacies and tax have been paid.
- “I leave my share of my house to my wife if she survives me, but if she does not survive me then it will pass to my daughter” – this is a ‘reversionary bequest’ for your daughter. You can specify what happens if the person you leave it to dies.
- “I leave my share of my house to my wife for the rest of her life, and then it will pass to my daughter” – this creates a ‘trust’ over your share of the house. A trust allows you to say who you would like to benefit from your property immediately after your death (e.g. your wife), and then who you would like to benefit from your property (e.g. your daughter) once the first person you have chosen to benefit immediately after your death has died. This type of gift can easily go wrong, so you will need to get legal advice if you want to include a ‘trust’ in your will.
If things are more complicated, you’ll probably use a combination. For example:
Mike is married with one son. His wife has a son too, from a previous marriage. He leaves:
- his share of his home to his wife for the rest of her life
- £1,000 to each of his grandchildren
- his watch to his wife’s son
- anything else in his estate to a charity
- £500 to each grandchild
- half the remaining estate in a trust for her son for the rest of his life, to be split between her daughters on his death, and
- a quarter of the estate each to her daughters, but if any daughter dies before her, that daughter’s children will receive the dead daughter’s quarter share of the estate between them
4. Check if you’ll have to pay Inheritance Tax
The Inheritance Tax threshold is currently £325,000 for an individual, or up to £650,000 for a married couple or a couple in a civil partnership.If your estate is worth more than this, when you die and it passes to a non-exempt beneficiary, such as a child, or doesn’t qualify for relief as an agricultural or business asset, then Inheritance Tax (currently 40%), will have to be paid on the excess.
The Inheritance Tax threshold can be reduced or eliminated by certain gifts made in the seven years before death.
A new tax free allowance of £125,000 (rising to £175,000 by 2020/21) provides each individual with an additional allowance to be used against their home, provided they leave it to their children or grandchildren and their estate doesn’t exceed £2.35 million.
The allowance can be transferred to a spouse or civil partner if it isn’t used up on the first death.
This means when added to the existing £325,000 individual allowance, a couple will be able to leave £1 million without paying inheritance tax by 2020.
The rules aren’t straightforward. If you think you’re near the limit you need to get more information on how to legally avoid it or minimize the amount – which could save thousands of pounds.
You’ll probably want to get professional advice to help with this.
- Will you have to pay Inheritance Tax?
- Top 5 ways to cut your Inheritance Tax
5. Think about protecting your beneficiaries
Sometimes you might want to set some safeguards on your bequest – for example, if you’re leaving something to a child or someone with disabilities or mental health issues.Many people handle these issues by setting up trusts: this means that what you leave can be managed by people you trust to act in the best interests of your beneficiary.
Either for good or until a time when they can look after themselves.
What to do once you’ve made your will
Once you’ve worked through the steps you’ll have a reasonably clear idea about what you want to leave in your will and to whom.You might want to Talk to your family about your choices.
Your next step is to Get your will drawn up.
If your estate is quite simple (e.g. you’re simply leaving everything to your partner), you can probably do it yourself.
The more complex (and larger) your financial affairs, the more sensible it is to take advice from a solicitor.
Drafting of Wills
Anyone older than 16 years old, unless you cannot understand the meaning and effect of a Will.
What is needed to draft your Will?
Thabo wants to make a will
Sign = Signature = Initials = Thumbprint = Mark (X)
If Thabo can’t sign his Will, someone else may sign for him, if:
A codicil is an extra document to change (amend or supplement) your Will. The codicil must comply with the same formalities as that of a Will. When amending a Will, the same witnesses who signed the original Will need not sign the codicil
Who can be a witness?
Anyone older than 14 years old, if they competent to testify in a court of law can be a witness.
It is best if the person nominated as Executor (or his/her spouse) or who is to derive an inheritance (or his or her spouse) does not sign as a witness to the Will. (Having regard to sections 4 and 4A of the Wills Act)
Magdalene can be a witness in Thabo’s Will and receive the house, only if there are 2 other witnesses not getting anything from Thabo’s deceased estate.
Must Thabo amend his will after divorce?
What is needed to draft your Will?
- Name and ID number of the executor of your estate
- Name and ID number of your spouse
- How you are married? (IN Community of Property; OUT of Community of Property with the accrual system or OUT of Community of Property without the accrual system)
- Copy of marriage certificate
- If you are divorced – a copy of your decree of divorce / settlement.
- Full names and ID number of all the children and other persons you want to benefit from your Will
- In the case of minor children (children younger than 18 years old: Names and ID numbers of the guardians of the minor children
- Details of all assets, liabilities and insurance policies etc.
Thabo wants to make a will
Thabo makes a Will where he decides to leave his house to his wife, (Magdalene) after his death. Thabo also decides to leave his car to his grandson, (Sipho). Thabo wants his money to be given to his son (Eric). Thabo has R5 000 in his bank account. BUT Thabo owes ABC Clothing Store R2 500.For Thabo’s Will to be valid, it must:
- Be in writing (handwritten, typed or printed)
- Be signed by Thabo at the end of the Will
- Be signed in the presence of two or more witnesses
- If the Will has more than one page, each page must be signed
Sign = Signature = Initials = Thumbprint = Mark (X)
If Thabo can’t sign his Will, someone else may sign for him, if:
- He tells them to do so
- that person signs the Will in front of Thabo
- that person signs the Will in front of a Commissioner of Oaths who must make sure that Thabo wants this Will to be his
- every page must be signed
A codicil is an extra document to change (amend or supplement) your Will. The codicil must comply with the same formalities as that of a Will. When amending a Will, the same witnesses who signed the original Will need not sign the codicil
Who can be a witness?
Anyone older than 14 years old, if they competent to testify in a court of law can be a witness.
It is best if the person nominated as Executor (or his/her spouse) or who is to derive an inheritance (or his or her spouse) does not sign as a witness to the Will. (Having regard to sections 4 and 4A of the Wills Act)
Magdalene can be a witness in Thabo’s Will and receive the house, only if there are 2 other witnesses not getting anything from Thabo’s deceased estate.
Must Thabo amend his will after divorce?
If you have an existing Will it is important to amend your Will within 3 months of your divorce, unless you want your divorce spouse to inherit. If you fail to amend your Will your divorced spouse will inherit in terms of the existing Will.What happens if Thabo does not leave a Will?
If you die without leaving a Will or a valid Will, your estate will devolve according to the Intestate Succession Act, 1987 (Act 81 of 1987). In that case someone whom Thabo wanted to exclude from his Will may inherit in terms of the Intestate Laws.Tips*:
- Get all the necessary information and documentation needed
- Make a list of all your assets and liabilities (debts)
- Decide how you want to divide your assets after all your debts have been paid
- Seek professional assistance to draft your Will / Draft your Will
- Sign your Will in the presence of 2 / more competent witnesses
- Store your Will in a safe and dry place.
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