Make sure your last words don’t leave ill will

By LESLEY GREGORY

There’s no feud like a family feud, yet that’s what many people bequeath their loved ones either because they didn’t make a will or their last words have been poorly drafted.

It’s estimated that about half of us don’t have a will. The result can be that it takes time and money for your family to sort out a legal and financial mess. Meanwhile, incalculable damage may be done to family and personal relationships as people argue over what’s “fair”.

Sure, most of us don’t want to think about death. We tend to think it’s a long way off and that making a will is something we can do “later”. But none of us knows what’s around the corner. Anyone of adult age can make a will — and should if they have assets.

The dangers of dying without a will

What happens to your estate when you die without a will differs across jurisdictions. But some of the potential impacts include a de facto partner not inheriting at all or your much loved stepchildren being treated differently to full-blood relatives. The distribution of desperately needed funds may be delayed at a time when your family really needs them.

Some people assume intestacy laws — which kick in when a will doesn’t exist — will sort things out. But these laws are designed only as a safety net and might not provide for friends and family in the ways you’d wish. This particularly applies when “informal” partnerships, divorce and remarriage complicate matters.

Find out who would inherit if you died without a will, using the intestacy checklist here.

What’s fair?

Having decided to prepare a will, it’s also important to ensure it’s drafted well. Whether in death or divorce, people can end up fighting tooth and nail over how money is divided. That may not be for the money itself but because they perceive an injustice.

You can help avoid bad blood not only by having a will but also by making sure you gently discuss with your significant others the reasons it will be framed in a certain way.

It may be that you have already provided financial assistance to one child who needed it early, and so you will leave them less than their siblings. Or it may be that you want to recognise the special care a friend has given you in a time of need or assist a charity with a bequest. People may not agree with some of those decisions, but setting expectations is better than leaving emotional and financial “surprises”.

Of course, you still need to make “reasonable financial provision” for those who are financially dependent on you (whether you’re talking or not).

Each family has to work out what “fair” means according to their circumstances. Ideally that should be done with the help of an independent third party, like a lawyer or financial adviser, guiding discussions so they happen without rancour.

Taking care of business

It’s not just divorce that can complicate matters. The status of family businesses also needs careful thought well ahead of time, yet one survey found that fewer than one in five family business owners have a robust succession plan in place.

Take the classic case of a child who has worked in the family business with the parents while the other pursues a career elsewhere. Does the business — the main asset in the estate — go to the child who has worked in it for years and now relies on it? Or has that child done well from the business while the other has had to make their own way in life without any assistance?

Should the business be sold so the estate can be divided equally, even though one child will lose their livelihood because he or she can’t afford to buy their sibling out? It’s probably too much to expect a business to fund the owners’ retirement while also providing a living for one child let alone an inheritance for everyone else.

It may be a case of working on strategies to allow fairness, such as building assets outside the business or giving something to one sibling earlier rather than later. £200,000 now could be the equivalent of £2 million two decades down the track if it allows one child to buy an appreciating asset.

Professional and independent advice will be needed.

The role of the executor

An executor is the person you appoint to ensure your wishes are carried out according to your will.

Naming someone as the executor of your estate is often regarded as a way of saying “thank you” or “recognising” someone, but in fact it can be a demanding and complex job, with tax, accounting and perhaps business issues involved. All this at a time when they too are experiencing the grief of a loss.

One option is to appoint two executors — one of whom is a solicitor or other trusted person outside the family who has the skills and emotional distance to manage your estate. Trustee firms can provide professional and independent executors, too.

Do-it-yourself kits

The intricacies of the law mean a do-it-yourself will kit may not cut it. Using a kit doesn’t automatically mean it’s going to be a disaster but think carefully about whether your circumstances are simple enough for a kit to cope with. Involving your financial planner and accountant, as well as your lawyer, may save you and your loved ones more money in the long run.

The bottom line is that writing a will, after talking to your family and taking professional advice, is the best chance you have of leaving behind a legacy that goes beyond the financial.