Wills and civil partnerships

If you have a civil partnership ceremony you need to renew your Will as any previous Will is invalid unless you carefully worded it allowing for the possibility of a civil partnership.

If you have never had a Will, now is the time to write one, you can do it before your civil partnership ceremony, as long as it says 'in contemplation' of your civil partnership.

The Civil Partnership Act will automatically give you spousal inheritance rights and you will not have to pay 40 per cent inheritance tax, however, it is much better to decide what you want to do with your estate. Lesley Gaskell of solicitors Cooper Sons Hartley & Williams says: 'If you do not make a Will the state determines what happens to your estate, whereas you should decide yourself.'

If you don't have a Will, intestacy rules will apply. For example, if you own a house worth £250,000 your civil partner might only inherit part of the value of the property and have to sell the house to fulfil the intestacy rules of inheritance.

Caroline Bates of solicitors, Newsome Vaughan says it is also vital for civil partners to obtain appropriate inheritance tax advice to make best use of all available allowances. Gifts between spouses or civil partners are exempt for inheritance tax. As such, by leaving all your estate to your partner, you can potentially lose allowances. On present values this can mean the potential for an unnecessary tax bill of £110,000 on the death of the surviving spouse.

Christopher McNeil of Anthony Gold solicitors, advises:

  • Make sure both partners' Wills match
  • Remember any existing agreement about joint property ownership/occupation may not stand; matrimonial law will now apply in the event of a later dispute.ø
  • Make sure you register your civil partnership before transferring any assets to each other; registration is not an amnesty for transfers already made and these will be taxable in the normal way.
  • Watch out for joint private company shareholdings, which will now be valued as though each partner's shares were part of the combined, larger holding. This revaluation could create an unexpected CGT charge on a later sale.
  • Check your domicile. Are you both deemed UK domiciled? If not, the exemption from inheritance tax on assets you receive from each other can be limited to just £55,000.

The tax implications of not having a Will depend on your circumstances. The current position is that anything you leave to your civil partner, or to a charity, is not chargeable to inheritance tax. Anything else you leave above the level of the 'Nil Rate Band' (which is currently £275k) is taxable at 40%. A solicitor or accountant will be able to advise you on whether you can avoid paying part or all of the potential inheritance tax due.

A basic Will costs between £50-200 plus VAT depending on the complexity. It can be drawn up by email or telephone. You can of course, buy a book and write your own but this can have pitfalls. 'If you make a DIY Will you may not get it right, I have seen such wills and the cost of proving the Will has been much greater to the estate than if the deceased had paid for a Will in the first place,' says Gaskell.

By having a Will you can decide exactly where you want your assets to go after your death. 'If you want to leave your hair wax collection to your best friend from primary school that's absolutely fine,' says Eve Carlile of Burton Woods solicitors. 'You can also use your Will to appoint a guardian for your children or for your cats and you can make gifts to charity,' she adds.

What you can include in a Will:

  • Who is to deal with your estate - an 'executor'
  • Who is to deal with any funds held in trust (eg for children) - a 'trustee'
  • Who is to be legally responsible for the day to day care of children - a 'guardian'
  • List of gifts, be they amount of money or specific items.
  • The gift of the majority of your estate (or the largest / highest priority) after the payment of small gifts and debts - 'Residuary Estate'
  • Alternative gift recipients can be listed (in case any predecease you)øFuneral directions
  • General provisions to make dealing with the estate more straight forward - 'administrative provisions' (Your advisor should help you with these)ø

If you own foreign property, you should always consult a lawyer qualified in the jurisdiction in question. However, foreign property can be included in your Will.

A well-drafted, properly thought out will can last you a lifetime. However, for most of us it's wise to reconsider our wills every time a major change takes place in our lives.