I have given small legacies of £500 to a few of my friends in my will. As inflation is rising, I am concerned that these gifts are now not going to be worth very much. Given the costs involved in will writing, I am hesitant to make a new will. Is there anything I can do?
Emily Robertson, a wills, trusts and probate specialist at Burgess Mee Family Law, says there are more cost-efficient ways to make small amendments to a will than producing a new one.
In the UK you can make small amendments to a will using a very simple document called a codicil. These are often one page in length and are drafted in simpler terms than a will.
They are commonly used to change who is appointed to administer an estate. However, they can also be used to increase the value of a cash legacy. If you want to increase your £500 legacy to, say, £1,000 then this could be placed in a codicil. However, if you later decide to change the legacy again (because, for example, you feel that £1,000 is not worth very much), you will need yet another codicil.
Alternatively, you can link a gift in a will to the retail price index (RPI) or the consumer price index (CPI). RPI is an outdated way of measuring inflation but is still used to calculate the cost of living. Gifts linked to RPI are often seen in older wills.
CPI is more widely used to measure inflation by tracking the cost of goods and services. If the £500 gift were linked to RPI or CPI it would increase in line with inflation, holding the same value on the date of death as was intended when the will was drafted.
However, when considering linking a gift to RPI or CPI, the calculations required and the potential costs of those calculations must be considered. If a solicitor is administering your estate, they need to calculate how much the £500 gifts will be worth at the date of your death. If you have many RPI or CPI-linked gifts in your will or codicil there will be an increase in your administration costs.
If a solicitor is not instructed on the administration of your estate, the calculations may cause confusion for lay executors. Therefore, it may only be worth linking gifts for those that are worth more than £500.
When considering whether a codicil should be created, solicitors will recommend that any significant legal changes are placed in a new will. Further, if you are not returning to the solicitor who drafted your will, they may refuse to draft a codicil to amend a will they did not originally draft.
How can I prepare for an English divorce?
My wife and I are American but are thinking of permanently relocating to England. We have been married for a decade but we have a rocky relationship and she constantly threatens to divorce me. I have heard England has generous laws compared with other countries and wealth is split 50/50 when a couple divorces. How can I protect my position before relocating? I would like to think we won’t get divorced, but also know it is sensible to be prepared for everything.
Sarah Jane Boon, partner at Charles Russell Speechlys, a law firm, says you are right to think about protecting your position because, upon relocating to England, you and your wife will become “habitually resident” in England, which means a divorce could take place there, even if you have only been living in the country for a short period of time.
The starting point of a divorce in England is that all wealth built up during the course of your marriage is divided equally between the spouses, unless one party has a strong argument that they need more than 50 per cent of what has been accrued. For example, if one spouse is unable to house themselves sufficiently without having more than half of the assets.
There are arguments that can be made as to why a 50/50 split may not always be the optimum outcome, including where wealth has been inherited (from family members or elsewhere) during the course of the marriage, or where one party entered the marriage with pre-acquired wealth which has not been mixed in with the marital assets.
For example, one spouse may have had a pre-acquired property that was retained as an investment, with the spouses not spending the rental income on any marital outgoings. However, these arguments can be complicated and potentially lead to expensive legal proceedings.
In circumstances such as yours, there is also the potential for an initial dispute as to the jurisdiction of where the divorce and related financial matters are resolved, since there is the potential for your wife to issue proceedings in England and for you to issue proceedings in America (or vice versa). Again, this would create additional conflict and legal costs, as well as a delay to resolving matters.
The most sensible way of protecting your position, in advance of any relocation to England, would be to enter into a postnuptial agreement with your wife, which records what you would both wish to happen in the event that your marriage were to break down while you were living in England.
That agreement would set out how you would intend to divide your wealth. Such a document is not binding as a contract but would give you a significant level of protection as the court would be likely to uphold it provided that you and your wife had given full disclosure of your financial positions when entering into the agreement, had each received independent legal advice, and had signed up to an agreement that was fair to you both.
The drafting of a postnuptial agreement is a highly specialist area so you should consult a family lawyer in England who would ensure that the correct process was followed.
The opinions in this column are intended for general information purposes only and should not be used as a substitute for professional advice. The Financial Times Ltd and the authors are not responsible for any direct or indirect result arising from any reliance placed on replies, including any loss, and exclude liability to the full extent.
Do you have a financial dilemma that you’d like FT Money’s team of professional experts to look into? Email your problem in confidence to yourquestions@ft.com.
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