Whatever you leave when you die is called your estate. It’s made up of everything you own (or your share of things you own jointly), minus everything you owe.
If you die without making a will, the law decides who will inherit your estate. The law favours a husband, wife or civil partner and your children (including adopted children but not step-children). What you leave may be split between your spouse or civil partner and children.
An unmarried partner has no legal right to inherit anything, but may be able to apply to a court for financial support from your estate.
If you don’t have a husband, wife, civil partner or children, your estate goes to more distant relatives. If there are no relatives, the state gets everything. This may not be the way you would like to leave your money and possessions, so writing a will could be very important.
Younger people and wills
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You have to be aged at least 18 (16 in Scotland) to make a will. This means the law dictates how a child’s estate is passed on. Normally, the parents will inherit everything (or the young person’s husband, wife or civil partner if he or she was married). The child’s estate may include money a child has invested in a Child Trust Fund or Junior Individual Savings Account (JISA).
Writing a will means you can ensure that the right people inherit from you and that your beneficiaries don’t suffer unnecessary hardship. You can also use a will to arrange your tax affairs efficiently, appoint people called executors to sort out your estate and, if appropriate, appoint guardians to take care of your children.
You can write your own will, but unless your affairs are very straightforward, it’s safer to use a solicitor. You should shop around for the best deal when looking for a solicitor. Macmillan has a service that may help you arrange a will at a discounted price.
Financial help through the legal aid system isn’t normally available for writing a will, but occasionally it is, in special circumstances. The solicitor you use can tell you if you qualify for legal aid.
Some charities offer a free will-making service. They hope you will use your will to leave a legacy to the charity concerned, but you’re not obliged to do this. It’s always a good idea to consult an independent solicitor.
If you’re a member of a union, you may be able to get a free or reduced-cost will written through their legal services.
Macmillan can help you save money on your will with a legal professional you can trust.
Macmillan has a discounted will-writing service. We have hand-picked a choice of will-writing organisations you can trust and that can offer you a reduced price. You don’t have to leave a gift to Macmillan to get a discount. Visit macmillan.org.uk/willwriting to find out more.
There are several other ways we can support you to make or update your will, including leaving a gift. We have legacy advisers in your area who are happy to call or visit for a confidential chat.
Find out more about legacies, or call us on 0800 107 4448, visit or email our legacies team.
To find out if a charity offers a free will-making service, contact the charity concerned. For a selection of charities offering a free annual will-making service to those aged 55 and over, you can also visit freewillsmonth.org.uk
Some other free or low-cost charity will-writing services include willreliefscotland.co.uk and willaid.org.uk
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There are two ways you can own something jointly with one or more people. You can own it as:
Joint tenants (or with a ‘survivorship destination’ in Scotland)
Legally, you all have equal shares in the asset and, when one of you dies, the rest inherit the deceased person’s share. For example, if you’re a couple (married or not) and own your home as joint tenants, you each have a half-share. When one of you dies, the other automatically inherits their share. This overrides what the law or any will says about inheritance.
Tenants in common (or ‘common-owned’ in Scotland)
You can have unequal shares and, when one of you dies, your share is passed on either in accordance with your will or as the law says if there is no will.
Joint bank and savings accounts are always owned as joint tenants. A simple way to ensure that your partner would have immediate access to cash for day-to-day living if you died is to transfer some money into a joint account now.
There may be Inheritance Tax to pay on an estate, but there is a tax-free threshold (also called ‘nil rate band’) of £325,000. This means that £325,000 of anyone’s estate can be inherited tax-free (this amount is frozen until April 2018). If your estate and any taxable gifts made in the last seven years are worth less than £325,000 all together, there is no tax on it at all.
No matter what the size of your estate, there is also no tax on anything you leave to:
your husband, wife or civil partner (in most cases)
charities (in most cases).
If you’re married or have a registered civil partner, and what you leave to relatives when you die is worth less than £325,000, then you won’t have used up all of your tax-free threshold. In this case, it’s possible to transfer your remaining tax-free threshold to your living partner. This means they can effectively claim a higher tax-free threshold than £325,000 when they pass away - possibly up to £650,000. This would be calculated against your combined estate when your partner dies.
To do this, your will executor (someone you appoint in your will to sort out your estate) or personal representative must transfer your unused tax-free threshold to your partner.
If your estate is worth more than £325,000, you may want to look at ways you can make gifts in your lifetime and arrange your will in order to reduce any tax bill.
Anyone who leaves 10% or more of their estate to a charity will have the rest of their taxable estate (anything over £325,000) taxed at 36%, rather than 40%. Whatever you leave as a charitable gift will also be deducted from your estate before any Inheritance Tax liability is calculated (so it doesn’t count as part of your £325,000 tax-free allowance).
You can read the latest information about Inheritance Tax on the HMRC website.
Making lifetime gifts can reduce the value of your estate when you die, which reduces the Inheritance Tax on it. Lifetime gifts that are tax-free include:
gifts to your husband, wife or civil partner (in most cases)
gifts to charity
wedding gifts up to specified limits
regular gifts of any amount out of your income that don’t reduce your standard of living
any number of small gifts up to £250 per person
up to £3,000 of any other gifts you make each tax year.
Most other gifts you make are tax-free only if you survive for seven years after making them. If you die before seven years are up, they count as taxable gifts. Some gifts (in particular, gifts to most types of trust) are taxable anyway.
When you die, your tax-free allowance (£325,000) is set first against the taxable gifts you have made in the last seven years. The remainder is set against your estate. For example, if you left an estate worth £300,000 and had made taxable gifts of £100,000 during the last seven years, the gifts would use up £100,000 of the allowance, leaving £225,000 to set against your estate. This means £75,000 of the estate would be taxed.
For more information, download the HMRC’s fact sheet at hmrc.gov.uk/tiin/tiin652.pdf or visit the HMRC website.
A funeral plan allows you to arrange and pay for your own or someone else’s funeral in advance. You either pay a lump sum or instalments, to the plan provider or a funeral director. There are safeguards to ensure your money is safe until it’s needed. As when buying anything else, check what the total cost will be and what will be included in the package to make sure you’re happy with the deal. For more information, visit the Money Advice Service website.