Wills are important legal documents that everyone has to consider at some point in their lives. Even though you may not want to think of leaving your loved ones behind, creating a will, and especially a foundation will, can be one of the best things you could do for them. But what are foundation wills, and how can they help you and your loved ones? This guide answers all of these questions.
What Is A Foundation Will?
The foundation will is a legal document that allows you to take active control over how your estate is managed after you die. It covers how your belongings and assets will be distributed, down to your pets and even your funeral arrangements. The foundation will is sometimes called the Legacy inheritance will, and it is one of the most important legal documents you could ever prepare.
Do You Need A Foundation Will?
You should prepare a foundation will because you want to be able to leave your possessions to the people you choose. Without one, it’s possible for your family members to get cut out, while a distant relative gets your possessions. Another dangerous effect of not preparing a foundation will is that in addition to cutting out your loved ones, they could also get burdened with the responsibility of paying inheritance tax, as well as probate fees. So the answer is yes. You do need a foundation will.
What Can You Do With A Foundation Will?
A foundation will allows you to do so much more than decide who gets what. Of course, it lets you decide which properties you give to your family, down to cars, houses, and even cherished objects. Every item that’s valuable to you and others can be included in the will, and given to whomever you choose. In summary, here are some of the things you can do with a foundation will.
- Appoint executors of your will
- Select who gets your business and other assets.
- Name who will inherit your estate. You can also select the individuals who will inherit what parts of your estate
- Exclude certain individuals from your foundation will
- Give out your bank balances and other liquid cash assets to your loved ones and others.
- Donate as much of your wealth as you like to a charity of your choice
- Gift out several other non-monetary belongings like pets, jewellery, and even furniture
- Appoint guardians for children younger than 18
- Select an age at which an individual will be eligible to inherit belongings. With this arrangement, children under the age limit will not be able to access the items and assets you will get to them until they reach the age
- Give funeral directions down to the kind of flowers you’d like and how you’d like your body to be treated
- Give directions on how you want your organs to be handled; either to be harvested and donated or not.
Benefits Of Having A Foundation Will
Preparing a foundation will also helps you make things easier for your loved ones after you’re gone. Leaving a very special item for your partner can renew their conviction of your love for them. Willing your business and estate to your child can assure them that you believe they are capable and that they deserve it. While foundational wills are legal documents, they can also serve non-legal, even emotional purposes as well.
Foundation wills can also help prevent conflict among your loved ones. When you state your wishes in a legally binding document, you clearly communicate your intentions, and get rid of any possible confusion. With a will, there can be no controversy on who ought to have what. It’s easy for disagreements and even bad blood to spring up among your loved ones. That’s why beyond the financial and legal reasons, preparing a foundation will is very important.
What Can’t You Do With A Foundation Will?
It is obvious that a foundation will can do a lot for you. However, there are limits on instructions you can give on a foundation will. Here are some of the scenarios you can’t address with your will
- If you have a life insurance policy, you can’t direct the proceeds to any of your family members. After you pass away, the payout from your insurance will be distributed to the policy’s beneficiaries. You can’t choose who you want.
- If you have any investment accounts designated as “transfer on death”, these will also be transferred to the designated recipient. You usually choose the recipient when setting up the investment, and your will cannot change that. You would have to alter the arrangements while you’re alive if you want to change who gets the investments.
A caveat to this point is that if the recipient passes on before you do, and you don’t change the arrangement on the account, then the assets revert to your estate. They then become a part of your remaining belongings and are distributed with them, based on your specifications in the will.
- If you and your spouse have jointly owned assets, you only have limited control over the amount of your belongings that you can leave to your spouse. There are certain limits on how much property you can leave your spouse after you pass on. If you leave less than the stipulated amounts, your will can be overridden and the proportion can be raised to the stipulated quantity.
What Happens If You Die Without A Foundation Will?
Passing on without a will is also called dying intestate, and this often has several implications. The most significant of them is that you won’t have any control over which of your family members and loved ones you leave your belongings to. Instead, they will be distributed based on preset formulas. These are also known as the rules of intestacy.
Your estate will be administered by your next of kin in adherence to the rules. Accordingly, your spouse will receive your assets up to the value of £250,000, as well as all personal items. After £250,000, whatever is left of the assets will be divided into two, and half will go to your children when they turn 18 and the other to your spouse. If there are no children, your spouse will inherit everything.
The rules of intestacy also dictate other situations like what happens when you have neither spouse nor children. As you can see, preparing a foundation will is crucial for both you and your loved ones, so it’s important to see to it.