Landlords need a will
Oh god, it’s come to this, I must be getting old.
Writing a will. Damn does this mean it’s all about death and senility.
Well not exactly.
I’ve never thought about what happens to my properties should I shuffle off this mortal coil. Somebody else’s problem!
However, as a result of my latest venture to set up a cookery school with my girlfriend. It’s an inevitable part of taking up your responsibilities and making sure that you protect the interests of those closest to you.
Landlords not making a will
Firstly, if you have never made a will. You are not alone. Approximately 7 out of 10 people die intestate without making a will. The result is that the estate is divided between a landlord’s spouse and their blood relatives according to the laws laid out by Parliament. Where there are no traceable relatives the estate goes to the crown.
Why make a will?
Many landlords don’t consider themselves rich, because they may feel relatively cash poor. However they are often asset rich which can make them quite a target for ‘gold diggers’.
You make not be aware that in 1995 the government passed a new measure called the Law Reform Succession Act 1995. This amended the 1975 Inheritance Act which meant that the vast majority of couples living outside wedlock can now seek financial provisions from the estate of a deceased cohabitee. A landlords ex and their children can still make a claim. This situation potentially makes it open season if a landlord dies suddenly without making a written will.
The result is a potentially a contested will where the only winners are the solicitors!
What you should include in your will:
Things that you should consider including in your will are:
- how much money and what property and possessions a landlord has.
- who a landlord wants to benefit from their will.
- who should look after any children under 18 years of age.
- who is going to sort out a landlord’s estate and carry out a landlord’s wishes after their death – that is your executor.
An executor is the person with the legal responsibility for administering a will. Traditionally it has been a solicitor although anybody can be appointed in the will to do it.
A word of caution. Professionalism doesn’t mean financially disinterested! Professional executors are entitled to charge fees relating to the value of the estate, typically 2-4%. Now that might equate to a couple of thousand on a small estate but could easily become a couple of hundred thousand where a landlord has a large portfolio.
Where a landlord dies intestate the administration of the estate could run into years or even decades before disputes between the interested parties are resolved resulting in the executors pocketing a small fortune over the years. My advice would be to include a cap on the executors fees in your will.
Tax planning and your estate.
A recent change to the tax laws has increased the pressure on a landlords estate. The old rules which gave the revenue only 60 days to investigate the estate have been scrapped allowong the revenue up to 7 years to trall back into a landlords financial history.
Where should landlords go to get a will written?
A lot of people still go to a solicitor to get their will written. Not me I’m too tight! A solicitor will normally charge a landlord between £50 – £300 for writing a will depending on the complexity and time taken to draft it, if you decide to go down this route. Normal landlord rules apply. That’s shop around to get the best deal.
In fact one in every five of us actually writes our own will.
If you decide to go down the non-custom route as I have. There are numerous legal stationers that produce packs instructing a landlord how to go about writing a will.
The other alternative a landlord has is to use one of the burgeoning number of websites that provides an online template for landlords to write their will. Those websites charge slightly more than buying a stationary pack but have the advantage of providing online or telephone support to guide a landlord through the process of writing one.
Some of the most popular are:
Should a landlord write their will themselves?
If your finances are simple then you may feel there is no reason to employ a solicitor.
The consumer association Which? says you should use a solicitor if you have:
- a complicated estate or the way you wish to pass it on is very detailed.
- remarried and have children from a previous marriage
- assets outside the UK
- a business
- assets in excess of the inheritance tax threshold
- someone with mental or physical disabilities to look after.
Once you have made your will, it is important to keep it in a safe place. Not so safe that you forget where it is! Therefore it’s always a good idea to tell your executor or a close friend or relative. If you use a solicitor to write your will they will normally keep the original and send you a copy.
Once the will is made you need to keep it up to date. As your portfolio hopefully grows you might want to change or expand your generosity.
Things happen like divorce, children etc, so remember to keep it current and up to date. Any change must be by ‘codicil’ (an addition, amendment or supplement to a will) or by making a new will.
And finally after all that…..remember to sign it.