Why is a Will part of our risk mitigation process?
December 5, 2020 - 3 minutes read
Posted by Claire Parker
Whatever your financial situation, to effectively pass on your assets when you die, you need to make a Will. So, if like many people, it’s something that’s been on your ‘to do’ list for a while, make the New Year the time you decisively take this vital step. It is one of the fundamental elements of our WealthPlan™ method.
There are many reasons why you may have put off making a Will, the most common being simple inertia. However, clients also put off making a Will because they think their situation is too complicated because of sensitive family dynamics, or they worry that their offspring don’t have a good ‘business head’ or are unable to manage their finances leading to concerns that their hard-earned money will be wasted. However, all these reasons make it even more important to seek expert estate planning advice to ensure you take control of your inheritance plans once and for all.
What happens if you die without having a Will in place?
“40% of people die without making a will” (Law Commission)
If you haven’t made a Will, when you die ‘intestate’ it will be left to the Courts to decide what happens to your estate, assets and property. And this means that everything you’ve worked so hard for could end up in the hands of beneficiaries that you didn’t choose or expect, as well as a large chunk going to the taxman. So perhaps as we head towards a new year, this will be the push you need to finally tick making a Will off that ‘to do’ list in 2021 and enjoy peace of mind that your exact wishes will be carried out and that your loved ones are properly provided for.
After all, you wouldn’t run your business without having a good back-up plan – making a Will is your life back-up plan and is much the same, and just as important. And if you’re a business owner, it’s vital to consider who you want to inherit your shares or business interest, because if you don’t you run the risk of it falling into the hands of someone who either has no desire to run it or doesn’t have the skills or experience to do so. There may also be major conflict between multiple people about how the business should be run.
Planning for your business after you die
When you consider the bleak figures for businesses in the four years following the death of a founding entrepreneur, the importance of writing a Will becomes even clearer. Research by the University of Warwick shows that:
- Sales were down 60%
- Employment was down 17%
- Business survival rate reduced by 20% when compared to similar firms where the founder was still alive.
The benefits of the right Will
A well-written Will means you can:
- Name who you wish to inherit your estate, business or shareholding.
- Appoint guardians for young children, instead of leaving it up to the Courts to decide.
- Protect your share of property from needing to be sold to pay for your partner’s future care requirements, meaning you will still have assets to leave to family.
- Create maintenance trusts for your children so that their inheritance is protected until a specific age requested by you.
Does your Will reflect your current wishes?
Things change – that’s the one certainty of life, along with death and taxes. So once you’ve taken the important step of making your Will, you’ll need to make sure you revisit it every two to five years or so, or whenever there’s a shift in your circumstances, such as a divorce, a new relationship or if you acquire new assets, to make sure the right people inherit your wealth.
Prepare and protect
Having a Will is the foundation of good money management. Protect your assets and investments with professional financial planning advice, so that you can create a Will that takes advantage of the diverse areas of flexibility within the law of estate planning. It’s essential to plan ahead if you want your business to continue to thrive when you’re no longer around, because if you don’t make a Will it can be very difficult for someone to carry on trading.
If you own an interest in a partnership, you will need a properly drafted partnership agreement, because this will affect what happens to your interest after your death.
There’s a lot to think about, especially for the business owner, so the sooner you take the first step to seeking professional financial planning advice to help write your Will, the better off you and those around you will be.