This episode of the Your Recipe for Financial Success podcast was published on 24th September 2020. You can listen again by heading to our Episodes page, or on your favourite podcast player.

In this episode, Becky and Emma are serving up the ingredients needed to write a will. They take a look at why you need one, when you need one and what should be included in one.

Episode Highlights

Why is it important to have a will?

According to Which? in 2018, 54% of UK adults didn’t have a will

Wills are important as they make sure your assets and estate are given to the people you want them to. You should consider writing a will if you own savings and investments, if you have children/ stepchildren or if you have a partner who you are not married to.

Although it’s not the most appealing topic, you should definitely think about it. Writing a will won’t make you die any sooner but it will ensure your wishes are carried out when the time comes.

What happens if you don’t have a will when you die?

If you die and haven’t written a will, you will die intestate. This means there are a set of rules, called the rules of intestacy, which determines who inherits your assets. This means your belongings may not go to the people you want them to.

Below is a flow chart explaining exactly who would inherit your estate should you pass away without a will.

A flowchart explaining the rules of intestacy

What needs to go in a will?

There is no right or wrong answer when it comes to writing a will. They are a very individual thing as each person will want different things.

You need to elect an Executor. This is a person who will be responsible for carrying out your wishes and funeral plans on your behalf once you pass away.

If you have children under the age of 18 you will want to nominate guardians to care for them. You should also decide at what age they can inherit by using trusts.

The most common type of will is a mirror will. Married couples tend to use this type of will, it means their wills would be identical. They would leave everything to each other and then onto their children.

We hope that this episode has cleared up all of your questions around why you should have a will. Maybe this was the motivation you needed to get your spatulas in a row and finally put your will in place.

If this has left you hungry for another recipe, check out our other podcasts on our episodes page.

Don’t forget about our Facebook page too where you can ask questions and join in discussions about all of our topics. We look forward to chatting all things personal finance with you!

 

Rediscover the conversation

Emma Knights
So this week we’re weighing out the ingredients needed when writing a will.

 

Becky Campion
Excellent. Sounds interesting. Do you have a will before we start?

 

Emma Knights
I’ll be honest, I don’t.

 

Becky Campion
And is there a good reason for why?

 

Emma Knights
Well, I didn’t really have anything to make a will for! I’d say that’s a pretty big reason.

 

Becky Campion 
I would say so, too. So, before we start, can you have a guess Emma, how many adults in the UK, don’t have a will in place?

 

Emma Knights 
Oh, I guess it’s quite high, I might say about 60%?

 

Becky Campion
You’re actually more pessimistic than the figures that I found. So, according to Which? in 2018 54% of UK adults don’t have a will.

 

Emma Knights
I’d be interested to see the statistics for this year with the coronavirus. How many people rushed out and made a will, because they were worried?

 

Becky Campion
You say that Emma, but another interesting statistic that I found is that 5.4 million people have no idea how to make a will.

 

Emma Knights 
That sounds like most of the population.

 

Becky Campion
Well, I did wonder it sounds like more than 54%, but who knows? Anyway, Emma why is having a will important?

 

Emma Knights
It’s to make sure that when you do die that your assets and your estate are given to the people you want them to. So it’s making sure that your wishes are carried out just the way you want.

I think it’s really important to say here, dying isn’t a bad thing to talk about and making a will isn’t going to make you die any sooner. It is something that you should really think about and is important to do.

If you don’t have a will in place you die intestate. Your estate is dealt with under the rules of intestacy. Becky, I know you’ve been reading up on the rules of intestacy recently and you are the technical one, so I’m going to hand this over to you so you can explain what they are.

 

Becky Campion
Thanks Emma. So, before we get started, this is where it’s going to get quite complicated, so I’ll do my best to keep it as simple as we can.

We’ll start off with married people. If you’re married, and you have children or grandchildren, or great grandchildren who survive you AND if your estate is valued at more than £250,000 your spouse will get all of your personal property and belongings and the first £250,000 of your estate.

With me so far? Emma are you following?

The spouse also gets half of the remaining estate. Any children that you have that outlive you will inherit (in equal portions where there’s more than one) the other half of anything in your estate over the £250,000 that has already been given to your partner.

 

Emma Knights 
So, can I just check this? If my estate was £750,000 when I die and all of my personal belongings and property would go to my husband. And the first £250,000 will go into him too.

That would leave £500,000 left, so half of that would also go to my husband. The remaining half would go to my children so £250,000. If I had two children, it would be £125,000 each.

 

Becky Campion
Exactly, you were listening. Thanks Emma!

So, I think it’s really important to highlight here before we go any further, that the rules of intestacy won’t suit everyone.

For example, say you have some sentimental items – perhaps you have your wedding ring that you would want to leave to your sister, or your brother. You want them to have it, instead of your partner or your husband or wife. Then they straightaway wouldn’t have it, it would go to your to your spouse instead.

The other thing that is probably quite important to mention at this stage is, if you’re not legally married your partner, no matter how long you’ve been with them or how long you’ve lived together, under the rules of intestacy they wouldn’t get anything.

 

Emma Knights 
Blimey there are people who have been together for decades but haven’t ever been married. It’s so bad they would get absolutely nothing.

 

Becky Campion 
That is exactly what I mean. And that, I think, is the scariest thing about the rules of intestacy.

 

Emma Knights
Wow. Yeah, if you died and had a partner that you were not married to and thought they would get everything and then in reality they don’t, you could potentially make them homeless if they live in your house with you.

 

Becky Campion
It’s really scary when you start thinking about the consequences. So if you’re not married, but you have children, your estate would go to your children in equal shares, which sounds pretty fair and what most people might want. I would say that’s quite reasonable.

If you’re not married and you don’t have children, then your estate would go to your parents equally.

 

Emma Knights
Wow, I can’t imagine that would work especially well, they might not even be alive!

 

Becky Campion
Exactly. So again, this is where the rules of intestacy don’t always mean that what you would like to happen with your estate actually happens.

 

Emma Knights
Yeah, it seems odd to go to your parents. You would think it would go to nieces and nephews or something like that.

 

Becky Campion
Yeah, or even your brothers and sisters – which would be OK if you like them!

I think I’ve covered the rules of intestacy at quite a high level. I will post the flowchart on our website following the podcast so you can see for yourself the impact and the implications of the rules of intestacy in a more visual way.

 

Emma Knights
That sounds very good Becky, even I am going to check that one out.

 

Becky Campion
Thanks. So Emma, what are the things people need to think about if they’re now listening and they think ‘ah, I think I need to write a will.’ What would you say to start thinking about?

 

Emma Knights
So, the first thing to think about is, there’s no right or wrong answer. What should be in your will and how it should be written varies because everybody wants something different.

I might want everything I’ve got to go to my sister and my nephew. Whereas, someone else in my position might want it all to go to the cats home!

 

Becky Campion
Or to me!

 

Emma Knights 
It’s important to remember that it’s your own personal decision what you want to happen.

So the first thing that you’re going to need in your will is what we call an Executor.

 

Becky Campion
What’s an Executor?

 

Emma Knights
So, the Executor is the person who’s going to carry out your wishes and action the will on your behalf when you have died. Basically they’re going to be sharing out the money and giving it to the people that you choose.

You also need to think about your funeral wishes. So whether you want to be buried, cremated, or even something else there are some wacky things you can do now.

 

Becky Campion 
There are indeed.

 

Emma Knights
How about being put into our eco pod? I have seen some very odd things to do with that.

 

Becky Campion
Some of them, I think are really nice, and some of them I think ‘hmm.’

 

Emma Knights 
Yeah, I quite like the ones where you can have ashes made into jewellery, or I quite like the idea of being made into a firework.

 

Becky Campion
Oooh go out with a bang!

Are there any other things to think about?

 

Emma Knights
If you’ve got children that are under 18 at the moment, you need to think about what age you’d like them to inherit. They can’t physically receive it until they’re 18, but do you want to inherit when they’re 18 or would you prefer them to inherit when they’re a little bit older, maybe 21 or 25.

 

Becky Campion 
That’s a very good point. I know just thinking back to when I was at school, a lot of people when they were 18, perhaps wouldn’t have been sensible coming into a lump sum of money.

 

Emma Knights
Yeah, definitely.

You’ve got to think, this could essentially be setting them up for life, as a huge amount of money. Could they be influenced by all people as well at that age?

So, if you were to die before they were 18, what would happen is the money would be held in a trust by the Executors. Don’t worry too much about trusts, we’re going to come back to them in a little while. But I’m going to keep it nice and basic today.

So what would happen if your children were under the age of 18 and passed away, because the money would go into trust and be held by the Executors. Think of this as putting the money in a proving draw, you would put the money in there, and it’s being kept nice and safe, and it’s going to rise over time. And then, at the right age, it will be distributed out to and can be used for their benefit along the way.

 

Becky Campion 
You mean its a proving draw and not a bread draw like I have written in my notes?!

So we’ve covered Executors, and we’ve talked briefly about children. What else do we need to consider when we’re writing wills?

 

Emma Knights
Staying on the subject of children, you need to think about who would look after them. So, if you were gone while they were still a minor and they weren’t able to look after themselves, who would look after them? You need to think something called guardians for them.

 

Becky Campion 
I guess if you still have your parents you perhaps not might not necessarily want them to be guardians, because they may be too old to look after two or three little children.

 

Emma Knights 
Definitely. I know my sister has spoken to friends of hers that have children of a similar age, and they’ve all kind of made a little bit of a pact that, if anything happens to me you’ll have my children because Mum and Dad will be too old.

It is something people will talk about quite openly so don’t be afraid to have that conversation.

 

Becky Campion
Is there anything else?

 

Emma Knights
In your will you can also make specific gifts. It could be a gift of money. So, “I give Becky £100.”

 

Becky Campion
Ahh very kind of you, thank you!

 

Emma Knights
You can make gifts of money, or you can even give a specific gift of one of your possessions. So, it could be that I am going to leave this necklace I’m wearing today to Julie.

 

Becky Campion
Lucky Julie.

 

Emma Knights
You need to make sure that you’re nice and specific with the gifts, because you need to make sure your Executor is going to be able to identify what exactly it is you want to give.

 

Becky Campion
Makes sense.

 

Emma Knights
In your will you can even say what you would like to happen to your pets. So pets are a massive thing in people’s lives.

I know my parents have a menagerie of animals, and they certainly have a parrot in their wills because parrots can live for over 50 years. I was adamant that I did not want anything to do with it. So it’s safe to say, she’s my sisters!

 

Becky Campion
Does your sister know that?

 

Emma Knights
Oh yeah, I’ve been told that she gets an extra gift of some money to look after it too, so the parrot is going to be well looked after!

 

Becky Campion  
Oh, okay, then as long as it’s not by you!

 

Emma Knights
So after all those things have been taken care of you’re going to need to think about what will happen to the rest of your estate, known as your residual estate.

 

Becky Campion
That sounds like something that I scrape off the bottom of my cake tins quite a lot.

 

Emma Knights
Well, you did something wrong there if they are sticking that much! It’s not quite the same as what’s left stuck to the bottom of the tin.

What it means is, all your other possessions, money and any other assets that haven’t been gifted in those other areas of your will.

 

Becky Campion
Makes sense, basically it’s just like everything that’s left at the end.

 

Emma Knights
So, it could just be “anything left over I share equally between all of my children”. That leads on nicely for me to tell you about basically the most common type of will, which is known as a mirror will.

 

Becky Campion
Can you look at yourself in it?

 

Emma Knights
No, not quite. Thinking of a family, a married couple with two children, basically their wills would be identical so it would be the husband and wife, everything would be left to each other and then on to the children. So we say, “as each to each other, and on to my children equally.”

 

Becky Campion
Okay. Makes sense! Does it get any more complicated than that?I

 

Emma Knights
It can get a bit more complicated when we use trusts like I mentioned earlier, but those are basically to make sure that your beneficiaries, which are your children or whoever you choose to leave anything to, inherit in the way you wish to.

So if your child was a risk of bankruptcy or divorce, and there was a risk that somebody else from outside could attack that money. It could be if they received it now, and they were to divorce they can potentially lose half of it to their ex husband or wife.

When you’ve worked hard all your life to save this money for these assets to pass on to your children, you don’t really want to risk that happening and they lose it. So, if there is an imminent risk of something like that happening, we can use trusts to basically prevent that from happening.

 

Becky Campion
Sounds like a very clever tool.

 

Emma Knights
It definitely is. But it’s definitely something worth taking some advice on to make sure it’s being used in the right way.

 

Becky Campion
So you mentioned professional advice. Is it possible to write your own will?

 

Emma Knights
Of course you can. You can buy D.I.Y kits online and basically fill in the forms yourself, and get them signed and witnessed.

It is better than nothing, because you’ve got your wishes written down in some way, shape or form. But you just need to make sure that it is definitely going to be doing exactly what you need it to do so, it is always worth taking a little bit of advice.

 

Becky Campion
So I asked you earlier Emma whether you had a will. And you said you didn’t. When should you consider writing a will?

 

Emma Knights 
So you need to have a will, when you’ve got something that you need to make sure that is passed on to the person that you wish to.

So, if you don’t own any assets, you don’t have any savings or investments, you don’t have any children, then it doesn’t necessarily matter if you haven’t got a will, because it doesn’t really matter what happens with it.

But if you’ve got a partner that you’re not married to, if you’ve got children and, quite importantly, if you’ve got stepchildren that aren’t necessarily adopted but you would want something to go to. That’s definitely a time when you need to have a will.

It’s also important to remember the effect that getting married or divorced can have on the will. If you get divorced, your spouse or partner would just come out of your will. So, all of your will would remain valid and everything else will be carried out. What was left to your husband or wife, originally wouldn’t go to them, but the rest of your wishes will be carried out and then the residual estate would be distributed as you wish.

But if you’re getting married, and you’ve got a will in place, the marriage invalidates your will immediately. So, Becky you got married last year, have you updated your world since?

 

Becky Campion 
Of course I have.

 

Emma Knights
I’m glad to hear!