Whether you are buying a property alone or with another person, purchasing your first or your fifteenth home, planning on living in it or letting it out: whenever you acquire property, you should consider whether you need to make or update your Will as a result.
Fundamentally, your Will determines who receives your estate when you die. This includes any property you own solely or as tenants in common with someone else. For many people, their property is their most valuable asset and it is all the more important to ensure it passes as intended on death.
If you die without a Will, the future of this asset becomes uncertain and the intestacy rules will dictate which of your closest relatives receives your estate. This could mean that some of your loved ones are left without.
My situation is simple – surely I don’t need a Will?
If you own property, it is always worth considering putting a Will in place. Making a Will allows you to decide what happens to your property, money and other possessions after you die, as well as providing an effective means of planning for inheritance tax (IHT). A carefully drafted Will can make it possible to reduce the amount of IHT owed on your estate – and perhaps pay none at all – leaving more for your loved ones.
If you are married or in a civil partnership with children, your spouse will not necessarily receive all of your share in any property you own if you die intestate. If your share in the property is worth more than £270,000, then the intestacy rules mean that your children will receive part of it, even if your spouse is still alive. The children would need to consent to any sale of the property by your widow or widower, and could force him or her to sell the home. An inheritance tax charge could arise on your death, which could be avoided with a properly drafted Will.
If you and your partner are not married or in a civil partnership and you have children, then your partner may have no right to your share in any property you own together. They may find that they share ownership with your children if you die intestate. Not only is this potentially very awkward, it can expose your partner to significant risk if one of your children gets into financial difficulty or goes through a divorce, at which point their share of the home would be available to be claimed by creditors or an ex-spouse.
If you own property with someone other than a spouse or partner (for example, if you co-own a home with your siblings), you may want to ensure that your co-owners inherit rather than the people favoured by the intestacy rules.
Even if you are buying a property alone, it is still essential that you consider making a Will to determine who will receive the property on your death, and who will be responsible for administering your estate.
What can I do with my property in my Will?
You have a range of options in terms of the type of gift you make. An outright gift may be perfectly appropriate. However, if you want to leave your property to your children, to make a flexible gift, or to give several people rights to it (for example, if you would like to give your spouse the right to live in it for life and then to leave it to your children) then a trust arrangement will be needed, and you should seek professional advice on this.
The inheritance tax rules for people who own property and who wish to pass it to their descendants have recently changed. You may want to take these rules into account if you are concerned about minimising the tax burden on your estate when you die.
I already have a Will – do I need to review it?
Yes, you should review your existing Will to make sure it is still appropriate and reflects your wishes. You may find that in your current Will, you made a gift of a property you no longer own, or that the Will was drafted when your estate was lower or higher in value and needs to be updated to reflect the change in circumstances. You may also find that in your current Will, your estate could inadvertently pay more inheritance tax than is necessary, because it was drafted before the changes were made to tax rules, regarding gifts of property.
How we can help you
At TWM, our expert Private Client team are here to help you and we offer an initial meeting with no obligation to proceed, so that we can discuss with you the things you should consider and help you think about your choices and options. We will provide you with a fixed charge to consider, for preparing a Will based on your wishes.
For further details about our Private Client services, click here.