Writing a Will (the estate as opposed to life insurance and pension).

mp203

Writing a Will

Hi.

I’m writing my will at the moment. It’s relatively small, and straightforward but I have a couple of questions.

The will has 4 components as I see it. My house. My savings. My pension. My life insurance.

I want to leave my house and savings to my daughter.

I want to leave my life insurance to her mum, my ex (we weren’t married).

And I’d like my pension to be used to pay off my mortgage, other debts, funeral expenses, and any other expenses, with the balance going to my daughter.

I’ve been told that only two of the above go in my will (only two are part of my estate); my house, and my savings. My pension and life insurance don’t go in my will; I have to instruct (advise?) the respective companies regards where those monies go.

The reason I’d like debts and expenses to come from the pension is as follows.

My daughter is a child (under 18) and I’m writing my will imagining me dying before she turns 18 (if I’m still alive when she turns 18 I can rethink it, and re-write the will if necessary). I want her mum to let the house until my daughter is 18, and then my daughter can take it from there; and my savings won’t cover all of my debts etc, so I’m thinking those will have to be paid for from either my life insurance, or my pension.

I want to leave my life insurance to my ex as it’s around the amount I want to leave to her anyway, and it’s a fixed sum, I know now how much it will be (failing any unforeseen issues). Whereas my pension is more than I want to leave her, and it’s an amount that fluctuates, but it will cover my debts and expenses, with some left over for my daughter.

Can I do it this way? And if so, is it the wisest way to do it? Will the insurance company agree to pay out to my ex at my request, if she outlives me? Will the pension company agree to my request? How might that one work? Could I ask the pension company to pay out to my estate, from where it can be used to pay my debts, expenses etc? Or do they insist on it going to a person? If the latter, I’m guessing that the estate and the person are one and the same, i.e, my daughter (?).

My main concern is a forced sale of the house, to pay debts and expenses, if anything ‘went wrong’ with the pension. I don’t mean if there wasn’t enough in the pension to cover the debts etc; I mean went wrong as in some admin issue or whatever.

Nb. My daughter’s mum, my ex, has agreed to be the executor, but she doesn’t know the contents of the will. She will also be the trustee. I’ve advised/requested in a separate letter that she keeps the house for my daughter until she is 18, and uses the pension to settle the debts etc. And that I wish for her to receive the money from my life insurance policy.

eastcorkram

I thought the pension shouldn't even be mentioned in a will. I thought that was just done via expression of wish.

poseidon1

mp203 said:

Writing a Will

Hi.

I’m writing my will at the moment. It’s relatively small, and straightforward but I have a couple of questions.

The will has 4 components as I see it. My house. My savings. My pension. My life insurance.

I want to leave my house and savings to my daughter.

I want to leave my life insurance to her mum, my ex (we weren’t married).

And I’d like my pension to be used to pay off my mortgage, other debts, funeral expenses, and any other expenses, with the balance going to my daughter.

I’ve been told that only two of the above go in my will (only two are part of my estate); my house, and my savings. My pension and life insurance don’t go in my will; I have to instruct (advise?) the respective companies regards where those monies go.

The reason I’d like debts and expenses to come from the pension is as follows.

My daughter is a child (under 18) and I’m writing my will imagining me dying before she turns 18 (if I’m still alive when she turns 18 I can rethink it, and re-write the will if necessary). I want her mum to let the house until my daughter is 18, and then my daughter can take it from there; and my savings won’t cover all of my debts etc, so I’m thinking those will have to be paid for from either my life insurance, or my pension.

I want to leave my life insurance to my ex as it’s around the amount I want to leave to her anyway, and it’s a fixed sum, I know now how much it will be (failing any unforeseen issues). Whereas my pension is more than I want to leave her, and it’s an amount that fluctuates, but it will cover my debts and expenses, with some left over for my daughter.

Can I do it this way? And if so, is it the wisest way to do it? Will the insurance company agree to pay out to my ex at my request, if she outlives me? Will the pension company agree to my request? How might that one work? Could I ask the pension company to pay out to my estate, from where it can be used to pay my debts, expenses etc? Or do they insist on it going to a person? If the latter, I’m guessing that the estate and the person are one and the same, i.e, my daughter (?).

My main concern is a forced sale of the house, to pay debts and expenses, if anything ‘went wrong’ with the pension. I don’t mean if there wasn’t enough in the pension to cover the debts etc; I mean went wrong as in some admin issue or whatever.

Nb. My daughter’s mum, my ex, has agreed to be the executor, but she doesn’t know the contents of the will. She will also be the trustee. I’ve advised/requested in a separate letter that she keeps the house for my daughter until she is 18, and uses the pension to settle the debts etc. And that I wish for her to receive the money from my life insurance policy.

You have not indicated whether your collective assets at death might be high enough to attract IHT , bearing in mind you have no surviving spouse exemption available.

In any event, the life assurance policy should be written in trust for your ex so that those proceeds,  will not form part of your estate for iht purposes and the proceeds can be paid quickly to your ex without waiting for probate.  Approach the life company immediately for a trust document.

I assume you have a DC pension and not DB ( no pension pot with DB pension).  I assume you are also aware of the proposal for DC pensions to become subject to IHT from 2027 onwards, so depending on values of all your other assets ( life policy excluded if place in trust), IHT could impact the quantum of the pension pot available for the purposes you have outlined.

With regard to the mortgage, is there any reason you do not have a dedicated mortgage protection policy to handle that debt on premature death?

Given all your concerns on behalf of daughter and ex, you could benefit from a consultation with an IFA or chartered financial planner to join the dots on a cohesive estate plan of action, and a holistic  review of your current arrangements to see where else you may have missed a trick.

p00hsticks

Would it be simpler to take out a separate insurance policy specifically to pay off the mortgage on death ? 

Also I'm assuming that your ex has full custody of your daughter - if not then I think you also need to include naming a guardian to take over your parental responsibilities for her....

Keep_pedalling

You should not attempt to DIY this, please get your will drawn up with a local solicitor. Your prnsion falls outside your estate, and if written in trust so does your life insurance. 

msb1234

Who’s going to pay for the upkeep of your house until your daughter is 18? Also, she will lose any first time buyer status if the house isn't sold. You’re assuming here that she’d want to keep the house - she very well may not. This will impact her financially when she wants to buy another property. 

I suppose you have your reasons for handing over a substantial sum of money to your ex instead of all your estate going to your daughter - it seems a bit odd though. Your debts will have to be settled before your estate is distributed - leaving your life insurance to your ex means that it would not be able to be used to pay off your debts. The house would have to be sold to pay the mortgage. In addition, if your ex got married, her husband would be entitled to half of that money. 

The simplest thing to do is leave your estate in its entirety to your daughter. 

Savvy_Sue

mp203 said:

My daughter is a child (under 18) and I’m writing my will imagining me dying before she turns 18 (if I’m still alive when she turns 18 I can rethink it, and re-write the will if necessary). I want her mum to let the house until my daughter is 18, and then my daughter can take it from there; and my savings won’t cover all of my debts etc, so I’m thinking those will have to be paid for from either my life insurance, or my pension.

<SNIP>

Nb. My daughter’s mum, my ex, has agreed to be the executor, but she doesn’t know the contents of the will. She will also be the trustee. I’ve advised/requested in a separate letter that she keeps the house for my daughter until she is 18, and uses the pension to settle the debts etc. And that I wish for her to receive the money from my life insurance policy.

You say you want your ex to rent the house out on behalf of your daughter. IMO that's a big ask, with all the responsibilities of being a landlord these days, and it can go terribly wrong. It appears to be in a Letter of Wishes rather than the will itself, so it's not binding, but still. 

And personally I can't quite follow the logic. If it's being let out, it won't be 'your daughter's home' any more: someone else will be living there. And it may be quite painful for her to see someone else making changes to it, when it's still 'her house', but she has no control over it until she's 18. 

Also do consider whether it's a suitable house for letting out: in good repair, in the right area, with a decent rental market around. If it's not, don't do it!

twopenny

I'd agree having worked in probate, get it done properly so you know it's right. 

Should be under £100 and ask around for the best price.

You can get a cheap deal through the Charity will writing and leaving a small amount to the charity.

https://www.rememberacharity.org.uk/making-a-will/what-is-free-wills-month/

mp203

eastcorkram said:

I thought the pension shouldn't even be mentioned in a will. I thought that was just done via expression of wish.

Thanks. Yes, that's what I've been told. I'll only be mentioning the pension in a letter to my ex-partner, my daughter's mum; as well as asking the pension company if they can pay out to my estate/my daughter (one and the same?).

mp203

poseidon1 said:

mp203 said:

Writing a Will

Hi.

I’m writing my will at the moment. It’s relatively small, and straightforward but I have a couple of questions.

The will has 4 components as I see it. My house. My savings. My pension. My life insurance.

I want to leave my house and savings to my daughter.

I want to leave my life insurance to her mum, my ex (we weren’t married).

And I’d like my pension to be used to pay off my mortgage, other debts, funeral expenses, and any other expenses, with the balance going to my daughter.

I’ve been told that only two of the above go in my will (only two are part of my estate); my house, and my savings. My pension and life insurance don’t go in my will; I have to instruct (advise?) the respective companies regards where those monies go.

The reason I’d like debts and expenses to come from the pension is as follows.

My daughter is a child (under 18) and I’m writing my will imagining me dying before she turns 18 (if I’m still alive when she turns 18 I can rethink it, and re-write the will if necessary). I want her mum to let the house until my daughter is 18, and then my daughter can take it from there; and my savings won’t cover all of my debts etc, so I’m thinking those will have to be paid for from either my life insurance, or my pension.

I want to leave my life insurance to my ex as it’s around the amount I want to leave to her anyway, and it’s a fixed sum, I know now how much it will be (failing any unforeseen issues). Whereas my pension is more than I want to leave her, and it’s an amount that fluctuates, but it will cover my debts and expenses, with some left over for my daughter.

Can I do it this way? And if so, is it the wisest way to do it? Will the insurance company agree to pay out to my ex at my request, if she outlives me? Will the pension company agree to my request? How might that one work? Could I ask the pension company to pay out to my estate, from where it can be used to pay my debts, expenses etc? Or do they insist on it going to a person? If the latter, I’m guessing that the estate and the person are one and the same, i.e, my daughter (?).

My main concern is a forced sale of the house, to pay debts and expenses, if anything ‘went wrong’ with the pension. I don’t mean if there wasn’t enough in the pension to cover the debts etc; I mean went wrong as in some admin issue or whatever.

Nb. My daughter’s mum, my ex, has agreed to be the executor, but she doesn’t know the contents of the will. She will also be the trustee. I’ve advised/requested in a separate letter that she keeps the house for my daughter until she is 18, and uses the pension to settle the debts etc. And that I wish for her to receive the money from my life insurance policy.

You have not indicated whether your collective assets at death might be high enough to attract IHT , bearing in mind you have no surviving spouse exemption available.

In any event, the life assurance policy should be written in trust for your ex so that those proceeds,  will not form part of your estate for iht purposes and the proceeds can be paid quickly to your ex without waiting for probate.  Approach the life company immediately for a trust document.

I assume you have a DC pension and not DB ( no pension pot with DB pension).  I assume you are also aware of the proposal for DC pensions to become subject to IHT from 2027 onwards, so depending on values of all your other assets ( life policy excluded if place in trust), IHT could impact the quantum of the pension pot available for the purposes you have outlined.

With regard to the mortgage, is there any reason you do not have a dedicated mortgage protection policy to handle that debt on premature death?

Given all your concerns on behalf of daughter and ex, you could benefit from a consultation with an IFA or chartered financial planner to join the dots on a cohesive estate plan of action, and a holistic  review of your current arrangements to see where else you may have missed a trick.

Thanks.
Sorry, I forgot to mention IHT. The estate is below £325k so I don't think IHT will be an issue.

Regards my life insurance policy being written in trust for my ex; is that straightforward? Will the insurance company agree to that? I seem to remember either insurance or pension not being straightforward in that respect, but I can't remember which. With one of them I was told that you can name someone as beneficiary but there is a degree of discretion on the part of the company.

I think I have a DC pension, having Googled the difference. Google informs me that a DC, a defined contribution pension, is based on how much me and my employer invest, and how those investments perform. I only found out I actually had a pension in 2019. Standard Life got in touch out of the blue. Apparently one of my employers, back in the 80s and 90s made some contributions. Since 2019 I've been paying in some money here and there. 

As for a dedicated mortgage protection policy; it's only a small mortgage now, of around £10k. As I said, my pension can cover that, and any other debts, and expenses, with something left over for my daughter. Should I still look into a policy though? Even if it's just £10k?

Regards a consultation with an IFA or chartered financial planner; I will consider that, thanks, but I thought that some provisional advice from the kind people here before meeting with the Will company to write it up might be enough (?).
I've been quoted approx. £200 to have the Will written up and assumed that they would advise me on everything; but I wouldn't mind paying £100 or so more on an IFA before I see the Will people. What do you think?

Keep_pedalling

mp203 said:

eastcorkram said:

I thought the pension shouldn't even be mentioned in a will. I thought that was just done via expression of wish.

Thanks. Yes, that's what I've been told. I'll only be mentioning the pension in a letter to my ex-partner, my daughter's mum; as well as asking the pension company if they can pay out to my estate/my daughter (one and the same?).

I will repeat what I said earlier, please do not attempt to DIY this, you need a professionally drawn up will by a STEP solicitor.