PER­SONAL AC­COUNT

The Daily Telegraph - Your Money - - FRONT PAGE - Marc Sid­well

Details mat­ter if you want to pass your money on to the heir of your choice

You can’t take it with you, but you can choose where your money goes when you die. “Tes­ta­men­tary free­dom”, the right to be­queath your es­tate to who­ever you wish, is an old prin­ci­ple in English law. De­spite today’s need­lessly com­plex and re­stric­tive rules on in­her­i­tance tax, the Gov­ern­ment keeps out of what hap­pens to the rest of your es­tate.

It doesn’t have to be that way. In France, thanks to the

rule, you may have dis­cre­tion over just a quar­ter of your es­tate, should you have three liv­ing chil­dren when you die.

In Ger­many, the forced share prin­ci­ple of makes it al­most im­pos­si­ble to dis­in­herit your chil­dren, grand­chil­dren, spouse or par­ents. To do so re­quires both par­ties to sign a no­tarised agree­ment.

By con­trast, our An­glo-Saxon model stands out for its em­pha­sis on strong prop­erty rights and con­tract en­force­ment. It errs on the side of in­di­vid­ual choice rather than judg­ing those choices, qui­etly recog­nis­ing the dan­gers to a free so­ci­ety in weak­en­ing that prin­ci­ple, even for hard or dis­tress­ing cases.

But even in Bri­tain you need to take care to be cer­tain your fi­nal wishes will be hon­oured. There are lim­ited ex­cep­tions, as a case this week showed. When Wyn­ford Hodge died aged 94, the Pem­brokeshire car­a­van park owner left a £1.5m es­tate. He also ex­plic­itly wrote his long-stand­ing part­ner, Joan Thomp­son, out of his will in favour of ten­ants who had helped him in his last years.

That will has now been changed by the courts. The judge ruled that Mr Hodge was mis­taken in be­liev­ing Ms Thomp­son was fi­nan­cially se­cure on her own. He granted her a cot­tage from the es­tate worth £225,000, and a fur­ther £190,000 for re­fur­bish­ment and fi­nan­cial sup­port.

De­spite tes­ta­men­tary free­dom, a nar­row class of claims like Ms Thomp­son’s are al­lowed un­der the 1975 In­her­i­tance Act. This af­fects a will if it fails to make “rea­son­able fi­nan­cial pro­vi­sion” for a spouse, co­hab­i­tant, child or de­pen­dant.

Even this act re­mains within strict lim­its. Ex­cept for a spouse or part­ner, pro­vi­sion is re­stricted to that nec­es­sary for main­te­nance. And in gen­eral the em­pha­sis is on pro­vid­ing in­come rather than trans­fer­ring cap­i­tal. Ms Thomp­son’s case is un­usu­ally gen­er­ous, be­cause she has been granted out­right own­er­ship of a cot­tage.

In many cases, a life in­ter­est only might have been ar­ranged, out of re­spect for the orig­i­nal will.

The im­por­tance of tes­ta­men­tary free­dom re­mains strong, as was reaf­firmed by a rul­ing from the Supreme Court in 2017. A mother’s will had dis­in­her­ited her es­tranged daugh­ter in favour of sev­eral char­i­ties. The daugh­ter chal­lenged the will and re­ceived £50,000 for main­te­nance, a fig­ure then tripled by the Court of Ap­peal. The char­i­ties went to the Supreme Court – and it unan­i­mously cut the daugh­ter’s award to £50,000. The law is on your side, but to avoid le­gal wran­gles there are sim­ple steps that ev­ery­one should take. These can help en­sure your money goes where you want it to af­ter you die.

First of all, make a will and re­view it reg­u­larly. Re­search this year sug­gested two thirds of UK adults had not made a will. Don’t leave the fate of your wealth to be de­cided by oth­ers.

Sec­ond, use a so­lic­i­tor to write your will, and ask if the 1975 Act could af­fect you. Even if not, it is easy to make se­ri­ous er­rors with­out a so­lic­i­tor. For in­stance, wit­nesses to a will can­not be ben­e­fi­cia­ries. If you write your own will at home with a kit and ask rel­a­tives to witness it, you may in­ad­ver­tently dis­in­herit them.

To save money, you can use the free so­lic­i­tor ser­vices pro­vided dur­ing Free Wills Month twice a year. The next is sched­uled for Oc­to­ber.

Third, if you want to be ex­tra sure, get a doc­tor to cer­tify that you are of sound mind when you make your will, to avoid a chal­lenge on grounds of in­ca­pac­ity. Fi­nally, if you are mar­ried and con­sid­er­ing a “mir­ror will”, talk to your so­lic­i­tor about how to pro­tect its pro­vi­sions in the fu­ture if your widow or wid­ower re­mar­ries.

The power to pass on our wealth as we see fit also brings a bur­den of re­spon­si­bil­ity – it is down to each of us to make the right choices. Pre­pare prop­erly to make the best use of your free­dom.

The right to leave your money to who­ever you like has ben­e­fited char­i­ties such as the Blue Cross

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