PAM Guide to Wealth Management


For common law jurisdictions, such as the UK, a Will is a fundamental aspect of wealth management. Making a Will allows you to decide who will inherit your estate on your death, as well as dealing with other important issues, such as who should administer your estate and who should look after your minor children in the event of your death.

If you do not make a valid Will, your estate will be distributed in accordance with the intestacy rules, which determine who will benefit from your estate in a particular order of priority. The way in which the rules apply depends on the value of your estate, and on which members of your family survive you (e.g. spouse, civil partner, children, grandchildren, etc). Different rules may apply to some or all of your estate, if you are domiciled outside England & Wales at the date of your death.

One common misconception about the intestacy rules is that your surviving spouse or civil partner will inherit all of your estate. This is not necessarily the case. For example, if you are survived by a spouse, or civil partner and you have one or more children, then under the intestacy rules your spouse/civil partner will inherit all your personal property and belongings, plus the first £250,000 from your estate. The rest of your estate will be divided into two: your spouse/civil partner will receive one half, and the other half will pass to your children at the age of 18. This may not be appropriate, depending on the value of your estate and the age of your children.

If you have a partner, but you are not married, or in a civil partnership, then your partner will not be entitled to receive anything from your estate under the intestacy rules (although they may be able to make a claim for provision from your estate for which, see below).

Making a Will, on the other hand, enables you to leave your estate to whomever you wish and it allows you to decide who will administer your estate and act as trustees of any trusts which arise under your Will (known as executors and trustees). Who you appoint as executor(s) and trustees is likely to depend on your personal circumstances and the complexity of your affairs, but may include a combination of friends or family and professionals, such as a solicitor.

Under the laws of England and Wales, you can leave your estate to anyone you choose. This is subject to any claims which may be made under statutory provisions found in the Inheritance (Provision for Family and Dependents) Act 1975, which allows certain categories of people to make a claim against someone's estate, if they have not been left anything, or if they consider that the provision which has been made is insufficient. These rules apply, whether or not you have a Will in place; the advantage of having a Will, however, is that you can give consideration to any potential claims at the time of preparing your Will and take appropriate steps, which may help to prevent claims from being made in future.

The precise terms of your Will depend on your personal and family circumstances, tax considerations and the assets in your estate. Jointly owned property does not pass under the terms of your Will, but instead passes automatically on your death by survivorship. Assets held in trust for your benefit will not pass under the terms of your Will. It is, therefore, important to consider the terms on which you hold assets, to ensure that they pass in accordance with your wishes. Foreign assets (for example, a property situated in Spain) require separate consideration and it will usually be necessary to take specific advice in the relevant jurisdiction about succession to such property.

Married couples, or those in a civil partnership, may wish to leave their entire estate to their surviving spouse, or civil partner (either outright or on life interest trusts), with assets passing to their children on the death of the survivor. The advantage of this is that the surviving spouse, or civil partner will inherit the entire estate free of inheritance tax (due to the spouse exemption), subject to limitations in the case of spouses, or civil partners who have different domicile profiles.

Depending on the value of the estate, there may then be inheritance tax to pay on the death of the survivor, when the assets pass to the children, after taking into account the available nil rate bands and any other exemptions and reliefs. Thought needs to be given to the age at which children should receive their inheritance; it may not be appropriate to leave assets outright to the children to receive at the age of 18 (for example if they stand to inherit significant wealth), in which case there may be merit in incorporating trusts into your Will, effectively postponing the age at which children receive capital. For more information, including the inheritance tax considerations of using trusts, see the section on Trusts below.

Under current law, after your death it is possible for the beneficiaries of your estate effectively to vary their entitlement under the terms of your Will in favour of others. Where the variation is made by deed within two years of your death, the disposition is treated for inheritance tax and some capital gains tax purposes as if it was made by you. This variation (known as a deed or instrument of variation, or a post-death variation) can be made where the beneficiaries are adults and agree to the alteration; in limited circumstances it is possible to make an application to ask the court to agree to a variation on behalf of a minor, or an adult who lacks mental capacity. A variation can be advantageous in certain circumstances, for example it may allow for assets to be passed on to the next generation in a tax efficient way, or could make use of exemptions and reliefs which might otherwise have been lost.

An alternative way of increasing the flexibility of your Will is to incorporate discretionary trusts (either of a specific amount e.g. the nil rate band, or a full discretionary trust of residue, instead of leaving fixed interests to named beneficiaries). The terms of the trust would be set out in the Will; the trustees would then have discretion after your death as to how and when to distribute the trust funds among your chosen beneficiaries (e.g. your spouse/civil partner and/or children). The trustees could take into account the circumstances and needs of the beneficiaries on your death, as well as the value of assets and any available reliefs (such as business property relief) and ensure that the assets pass in the most appropriate way. Whilst there are possible tax advantages of this route, this does mean that the trustees have a great deal of influence over the distribution of your estate and you would need to give very careful consideration to who you name as trustees, assuming you decide to go down this route. You might also like to give them some guidance about how you would want your estate to pass, by way of what is called a 'letter of wishes'. This letter is not formally binding on the trustees, but would help guide them when exercising their powers and discretions.

When to review your Will

It is important to review your Will on a regular basis. Significant stages in your life when you should review your Will include:

  • when you are (or are contemplating) getting married, or entering into a civil partnership, since marriage/civil partnership will revoke your existing Will, unless it is made in contemplation of that marriage/civil partnership;
  • when you separate from a long term partner, or divorce your spouse, or dissolve a civil partnership;
  • when you have children;
  • when the circumstances of your close family members change e.g. when your children become adults and leave full time education and when they marry, divorce, or have children of their own;
  • on your own retirement, when you may be considering estate planning and lifetime giving more generally; and
  • on the death of a partner, or close family member.

Other circumstances would include moving to another country, or acquiring assets elsewhere in the world, at which point it would also be appropriate to take professional advice in the overseas jurisdiction.

A solicitor can prepare a Will for you and advise you on inheritance tax, and can also advise on the formalities for executing your Will. The cost of the advice will depend on a range of things, including the size and complexity of your estate (for example, whether you own a business, or agricultural property, or if you own foreign property, which will require separate consideration), your family circumstances (for example, if you have children from a former relationship, if you have a pre-nuptial agreement in place), and your wishes, including whether you plan to include trusts in your Will.

There are DIY Will packs available, which may seem like the cheapest option, but they are unlikely to be suitable for all but those with the most straightforward affairs and, in fact, can end up expensive in the long run, if professional legal advice is later required in order to unravel an inappropriately drafted Will.

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