Why Every First-Time Buyer Needs a Will, Before It’s Too Late
Please note: This blog is for general information only and does not constitute advice. The information is aimed at retail clients only. You should always seek professional advice from an appropriately qualified adviser.
All contents are based on our understanding of current legislation, which is subject to change, any information provided here is only correct at the time of posting.
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Buying your first home is a major milestone. It symbolises freedom, stability and, often, the start of a new chapter in life. Amid the excitement of key collections, decorating plans and mortgage repayments, one crucial piece of the puzzle is often forgotten, making a will.
Wills aren’t just for the elderly or the wealthy. In fact, they’re arguably equally as important for younger individuals buying their first property, especially those doing so on their own. Without one, you risk losing control over what happens to your most valuable asset if the unthinkable happens.
Let’s illustrate this with the story of Sophie.
Sophie’s Story - A Harsh Lesson in Intestacy
At 29, Sophie finally stepped onto the property ladder. After years of saving, budgeting and climbing the career ladder, she bought a one-bedroom flat in Stratford-upon-Avon, entirely in her own name. She had no partner, no children, and was proud of what she’d achieved independently. Her younger brother, Max, had always been her closest companion, they’d spoken about how, if anything ever happened, she’d want him to have the flat so he could live in it or use the money for a deposit of his own.
Sophie took steps towards protecting against her death by taking out a life policy to ensure that in the event of her death, her outstanding mortgage could be repaid in full.
Sophie assumed her wishes would be obvious. But Sophie never made a will.
Tragically, two years after buying the flat, Sophie passed away suddenly in an accident. Without a will, her estate, including the flat was subject to the laws of intestacy.
Under English intestacy rules, when someone dies without a will and has no spouse or children, their estate automatically passes to their parents. That’s exactly what happened in Sophie’s case. Her parents inherited the flat, not Max.
They were heartbroken, and while they wanted to honour Sophie’s wishes by gifting the property to Max, this opened a whole new set of complications.
The Inheritance Tax Ripple Effect
Sophie’s parents were already dealing with their own estate planning. They had assets in excess of the inheritance tax (IHT) threshold and were carefully managing their affairs to maximise their estate for their children. Inheriting Sophie’s flat meant inflating their estate further.
Now, not only had Sophie’s original wishes been ignored due to the absence of a will, but her legacy had inadvertently created a potential IHT headache for her parents.
Even gifting the flat to Max wasn’t simple. HMRC’s rules around gifting assets are strict and often complex. While they could look to do a Deed of Variation to redirect all or part of the inheritance to Max, there are legal costs in doing so, which would not be ideal given the emotional stress they would be under at that time.
What started as a simple desire to leave her flat to her brother had spiralled into an unintended financial and emotional mess. However, a simple will, often costing less than few hundred pounds could have prevented this issue altogether.
Why First-Time Buyers Must Act
Sophie’s story is far from unique but highlights however important it can be for first-time buyers put basic estate planning in place. A will doesn’t need to be complicated or expensive, but it does need to be done.
Here’s why it matters:
1. Control Over Your Assets
Without a will, the law decides who inherits your assets. That might not align with your wishes. Whether it’s a sibling, partner, close friend, or charity, if they’re not legally entitled under intestacy rules, they may receive nothing.
2. Avoid Unintended Tax Consequences
Inheritance tax can be a complex area, particularly when assets pass up a generation. With frozen nil-rate bands, more and more families are finding themselves over the IHT threshold, even if they’d never considered themselves wealthy.
By setting out your wishes clearly in a will, you can avoid creating avoidable tax burdens for your loved ones.
3. Protect Vulnerable Beneficiaries
If you’d want someone younger, vulnerable or financially inexperienced to inherit your property, a will allows you to put the right structures in place such as a trust to ensure it’s handled properly.
4. Ease for Your Family
Dealing with the estate of someone who’s died without a will is often far more stressful, time-consuming and costly than if a clear will is in place. It can delay inheritance and lead to family disputes, the last thing you’d want for those you leave behind.
So, What Should You Do?
If you’re a first-time buyer, or know someone who is, don’t wait. As soon as the ink dries on the mortgage offer, think about putting a simple will in place. Many firms including ourselves offer fixed-fee wills, and some charities even offer free will-writing services at certain times of the year.
Final Thoughts
Buying your first home is a huge achievement, it shows you’re ready to take responsibility for your future. But that responsibility shouldn’t end at the doorstep.
A will gives you peace of mind that, should the worst happen, your property will go to the right person, with the least amount of difficulty. It’s a small act with a powerful impact. Don’t let the law write your legacy for you.