cash clinic: making a will is only the first step to a secure future for your children

13th November 2010

The Scottish private client and financial services team answer your queries, this week: the importance of making a will as part of your succession planning strategy.

Q My husband and I are thinking of having a family and I have started worrying about what would happen to me if he died. I will be very dependent on him financially if we have a baby as I intend to stop working. He has not made a will so we don't currently have anything in place to organise the finances should anything happen to him.

A As a general rule, you should both make wills and review them at least every three years. If you do not make a will any property you leave (known as your estate) might not go to the people to whom you would want it to go.

It is also important to recognise that wills are only one part of a succession planning exercise. Inheritance tax (IHT) is currently charged at a rate of 40 per cent on estates over the value of the nil rate band, which is currently £325,000. Up to 100 per cent of the unused proportion of the nil rate band of whichever spouse dies first can be claimed on the surviving spouse's death, provided the estate is left to the surviving spouse.

Please bear in mind that any gifts made in the seven years prior to death would be taken into account. There would therefore be IHT at 40 per cent over this amount. This is very different from the IHT position if you were not married and were just living together and there are several IHT and financial planning mitigation measures which could be taken.

You do not say whether either of you are or were previously married, or have children already, but this would also be important. Under Scots Law, if an individual dies and does not leave a validly executed will their estate is distributed according to the rules of intestate succession. Your surviving spouse is entitled to claim "prior rights" and these are significant. "Legal rights" can also be claimed by your spouse and children in your estate.

It is essential that you seek specialist legal and financial advice on these matters.

Glen Gilson is a partner and head of private client and financial services at HBJ Gateley Wareing.