Author: Sarah Pearson, Solicitor (England and Wales, Hong Kong and NSW Australia)
The Chinese proverb “At birth we bring nothing with us, at death we take nothing away” has Western parallels and is a salutary reminder of our temporary stay on earth. But whatever events lie between our birth and death, most of us would like to leave something behind when we depart, and writing a will can ensure material legacies survive us with the minimum amount of fuss and the minimum amount of money being left to someone we don’t know!
No Time ?
It seems odd that we spend so much time and effort earning a living but most of us seem to begrudge the time and effort needed to write a will. However, not writing a will and,having written one, failing periodically to review it, are false economies.
Different country, different law
Many people have diverse lives - place of birth, nationality, current place of abode, the location of family and friends, the nature and location of assets may all be different. Life can get quite complicated quite quickly as the laws are not the same in each country.
This makes writing a will even more important - that is if you want to dictate who benefits from your years of hard work, rather than leave the law to do so. If you die without a will (“intestate”) with connections to different countries, intestacy laws of more than one country could compete in dictating how your estate is distributed. The fees you have saved in not writing a will could be a fraction of the fees your family / estate could incur in sorting out the mess you have left them.
Whilst many countries’ laws on estate planning and intestacy are fairly ancient and do not change much, regular developments do occur in other areas of those countries’ laws that could have an effect on a will. This is particularly the case in relation to taxation but also in other areas.
Legitimate mechanisms exist in most countries that enable you to minimise the tax payable on your death by structuring your will appropriately (e.g. by giving everything to your spouse, by making gifts during your life time, by choosing how you use your nil rate tax band to benefit family or friends).
Mechanisms also exist in many countries that mean a deceased’s estate can be “optimised” after their death - for example in England it is possible for all beneficiaries to agree to change the terms of the will and this is frequently done where either family members have been overlooked or one family member is in particular need or the will is not tax-efficient (the zero rate tax band has not been used and carrying it over may not be possible or desirable).
But such mechanisms are unlikely to be available if there is a long delay (6 months or more generally) after your death (which could occur if there is no will or there are delays involved in identifying beneficiaries because no addresses or out of date addresses have been given in the will).
Why more than one will?
It may also make sense to have a number of wills, each governed by a different law and made in respect of different assets in different countries. This could speed up considerably the realisation of assets in each country.
Appointing a guardian
If children are involved it could be extremely important to ensure provision is made in a will to ensure someone is identified locally who can take care of them immediately and pending the appointment of their guardian (pursuant to the terms of the will or pursuant to the relevant intestacy laws). Otherwise the children could experience an interesting time “in care” during which time they may feel not only bereaved and unloved but also extremely anxious about what happens next.
Other reasons for making a will or revising your current will include:
If you married after you made your last will, marriage can have the effect of revoking a previous will
Financial planning - it will force you to think about your financial situation and the spread and diversity of your assets
It will force you to think about who benefits from your labours; enabling you to make it clear who you want to benefit by making a gift to them
Many European countries have “forced heirship” rules which dictate how certain family members must benefit - regardless of whether or not a will exists. If you could be subject to these laws you should find out what they state. You may be able to do something about them. These laws may also impact who actually benefits from a gift you make as, for example, the spouse of your chosen beneficiary may become automatically entitled to a share of the property you bequest.
It gives you the opportunity to discuss these issues with family and friends and explain to them in advance - which can often help to diffuse family squabbles that could arise subsequently
If you have a trust in place (this could be inadvertent on your part as, for example,certain investments - typically bonds and pension funds - are structured as such and involve trustees who will be given discretion to distribute the trust assets after your death) then the trustees may have regard to the terms of your will when they distribute the trust assets
The EU Succession Regulation, which has been adopted by many EU Member States has much to say about inheritance issues so if you are an EU national you need to consider whether this law applies to you
Even if you don’t really care who inherits your wealth you will probably have some desire to benefit a chosen purpose/ charity rather than a faceless state/ taxman
The last thing most families need at a time of mourning is having to sort out something you could have sorted out whilst you were alive.
Stay up to date
Whatever you do, do think about it, and be sure that you obtain up to date advice and ensure your estate planning reflects the latest developments in the law(s) applicable to your own unique situation.
Why bother making a will?