A will is the only way to ensure that assets pass to your chosen beneficiaries on your death. You can also appoint executors and trustees to administer your estate and deal with any trusts.
In the case of children, a will can outline the controls you wish to impose on your money and if they are under the age of 18, you can appoint guardians to take care of them. If you do not appoint guardians, the courts determine who will look after your children.
Trustees take care of your money if children are the beneficiaries until they reach an age specified in the will, although you can still provide for education and general wellbeing. Without a will, your children will inherit at the age of 18. If you have a partner, but you are not married, that person has no automatic entitlement to your assets. Their only form of redress is to claim against your estate, which can be costly and unpleasant.
For those without a will, the law determines who receives your estate. In many cases, your property will be owned jointly with a spouse and will pass automatically to them on your death. However, if you have assets (including life insurance) in your sole name and you have children, your spouse will only receive the first £325,000 (as of February 1, 2009). The rest will be split between your children and a trust, so your spouse receives an income, with the remaining capital going to your children on your spouse’s death. If you have no direct blood relatives, your cousins could be in for a windfall or failing that, the crown.
Property often forms a major part of an estate. The current inheritance tax threshold is £325,000, which means anything above that amount will be subject to 40% tax. A carefully drafted will could see this liability reduced drastically.