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What are mirror wills?

Borrowing in to Retirement

When your wishes as to what happens to your estate are the same as those of your partner, mirror wills provide an easy and cost-effective way to reflect this. If you don’t yet have a valid will in place, your estate will be handled according to the intestacy rules in the UK in the event of your death. This means your loved ones may not be provided for as you would have wished. By writing a will, you can ensure your estate is left to your chosen beneficiaries and divided according to your wishes. You may have put this off, believing it to be complicated, but mirror wills are a simple way for couples to protect each other and their children should the worst happen.

What is a mirror will?

As its name implies, the contents of a mirror will reflect those of another will. The only differences between the two are your names as the testators (the testator is the person who has made the will) and your individual funeral wishes. This is ideal for couples who have the same wishes, providing a straightforward alternative to writing two individual wills. Typically with mirror wills, each partner states they wish to leave everything to the other when they pass away. When that partner dies, everything is then shared equally between their children.

Mirror wills are popular with married couples and civil partners but you can also benefit from mirror wills if you’re unmarried. You can also take advantage of this type of will if you’re in a different type of relationship, such as business partners or siblings.

Usually, you act as each other’s executor — the person appointed to carry out the testator’s wishes. You should appoint an additional executor who can handle the estate when the second partner dies but also to carry out your wishes should you both die at the same time. You can name different additional executors if you prefer.

The benefits of making a mirror will

As mentioned above, mirror wills are a cost-effective alternative to writing two individual wills as the contents of one simply reflect the other. There are also other benefits that make mirror wills appealing, as detailed below.

Your partner is protected

You can have peace of mind that when you pass away, your partner will inherit everything. This is particularly comforting if you’re not married. The rules of intestacy state that without a valid will in place, the beneficiaries of your estate can only be a married or civil partner or a close relative. This means that no matter how long you’ve lived together or whether you have children together, your partner cannot automatically inherit your estate if you’re unmarried. If, for example, you owned a house together in Bexleyheath, they would be left with having to pay the entire mortgage on their own without any financial help. With mirror wills in place, however, you can rest assured your partner will be looked after financially.

Your children are provided for

Mirror wills can also state that your estate is passed to your children after you both die. Your will can include instructions as to who is to look after your children if they are under 18 and you can appoint trustees to look after their inheritance until they come of age.

You can mitigate your inheritance tax liability

Inheritance tax (IHT) becomes payable on your estate after your death. You have a personal tax-free allowance, called the nil-rate band, which is currently £325,000. If you leave your estate to your spouse or civil partner, no IHT will be payable, no matter the value of your estate. As this exemption rule means your nil-rate band won’t have been used, it will pass to your partner, increasing their personal tax allowance to £650,000. When you both die and your estate is passed to your children, this will significantly reduce the IHT bill that will become due.

You also have an additional tax-free threshold called the residence nil-rate band, which is currently £175,000. This applies when you leave your main residence to your children. As with your nil-rate band, this unused allowance will be passed to your partner if you’re married or in a civil partnership. This will increase their residence nil-rate band to £350,000, meaning your children can benefit from your partner’s overall tax-free threshold of £1 million when both of you have died.

Issues with mirror wills

Although mirror wills reflect the same wishes for both of you, they are still your own wills and are not legally linked. This means you both have the right to change your wills when you want to and there is no legal obligation to notify your partner. If your partner changes their will without you realising, your estate may not be dealt with according to your wishes if you die before them. For example, they may remarry in the future and, having previously inherited your estate, decide to leave everything to their new spouse, leaving your children without an inheritance.

Include a trust in your mirror will

A way to ensure your estate is protected is to set up a trust. This holds assets on behalf of your named beneficiaries and your appointed trustee is responsible for managing and administering the assets after you’ve died according to the specifications in your will. Trusts are legally binding so any assets placed into a trust cannot be left to someone else by your partner. Depending on the type of trust you set up, your partner may be able to benefit from these assets while they’re alive but then the assets will pass to your named beneficiaries when they die.

Get expert guidance on mirror wills

At Trinity Finance, our mortgage and protection consultants can discuss mirror wills with you in more detail as well as the alternatives available. This can help you to decide which type of will is the best fit for your circumstances, no matter how complicated your affairs may be.

Located throughout Kent, London and Edinburgh, our specialist consultants are on hand to assist you with all aspects of estate planning. As well as advising you on the types of wills available, they can help you make a valid will, provide inheritance tax planning advice and create a lasting power of attorney on your behalf. Simply give us a call on 01322 907 000 or send us an email at info@trinityfinance.co.uk for expert help with all of your estate planning needs.

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