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Making a Last Will and Testament

The financial consequences dying intestate can be significant. Without a will to indicate our wishes, the state steps in and distributes our property according to the prevailing laws of the land. Many people think their estate will go to their partner when they die, but this isn't necessarily the case. An unmarried partner is not automatically entitled to anything. If you have no apparent heirs and die without a will, it's even possible the state may claim your estate. Your 'estate', by the way, is everything you own...house, savings, car, insurance policies, etc.

ELEMENTS OF A WILL

Here are the basic elements generally included in a will:

Your name and where you live
A brief description of your assets
Names of spouse, children and other beneficiaries, such as charities or friends
Alternate beneficiaries, in the event that a beneficiary dies before you do
Name of an executor to manage the estate
Name of a guardian for minor children
Name of an alternative guardian, in case your first choice is unable or unwilling to act
Your signature
Witnesses' signatures

PREPARING A WILL

Start by organising what you need: outline your objectives, complete an inventory of your assets, estimate your outstanding debts and prepare a list of family members and other beneficiaries.

Use this information to consider carefully how you want to distribute your assets. Ask yourself lots of questions. Is it important to pass my property to my heirs in the most tax-efficient manner? Do I need to establish a trust to provide for my spouse or other beneficiaries? How much money will my grandson need for college? Do I need to provide for a child who has a disability?

Making an inventory of the assets is the key to making a will. As far as possible, all assets should be mentioned in your will. Any items not specifically mentioned may be addressed in a catch-all clause which generally goes along the lines of 'I give the remainder of my estate to...' Without this clause, any items not specifically mentioned are likely to be distributed in accordance with the prevailing laws of the land.

Outstanding debts will usually be paid by your estate before your beneficiaries get their cut. If you get enough notice of your impending shuffle off the mortal coil, you may want to clear up debts that you know will be a problem, or at least make specific provisions for payment of those debts in your will. You have to be specific and clear when naming beneficiaries. For example, state the person's full name as well as his or her relationship to you (child, cousin, friend, etc.) so your executor will know exactly who you mean. Clarity will help to prevent challenges to your will. You generally can't turn up in court after your death to resolve any outstanding questions about your intentions.

ESTATE TAXES

The way these apply vary significantly from country to country. (Don't forget that holiday home in Spain.does Spanish law apply?) However, you should be able to minimise your estate tax by establishing a trust or giving gifts during your lifetime. A properly written will also allows for provision to be made to lessen the impact of inheritance tax. You can also cover the cost of estate taxes by purchasing a life insurance policy intended to pay taxes.


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