26/06/2018
Wills have hit the headlines again recently with reports of banks ripping off customers who used financial institutions to make their will.
Up to 1.5 million people are believed to have signed up to will writing services offered by banks in the late 1990s and early 2000. Now, families of those who took out the service are being slapped with hefty bills to administer the estate.
While people paid as little as £75 for the service, or in some cases it was free, the small print in the contract allowed banks to appoint themselves as the executor of the will. Being an executor is an official legal role with responsibility for everything from disposing of property to paying bills and taxes.
Charges being levied by the banks involved are up to 2.5% of the value of the estate for legal fees. Although the figure doesn’t appear to be much, an estate worth £500,000 can incur charges of up to £12,500 – around six times the typical cost of £2,200.
When people took out these wills they may not have understood or been fully aware of the costs and consequences of assigning the bank as executor. And, while the charges may have appeared to be reasonable, with house prices soring 23% in a decade, even the estates of those on modest incomes can attract hefty fees.
The will writing service provided by banks, which was offered as a benefit of taking out insurance or signing up to fee charging current accounts, are thought to have earned the banks around £9 billion. Although customers can ask the bank to step down as executor, it usually incurs a fee and the bank doesn’t need to comply.
If an estate is straightforward, a family member can be appointed as the executor which costs nothing. If the situation is more complicated, however, many people chose to appoint intermediaries, such as solicitors, who can navigate the complexities of the law, often for hugely reduced costs to those being charged by the banks.
Around two thirds of UK adults haven’t made their will. While writing a will is all too often seen as one of those jobs you’ll get round to ‘tomorrow’, the benefits of planning ahead can be invaluable. It’s usually a straightforward process, but if it’s not done properly there can be repercussions. From an emotional perspective, it will be a very difficult time for your loved ones so, for their sake, try to make it as easy as possible. Here’s a list of some of the things you need to consider when drafting your will:
- It’s an unfortunate truth; money changes people. Making a will helps prevent family disputes over your estate
- It’s irrelevant whether you’ve promised certain possessions, property or money to specific people, if you have no will, the law decides who benefits from your legacy, not you
- Aside from your ‘paper accounts’, make sure you document any online financial accounts or policies or risk part of your estate being lost in the ether. DON’T document the passwords to your online accounts as this breaches security and don’t leave a list of accounts within the will itself as these can change and you will be forever paying to amend your will. Simply leave a note to your executor of where the information is stored so they can notify those organisations of your passing and make the necessary arrangements to transfer or wind up the accounts
- Don’t forget to let people know about any social media accounts you have too. Provide instructions about what you want to happen to them
- Using an online website to do it yourself can backfire as they don’t take into account the complexities of the law. This could result in your nearest and dearest paying to rectify things retrospectively
- Will writers aren’t regulated. This means they can promote themselves as experts without actually having any qualifications or accreditations at all
- Getting married automatically invalidates your existing will
- If you’re estranged from your partner and have entered into a new relationship with someone else, it doesn’t matter if you live together; if you’re not married or in a civil partnership, you’re new partner isn’t legally entitled to anything if you die
- If you’ve split from your ex acrimoniously and you die without having changed your will, your ex stands to inherit as, technically, you’re still married
- Dying without a will can leave an estate liable for inheritance tax
- Leaving money to charity in your will is just one of the ways to help reduce the amount of tax payable on your estate. This is something a solicitor can advise you on
- It’s not as expensive as you might think, especially if you’re planning to draft a joint will (also known as a mirror will) as they’re often discounted
- Finally, and perhaps most importantly, make sure you sign it. Without your signature at the bottom, your will isn’t worth the paper it’s printed on
If you’re thinking about making, or changing, your will, Russell and Russell can help. We’re bound by the Solicitors Regulation Authority’s code of conduct and are legally obliged to maintain high levels of service. We’re also accredited to the Law Society’s Wills and Inheritance Quality Scheme (WIQS), which sets the benchmark for best practice and transparency in the provision of wills and estate planning services.
Also, all our solicitors are accredited to Solicitors for the Elderly, an independent organisation of legal advisers who provide specialist legal advice for older and vulnerable people, their families and carers. In addition to this we’re a Dementia Friendly business and firmly believe in explaining things in plain English so clients are not baffled by legal jargon.
We provide advice and guidance on wills, lasting powers of attorney, court of protection and more complex financial issues, such as inheritance tax and trust planning. We offer a free, no obligation consultation where we can talk through your circumstances and advise on what’s best for you. Visit our website or drop in for a chat at any of our branches.
Please note that this article is meant as general guidance and not intended as legal or professional advice. Updates to the law may have changed since this article was published.