What would Dr Mo Lar do? Part 11
Over the course of this 11-part series, the 4dentists group has explored ways to tackle a number of personal and professional challenges by providing advice and guidance to fictional character Dr Mo Lar. In this final article of the series, Managing Director of the 4dentists group Richard Lishman explains the importance of making a will.
From graduating and starting a family right through to buying and selling his business, we have looked at every eventuality that Lar would have to consider to maximise his profits and protect his assets. Now, at this stage of his life, all that is left to do—apart from enjoy his retirement, of course—is to ensure his affairs are in order.
A legal will is essential for any person with property, savings, investments, insurance policies, dependants or a business, as it ensures that one’s estate is shared according to one’s wishes. For Lar, a will not only guarantees that his hard-earned money will be passed on to his loved ones, but prevents his wealth from falling into the hands of the taxman, or at least any more than is necessary. Were he not to have one, his wife would inherit the first £250,000 of the estate and half of the remaining estate, with the other half split between their children. Though this would not be a problem in this instance, having a will allows Lar to arrange his estate in his own way rather than it being divided in a predetermined way according to the rules of intestacy.
Setting up a trust for any beneficiaries included in the will is a particularly efficient way of transferring assets, as it yields all of the benefits of receiving inheritance without incurring any of the inheritance tax charges that would usually apply. In Lar’s case, a trust has been established for his life assurance policy naming his wife and children as the beneficiaries, and this has been written into his will to ensure that the value of the policy will be paid out at the right time. To prevent his pension benefits from forming part of his taxable estate after death, he would be advised to establish a trust for this too. Care should always be taken when naming the trustee in the will to secure the smooth administration of the estate.
The same advice applies when naming the executors of the will, as putting faith in the wrong person could spell disaster later on. At present, Lar has his best friend listed as the executor of his will, but after a recent dispute is considering naming a professional executor to administer the will instead. Naturally, using a solicitor will incur fees, but this is a small price to pay for peace of mind.
Lar should also double-check his will to ensure that all of his assets are included. Any existing investments, savings or bonds/shares that he has would need to be included to guarantee that they form part of the estate. A will can be changed at any time and should be reviewed every five years to ensure that details are current or after a major life change, such as moving house, having a child, getting married and getting separated or divorced. Though Lar has no intentions of moving and is happily married, there is always the possibility of grandchildren in the future, and this might impact his will at a later date. He may also wish to add other relatives, such as nieces or nephews, so Lar should endeavour to revisit his will at the recommended interval of five years.
All in all, Lar is well prepared for when the inevitable happens owing to his decision to utilise a specialist lawyer. He can rest assured that his family will be financially cared for once he is gone without any pressure of arranging the estate or having to worry about the tax implications. Such is the way that he has arranged his will that all the correct assets will go to the right people at the right time—and all in the most tax-efficient manner too.
Unfortunately, however, not everyone is as organised as Lar when it comes to making a will, with figures showing that over half of UK adults have not written a will. To protect one’s assets and one’s loved ones, it is important to have a will drawn up while there is still time.