1. You choose how your estate will be distributed
If you have a Will, you can detail who you would like to benefit from your estate and to what extent. If you die without a Will, your money, property and belongings will be distributed according to the Succession (Scotland) Act 1964 rather than your personal wishes. These rules determine who inherits (and how much) and may result in your estate going to people you might not want to benefit., Alongside that, those who you would want to benefit may not receive as much as you would have liked them to.
The winding up of an estate where there is no Will is more time consuming, costly and can cause distress and uncertainty to those you leave behind.
Whilst the law sets out some entitlements for spouses and civil partners, the same is not true for cohabitants. A cohabitant would have to go to Court to make a claim on the estate. Such a claim requires to be raised within 6 months of the date of death and for those that are unaware, this is a deadline which can easily be missed. This can also be a long and expensive process; the outcome of which may still not be what you would have wanted.
2. You choose who will be responsible for administering your estate
You can choose who to appoint as your Executor(s) in your Will. Your Executor will be responsible for ensuring any debts are paid, your property is sold, and your belongings are distributed according to your Will. By nominating an Executor, you can ensure that someone you trust will take on this role.
3. You choose who will look after your children
The age of legal capacity in Scotland is 16. If you die, leaving behind children under the age of 16, a Will can detail who you would like to be appointed as their Guardian and how you would like your children to be cared for in the event of your death.
4. You can create Trusts
The terms of your Will can establish a Trust which will operate on your death. A Trust is a way of managing and protecting assets for beneficiaries; it appoints a third party (a Trustee) to hold your assets on behalf of a beneficiary.
Why might you want a Trust?
There are many reasons why you may want to consider including a Trust in your Will:
- To protect vulnerable beneficiaries;
- When you are concerned about the age of the beneficiaries;
- To provide for children from a previous relationship;
- To reduce Inheritance Tax; or
- To have greater control over family assets.
Our experts can work with you to determine what is right for your family circumstances.
5. You may be able to reduce the amount of Inheritance Tax payable
Individuals have a nil rate band for Inheritance Tax purposes of £325,000 and may qualify for an additional allowance of £175,000 (the residence nil rate band) which can apply to an interest in a property which is passing to a linear descendent (such as a child or grandchild). Generally, the value of the estate in excess of these allowances will be subject to Inheritance Tax at 40%. Transfers between spouses are free of Inheritance Tax.
Mitigating Inheritance Tax can be complex and so it is advisable to obtain professional legal advice (in relation to your specific circumstances) to create a tax efficient Will.
6. You can detail funeral instructions or wishes
A Will provides an opportunity to record any funeral wishes, including who should be responsible for implementing those wishes.
If there are no funeral instructions, including clarity around who should implement those, the result can be disagreements amongst family members. Historically, these have been settled through the Courts.
The Burial and Cremation (Scotland) Act 2016 provides that if an adult dies without leaving instructions, the 'nearest relative' will be entitled to make the arrangements and lists an order of preference in definition of 'nearest relative': (1) spouse or civil partner; (2) cohabitant; (3) child (including step-children); (4) parents; (5) siblings; (6) grandparents; (7) grandchild; (8) aunt or uncle; (9) cousins; (10) niece or nephew; and (11) longstanding friend.
Certainty around who you would want to be responsible for arranging your funeral can be achieved by including an "Arrangements on Death Declaration" in your Will.
If you would like to discuss your tax and succession planning objectives, then please do get in touch with our team.
