Why are Britons so hesitant to create a will?
By Andrew Megson, executive chairman of My Pension Expert
Creating a will is admittedly, a depressing prospect. However it is almost a necessity to ensure that one’s friends and families are amply supported after we pass away. Particularly throughout the pandemic, Britons have been made aware of the importance of having these documents in place.
Indeed, recent research from YouGov indicates that although the vast majority (82%) of Britons believe it is vital to have some form of will in place yet, a shocking 59% do not actually have one in place.
This is understandable. Talking about what happens after one dies can be difficult terrain to navigate, and people may prefer to shelve the estate-planning process until they deem it necessary. That said, there couldn’t be a more suitable time to get their affairs in order.
With all this in mind, one must ask what is stopping Britons from writing a will?
Reasons for avoidance
First and foremost, many individuals just are not comfortable broaching the topic as to what happens after they die with their family. The fact that Britons tend to err on the reserved side – 60% of UK adults, in fact – does not help matters, creating the perfect storm for individuals to put off writing a will until a later date.
Age also plays a factor in will avoidance. Indeed, 76% of people under the age of 35 believe that they are too young to create a will. This could be for a variety of reasons. For example, some might believe that they are not ‘asset rich’ enough to and that they do not yet have enough worldly possessions, such as property, or a large sum of savings, to warrant one.
However, creating a will early on can help individuals to make a head start when it comes to evaluating their estate in later life. As we naturally accumulate savings and assets throughout our lifetime, this can create an insurmountable task later down the line. As such, Britons have plenty to gain from kicking the process off young.
Rigid intestacy laws
It is also important to note that, if an individual dies without a valid will in place, their assets will be subjected to rigid intestacy laws.
Intestacy laws rule that an individual’s assets are to be divided amongst their immediate family when they die. Alternatively, if an unmarried person with no immediate family dies without a will, their assets will be inherited by the crown; all unmarried partners, close friends or step-children would receive nothing.
Take, for example, an individual who wishes to leave their assets to their unmarried partner; intestacy laws would mean that this is impossible, without a will in place. On the contrary, married individuals who have children will see £250,000 worth of assets go to their spouse, in addition to the half of any remainder. The other half of the remainder will be shared between their children. Ultimately, even if an individual has specific plans in mind as to how they would like to see their estate divided, these will not be possible without a valid will.
The process of contesting these rules can be extremely taxing on close members of friends and family, adding some avoidable stress during an already difficult period. In any case, unmarried partners and close friends can claim that they are entitled to support under the Inheritance (Provision for Family and Dependents) Act, but they should be aware that this process comes without any guarantees.
Getting to grips with IHT
Another factor individuals should bear in mind is the fact that family members could be hit with unexpected inheritance taxes (IHT), without a valid will.
Indeed, the current rules state that a spouse can receive the first £250,000 of their inheritance tax-free, without a will. However, if the deceased has any children, they may of be faced with a hefty inheritance bill.
It’s important to note that IHT is unavoidable – but one of the benefits of creating a will is the fact that people can hand down their assets in a more tax-efficient manner.
Here, individuals should consider allocating a gift in their will. Given that a person does these seven or more years before their death, friends and family members will be exempt from paying IHT on their inheritance. To do so, assets must be referred to as outright gifts in a will, including the term “gift with reservation of benefit”, and this can apply to a vast range of assets, from fixed sums of money, to property and shares.
Another option to explore is creating a Trust, which can also allow beneficiaries outside of an individual’s estate to avoid any hefty IHT bills.
A culture change is in order
Although most Britons have plenty to gain from getting their affairs in order, more must be done to change the nation’s attitude towards will writing. This will take a collective effort, from financial advisors, regulatory bodies, and even the Government – all of whom must make the benefits of will writing more widely known to consumers. This must begin by creating new initiatives and informative campaigns to ensure that Britons are in the know about what might happen to their possessions after they die, as well where they can look to for assistance.
I anticipate that there will always be a reluctance to broach the subject of wills amongst Britons. However, if the financial and legal sector make a conscious effort to improve access to information about wills, and indeed legal guidance in creating wills, hopefully, we will see more and more people being empowered to get their affairs in order.
Andrew Megson is the Executive Chairman of My Pension Expert, the UK’s number one Advised Retirement Income Specialist. Founded in 2010, My Pension Expert specialises in providing independent advice to UK consumers about their pension plans – it arranges millions of pounds worth of retirement income options each week.
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