How can you future-proof your will to cater for changes in your circumstances?
Whenever you write a will, it reflects your wishes at the time of writing. Therefore, it’s normal to think about your beneficiaries and your estate as it stands today, rather than at the time of your passing, which is usually an unknown date far into the future.
This begs the question, how can I make sure that my will can accommodate unforeseen changes in circumstances? For example, children and grandchildren who aren’t born yet, or changes in the value and composition of your estate.
The “easy” answer is to make sure you review your will regularly and keep your will up-to-date. We usually suggest that most people should review and update their will every 3-5 years to keep up with significant life events (e.g. births, deaths, marriages and divorces). However, we also know that writing a will is rarely at the top of your to-do list, and there are a few practical things that you can do to help future-proof your will to accommodate some of these changes.
Changes to beneficiaries
Starting with beneficiaries, one way to accommodate changes to beneficiaries is to define a class of beneficiaries. A class of beneficiaries is a group of people who are all entitled to inherit the same share of your estate. This can be a useful way to ensure that your assets are distributed fairly, even if your circumstances change. For example, you could create a class of beneficiaries for your children, grandchildren, or even your friends.
You may wish to use classes as beneficiaries in your will if:
You have a large family: If you have a large family, it can be difficult to list all of your beneficiaries individually. Using a class of beneficiaries can make it easier to distribute your assets fairly.
You want to ensure that your beneficiaries are treated equally: If you want to ensure that your beneficiaries are treated equally, regardless of when they are born or how many children they have, you can use a class of beneficiaries.
You want to keep your will flexible: If you think your circumstances might change in the future, you can use a class of beneficiaries to make it easier to update your will.
It can be difficult to define the class. You need to be clear about who is included in the class of beneficiaries. For example, if you create a class of beneficiaries for your children, you need to decide whether this includes stepchildren or adopted children.
If you choose to use a class, you also need to specify when that class closes, usually at the time of your passing. Otherwise, it may be difficult to administer the estate, for example, if further grandchildren are born after you pass away. If you have more complicated family circumstances, a solicitor can advise you on how class closing rules apply to your specific circumstances.
Changes to the value and composition of your estate
The value and composition of your estate is likely to change substantially over the years, whether due to inflation, increases in the value of property, buying and selling of assets, etc.
Here are some examples of how the value of your estate might change over time:
Any property you own is likely to increase in value over time: Plus any secured debts (such as mortgages) are likely to decrease as they are paid off, meaning the total equity held in property can increase substantially over time.
Stocks and shares typically increase over time: These can also change in value and denomination through stock splits or share buy-backs, therefore your 200 shares in Microsoft may equate to 800 shares in the future.
The value of cash held in a bank account will be eroded by inflation: This means the £10,000 you were planning to leave to each of your grandchildren is unlikely to be worth as much as it is today if you pass away in 15 years time.
You may need to sell assets to pay for care as you get older: This can significantly reduce the value of your estate.
The simplest way to accommodate changes to the value of your estate is to describe the split of assets in percentage terms rather than nominal terms. For example, I want to leave 50% of my share portfolio to my grandchildren, rather than 100 shares in Microsoft. However, this can only be applied to assets which are easily divisible or are expected to be sold after you pass away.
The other alternative is to use a trust. A trust is a legal arrangement that can be used to protect your assets and to ensure that they are distributed according to your wishes. Trusts can be a helpful way to future-proof your will, especially if you have minor children or if you want to make sure that your assets are not subject to inheritance tax. Furthermore, you can delegate your trustees to distribute your assets according to the terms of the trust, which can provide more flexibility than a will.
It is important to remember that no will is completely future-proof. However, by taking certain steps, you can make sure that your will is kept as up-to-date and as flexible as possible.
