Basic Information

The waiting game is a mug's game

The very model of silk-dressing-gown elegance, Sir Noël Coward (1899–1973) moved far - very far - from his modest suburban London origins. Successful as a playwright, actor, composer, actor and director, Coward left England for tax-friendlier Switzerland and Jamaica, where he died. He had separate wills for his English and Swiss assets, and his executors established the Noël Coward Foundation.

If you do not have a will, when do you intend to make one?

If you do have a will, when was the last time you read it to see if it still reflects your personal and financial situation - and your likes and dislikes?

Should you use a solicitor, or would a professional will-writer, a bank, a charity or other provider be better, perhaps cheaper? Maybe even do it yourself? What about financial advice?

Time, a not so subtle thief

Young people think that they have plenty of time to make a will and, let's be frank, most of them do. 'Most.' In fact, some young people do not have much time - Illness and accident take their toll of young and old alike.

Older people with no will, or an outdated will, are also engaged in risky races against time.

How old is 'older?' American philanthropist Brooke Astor had all (certainly most) of her marbles well into her 90s. On the other hand, author Sir Terry Pratchett was not yet in his 50s when he got Alzheimer's.

Ironically, persistent good health can be an enemy of wise behaviour regarding wills. If the common cold and occasional flu have been the worst bad health you've ever experienced, you may feel little urgency in writing or revising a will.

Then, bang, cancer or early-onset Alzheimer's or a car accident alters the situation dramatically. And what if the cancer is aggressive brain cancer? Mental capacity can diminish sharply, even vanish entirely, in a mere moment.

No will is a no-no

Dying without a will (intestate) is not a good idea. Your assets

• will be distributed according to a rigid formula, whether you like (or would have liked) it or not;
• will be distributed slower and probably with more hitches than if you had made a will;
• will probably be smaller than if you had made a will.

Even if you consulted financial planners during your lifetime, if you die intestate, much of the fruit of that planning will come to nothing. Financial planning is generally done in conjunction with a will.

If you die intestate, your husband/wife/children/civil partner do NOT automatically inherit everything.

Merely living together with someone else counts for very little regarding inheritance. "Common-law marriages" are not worth the paper they are not written on. (Civil partnerships are formally registered relationships.)

Gifts between spouses/civil partners are exempt from inheritance tax.

What about gifts between live-in lovers?

"Gifts that you give to your unmarried partner, or a partner that you're not in a registered civil partnership with, are not exempt," says HMRC.

In addition to ex-spouses, some people who depended on you during your lifetime may have a claim on your estate (even if you have not included them in your will, and even if they are the last people you want to benefit from your assets).

After your death your will can be revised ( this is no excuse for making a silly will).

A will can be made for someone who has died intestate (this is definitely not a reason to refrain from making a will).

A new will does not automatically revoke previous wills. The revocation has to be explicit, which is why wills usually begin with a phrase revoking all previous wills and codicils.

Revoke all previous wills even when you make your first will. It may seem silly to revoke something that doesn't exist, and never did, but if there is a suspicion that you might have made an earlier will, your executors or beneficiaries may waste time, energy and money hunting for it. Revoking all previous wills, including non-existent ones, is a good deterrent to wild-goose chases. However, if you have a foreign will that deals with your foreign assets, you may not want to revoke that will.

Over the threshold

The inheritance tax threshold for 2009-2010 is £325,000, up from £312,000 for 2008-2009. If an estate is larger than that amount, the taxman will claim 40% of the excess - of the amount over the threshold. Quick and simple example: If an estate totals £1 million, Mr T's share - assuming a £325,000 threshold - will be 40% of £675,000 = £270,000.

If you want to make a will that does not minimise the tax due on your estate, that is your privilege.

A will need only be valid; it does not have to be tax efficient, although most people want to pay minimal or no tax at all. And their heirs want to inherit the maximum amount possible, and with the minimal amount of legal challenge and emotional hassle.

The wages of carelessness is chaos

The will needs to be valid because if it isn't, all or part of it can be ruled defective. An invalid will is one that does not exist, for all intents and purposes.

Clear, coherent and consistent wills can also prevent disputes and lawsuits.

Even the simplest of legal challenges can be costly.

In the worst of the worst cases, legal challenges consume enormous legal fees that come out of the estate over a prolonged period of time. In his famous novel Bleak House, Charles Dickens depicts a case of disputed inheritance, Jarndyce v Jarndyce, that dragged on for decades. Dickens did not pull Jarndyce v Jarndyce out of thin air. The novelist based it on an actual case that financially drained the litigants and the estate as it enriched generations of solicitors.

Civil cases today are not as protracted or costly as their Victorian counterparts, but they are not cheap either. In a not atypical case, a disputed will went to the High Court in 1998 and the Appeals Court two years later. At the Court of Appeals, a judge lamented this "ruinously expensive litigation."

Disadvantages of not having a will

If you die intestate, your estate will be distributed according to the rules of intestacy rather than to your wishes. This will be the case even if you have written your wishes down on a wish-list or similar sheet of paper and signed it. Such documents carry no legal weight and are not equivalent to wills, which must be properly signed and witnessed, and coherently composed. Signing and witnessing a wish list does not increase its legal standing.

If you die intestate, an administrator will be appointed to look after your affairs. Although the administrator tends to be a family member, this person might not have been your first - or even last - choice for that task. The "wrong" administrator can increase tension among family members and friends.

The very lack of a will can create problems due to its absence - its real or apparent non-existence. You may never have made a will, but someone may claim that you did leave a will. This claim can lead to a search that could be costly as well as fruitless, and subject your heirs to delay and worry.

If you do not have a will, it is also likely that you have not organised your finances efficiently.

Summary - Advantages of a will

You get what you expressly asked for, from funeral arrangements to the distribution of your estate.

Your estate is distributed faster than if you die intestate, which involves delay due to the court having to appoint an administrator.

Your affairs are handled by your hand-picked representative, not someone appointed by a court official.

Summary - Advantages of a good (financially astute) will

All of the advantages of a will, plus

Your heirs pay less/no tax.

You can draw up a Living Will or Enduring Power or Attorney; more generally, your professional advisers can suggest options that you otherwise might not be aware of.

Know before you go

Probably the most important aspect of a will is getting it right legally, and for most people that will involve consulting a solicitor or other professional.

Even if you are capable of doing it yourself, however, the starting point is knowledge - the more you know about wills, the stronger your will will be regardless of who drafts it.

You also need to know how much you are worth, and this can be tricky. Many years of boom brought widespread prosperity and raised many people above the threshold for inheritance tax. The boom that followed, starting in 2008, undid many of those gains.

Review time

Major events (births, deaths, marriages, divorce), significant purchases, gifts, inheritances, winning or losing big on a horse or the lottery usually have a significant impact on wealth and on relationships with other people. After any event that changes your life or bank-balance, re-read your will.

Some changes can sneak up on us. For example, you leave a valuable painting to your favourite niece. Many years later, you fall on hard times or out of love with the painting and sell it, forgetting that you have bequeathed it. If you haven't altered your will, you will have given your niece a headache instead of a Hockney.

Review your will, too, in light of legal and regulatory changes. The inheritance tax nil rate band, for example, changes regularly. Same-sex couples were granted considerable benefits in the Civil Partnership Act of 2004, and the amounts automatically inherited by spouses and civil partners increased in early 2009 - the first such change since 1993. Failing to amend your will in light of these changes can be very costly to your estate.

Codicil Caution

Minor changes to a will can be done with a codicil, but don't be fooled into thinking that a codicil is a simple document that can be casually drafted. Like the will itself, it must be properly signed, dated and witnessed, and refer to the will it is amending. A codicil may contain a simple change - naming a new beneficiary or executor, for example - that can be expressed in a single sentence, but with the witness statements and other legal language, it may require two or more carefully-worded sheets of paper.

Witness Caution

Your doctor, solicitor, clergyman and next-door neighbour can all be excellent witnesses.

You can even enlist the services of a passer-by, although that is not recommended. In the event that a will is challenged, or queried by the Probate Service, the witnesses may be called on to testify.

Select witnesses who are reliable, trustworthy, conversant in English and available.