Back in 2019, figures published in This is Money confirmed that one in four people would mount a legal challenge against a loved one’s will if they were unhappy with it. Over the last 18 months, unexpected deaths due to Covid-19 have added to that strain.

Which? reports that, between October 2020 and April 2021, one firm of solicitors saw a 111% increase in enquiries about contesting a will compared with the previous six months.

The need to have a will in place is clear, but so too is the need to communicate its content to those affected.

How a will might be contested

Increasingly complex family structures, an ageing population, and rising house prices are among the reasons why contested wills have been on the increase over recent years.

Not being happy with the contents of a deceased’s will, however, is not sufficient grounds to contest it.

There are several legal reasons why a will might be challenged. These include the deceased not being of sound mind when the will was made, being coerced into making the will, or the document being forged or amended fraudulently.

Contesting a will isn’t cheap either. It can cost as much as £75,000 (according to the same Which? report) but good communication when a will is made can help to limit the likelihood of a challenge.

The importance of good communication

In May we looked at 5 reasons to put a will in place now and found that having a will could:

1. Give an individual a sense of control
2. Ensure that an individual’s loved ones are provided for
3. Reduce stress, costs, and delays for those left behind
4. Help towards ensuring that a transfer of wealth is tax-efficient
5. Give an individual peace of mind.

To maintain control, or to ensure peace of mind, your client will also need to consider how they communicate the contents of their will to those affected.

Having difficult conversations in the present could help to avoid unpleasantness later on. Managing expectations honestly means that loved ones know what they are due to receive, hopefully reducing the possibility of a challenge.

Your clients will also need to keep their will up to date to ensure life events that impact the contents of the will – and their wishes – are reflected.

How Boolers can help your clients manage their estate

When a client puts a will in place, they are asking that their wealth be distributed in a way that aligns with their wishes.

There are other steps that they can take during their lifetime to ensure their estate is managed tax-efficiently. This is where Boolers can help.

Making use of HMRC gift exemptions

Using HMRC gift exemptions allows your clients to lower the value of their estate for IHT purposes.

One of the main exemptions is known as the “Annual Exemption”. Your clients can gift £3,000 a year tax-free and carry any unused amount over for up to one year.

They can also make regular gifts using the normal expenditure out of income exemption. Your client will need to prove that the gift is coming from income and that making the payment doesn’t impact their standard of living.

Gifts made to charity are also free of IHT. Your client could lower their IHT liability while supporting a cause they care about. If they donate more than 10% of their net estate, the rate of IHT payable is lowered from 40% to 36%.

Making use of a pension

We can also help your client to manage their retirement in a tax-efficient way.

Through holistic retirement planning, it might be possible for your clients to top-up their pension income from investments and savings held elsewhere.

This is beneficial because unused pension funds are outside of your client’s estate for IHT calculation purposes. Leaving a pension until last, or not taking it all, could help your client pass it onto the next generation tax-free in some circumstances.

If your client dies before age 75, 100% of their unused pot can pass to a chosen beneficiary tax-free. On death after age 75, a beneficiary can still receive an unused pension amount, but there will be tax to pay at the beneficiary’s marginal rate.

Your client would need to contact their pension provider to name a beneficiary as it can’t be done via a will.

Get in touch

If you have older clients looking for help managing their estate and planning the legacy they intend to leave behind, they might benefit from expert advice. Please get in touch via email at enquiries@boolers.co.uk or call 0116 240 7070.

Please note

The value of your investments (and any income from them) can go down as well as up and you may not get back the full amount you invested. Past performance is not a reliable indicator of future performance. Investments should be considered over the longer term and should fit in with your overall attitude to risk and financial circumstances.

The Financial Conduct Authority does not regulate estate planning, tax planning or will writing.