11 December 2013

Is a Complicated Will Better Than a Simple Will?

A potential client rang me with this fascinating question recently, having been advised by someone else to have a complicated will, and wanting a second opinion. Is a complicated will better than a simple will? 

To be more specific, he and his wife had been advised to have the kind of complicated will comprising two different types of trusts which I have blogged about before: see the ending of this posting. And he wanted to know whether that was better than simple wills which basically left everything to the survivor outright, failing which everything to the children equally, failing which grandchildren.

I suppose we need to start by asking what would make one will "better" than another. Clearly neither will could be described as better if it didn't achieve the client's objectives. So probably being better has to be defined in terms of whether it saves inheritance tax or not, and if so whether the saving would justify the other costs and consequences.

I'd also start from the position, which I feel sure most of my clients would agree with, that other things being equal, simple is better. Because it just is.

So the question turns, for me:

Firstly, on whether the client has a tax problem at all: married couples with estates below £650,000, for example, are almost certainly better served by a simple will.

Secondly, on whether the client has, or might have, assets which would be tax free on the first death, even if left to someone other than a spouse. Business assets, agricultural assets, substantial pension schemes and tax-efficient investments (such as AIM or EIS). In the absence of those, I'd say the simpler will still has the edge.

It does also raise the question (which I will save for another post) of the non-tax advantages of trusts.