The importance of an up to date Will when estate planning
Wednesday 27th April 2022
Katy Baxter
Few of us want to spend time talking about what happens to finances on our passing and therefore matters can be left and are not reviewed which can prove costly in terms of loved ones making hefty inheritance tax payments to the government.
This has been shown clearly as the latest HMRC data reveals that IHT receipts for the period April 2021 to February 2022 now stand at £5.5bn; £0.7bn higher than the same period last year.
Also, almost half (47%) of Brits who have a Will haven't updated it for more than five years, meaning nearly half of wills in the UK are likely to be out-of-date. Of those, a third (33%) haven't updated it for over 7 years, and a fifth (21%) haven't dusted it off in more than a decade.
Research has revealed that:
• Almost half (44%) of people realise the law decides who will inherit your assets if you don't have a Will in place.
• Only a third of people (33%) realise that a couple living together without marriage or civil partnership won't inherit each other's assets without a Will in place.
• Only a third of people (34%) realise their spouse (wife, husband, civil partner) won't automatically inherit their full estate without a Will in place.
Other misunderstandings about Wills include:
• Only 16% of people realise that re-marrying invalidates a Will.
• Less than a third (31%) of people realise stepchildren won't be included in a Will unless stipulated separately.
• 17% of people think a Will can be updated by making changes on the original document and initialling them.
In addition, other concerns are over the drop in Will uptake since the pandemic - the number of Brits over the age of 40 who have a Will in place has dropped from 65% in 2020, to 54% in 2022 - that's over 10%.
In its latest report, HMRC has also explained that it expected higher IHT receipts from March to August 2021 due to "higher volumes of wealth transfers that took place during the Covid-19 pandemic", however more data will be required before this can be confirmed. Lower receipts in April and May 2020, HMRC said, were due to a temporary issue where HMRC were unable to accept cheques for payment of IHT due to Covid-19, which was resolved, hence the peak in June 2020 receipts.
The average amount of inheritance paid per estate was £209,000 which is a significant sum of money by any measure. At Montgomery Estate Planning we specialise in inheritance tax planning so that wealth passes through to your loved ones in the most efficient way. If you need any advice in this complex area please do get in touch.
Wills, tax and estate planning is not regulated by the Financial Conduct Authority.