Financial Planning 101: Wills Explained

As you get older, it is important to make sure that you have plans in place to ensure that your family is looked after when you are gone. One of the most important things that you can do for your family is to have a will. It is one of the only ways that you can make sure that your wishes in regards to your money, possessions and property are followed.

What is a Will?

A will is a legal document that determines how your assets are to be divided after your death. It is a formal document, and as such, it has to comply with strict legal requirements in both the document itself and how it is executed. Your will is only valid if it is properly signed, which is why a professional is often needed to create the will.

The Different Types of Wills

There are several different types of will; the one that you choose will depend on your circumstances. Firstly, there arestraightforward wills; as the name suggests, these are the most basic form of will. If you are over the age of eighteen and you have gifts or an estate to leave to your loved ones, then you could use a straightforward will. 

Next, there are mirror wills. These are most commonly used by couples, and they consist of two almost identical documents. The wills themselves are so named because they mirror each other in content; when one of the partnerships passes away, then everything usually passes to the other person, with the will being fully executed after both parties have passed. 

There are also will trusts. These are for people who wish to have a testamentary trust written into their will. A will trust protects the assets that you wish to pass on to your loved ones;they are used as a way to provide for children or vulnerable loved ones. A trustee is nominated to manage the trust on behalf of the beneficiaries for the lifetime of the trust. Will trusts can be challenging to set up. 

Lastly, there are living wills. These are made while the person still has the mental capacity to give directions about medical treatment. They can be influenced by religious or other values and beliefs. They outline how far you would like your treatment to go should your condition be terminal.

How is a Will Written?

As a will is a legally binding document, you need the help of a professional to ensure that it fully complies with the law. However, there are a lot of options out there, and so doing your research is a must. Some companies, such as E.L.M Legal Services, offer a free, no-obligation consultation which can be incredibly useful when looking at your options.

What Should I Include?

What you include in your will largely depends on you; it can cover a number of topics and be as complex as you like. However, there are some guidelines that can make this easier. Start by thinking about who you want to benefit from your will and what assets you have. In short, start to think about who gets what. Consider children, if any, parents or even pets that you want to be looked after. 

In terms of property, if it is jointly owned, then most of the time, it automatically go to the other party, although it is possible to sever the joint ownership so that you can leave your half to another person. If you wish to leave your property to another person, then giving it to a direct descendant or spouse usually results in a lower inheritance tax. Do you want to give the right of residency to the current occupiers or tenants of the property?

Do you have any digital assets? If so, you need to remember them in your will and provide a list of passwords to your executor to help your beneficiaries to access them when you are gone. Although you should avoid putting any sensitive information into the will itself. 

Lastly, you should consider what you want to happen should your beneficiaries die before you. If you have any funeral wishes and who you want to appoint as your executor. The executor is someone who acts on your behalf to fulfil the wishes outlined in your will.

Will it Need Reviewing?

Once you have your will in place, it may need reviewing if your circumstances change. For example, if you get married,your will is automatically revoked; however, a divorce does not revoke your will, although both life changes would likely necessitate an amendment to your will regardless. If you have children, your list of beneficiaries may change, and if you acquire more assets, you may want to account for them in your will too.

In Conclusion

Having a will in place is really the only way that you can ensure that your wishes are followed and that everyone has what you want them to have. They are especially important as you get older and acquire assets and begin to have dependants in whatever form they come in.