Wills and Estate Structuring Explained

A will is a legal instrument. It names the people who inherit, sets out any specific gifts, appoints executors to administer the estate, and can appoint guardians for children. Drafting and witnessing a valid will is a solicitor's work, and nothing in this guide replaces taking that step. A homemade or unwitnessed will, or one that contradicts how assets are actually owned, can fail in ways that only surface after death, when they are expensive to fix.

Estate structuring is the layer around the will. It asks how assets are held, how much inheritance tax the estate is likely to face, which reliefs and exemptions apply, and whether ownership or beneficiary arrangements should change before the will is signed so that the will actually does what you intend. This is the work an estate-planning accountant does. The will says who inherits; the structuring decides how much of the estate survives the tax and reaches them.

The two pieces have to agree. A will that leaves a property to children does nothing if the property is owned as joint tenants and passes automatically to the surviving co-owner. A will that relies on a tax exemption the estate does not qualify for leaves the executors with a bill no one planned for. Getting the structuring right before the solicitor drafts the will is the point of coordinating the two professionals rather than treating the will as a standalone document.

Inheritance tax is charged at 40% on the value of an estate above the available allowances. The nil-rate band (NRB) is £325,000 per person. The residence nil-rate band (RNRB) adds up to a further £175,000 where a main residence passes to direct descendants such as children or grandchildren. Both bands matter to how a will is written, because the way the will directs assets decides whether the allowances are used efficiently or wasted.

The spouse exemption is the largest lever. Anything left to a spouse or civil partner passes free of inheritance tax, with no limit. Just as importantly, any unused nil-rate band and residence nil-rate band transfer to the survivor, so a married couple can in principle pass on two NRBs and two RNRBs on the second death. A will that leaves everything to the surviving spouse preserves both allowances for later; a will that gives assets straight to others on the first death may use up an allowance early without a corresponding tax saving.

The residence nil-rate band is the one most often lost by accident. It tapers away by £1 for every £2 of estate value above £2 million, so a large estate can lose it entirely. It also only applies where the home passes to direct descendants, so a will that routes the property through certain trusts, or leaves it to siblings or unrelated beneficiaries, can forfeit it. An accountant checks whether the will as drafted actually keeps the RNRB in play before it is signed.

A will can create a trust that takes effect on death, rather than leaving assets to a person outright. The classic reason is protection. A parent with children from a previous marriage may want their current spouse to live in the family home for life, while making sure the property eventually passes to their own children rather than to the spouse's side of the family. A life-interest trust in the will can do that: the survivor has the right to live in the property or receive income from the assets, and the underlying capital passes to the named children afterwards.

Will trusts can also help where beneficiaries are young, vulnerable, or not ready to manage a large inheritance, or where the family wants to keep some control over how and when capital is released. They are a structuring tool, not a default, and they carry their own tax and administrative consequences that have to be weighed against the protection they provide.

Whether a trust helps the inheritance tax position depends on the detail and is exactly the kind of question to put to an accountant before the will is drafted, working alongside the solicitor who would draft the trust. A trust written to solve a family-protection problem can inadvertently affect the residence nil-rate band or the spouse exemption if the tax consequences are not checked first. The deeper mechanics of estate trusts are covered in our trusts in estate planning guide.

How an asset is owned can override what the will says, so ownership is part of the plan rather than a detail to settle later. Property held by two or more people comes in two forms. Joint tenants own the whole jointly, and on death the deceased's share passes automatically to the surviving owner by survivorship, outside the will entirely. Tenants in common each own a defined share, and that share passes under the will. The difference decides whether a will can direct a person's share of the home at all.

This matters most where a will is trying to do something specific with property: leave a share to children, fund a life-interest trust for a spouse, or keep an allowance in play. A couple who own as joint tenants cannot leave their respective shares to anyone but each other through the will, because survivorship takes priority. Changing the ownership to tenants in common, where appropriate, is often the structural step that lets the will work as intended. That change is straightforward to make but easy to overlook.

Beyond property, the spread of ownership across a couple affects how efficiently the nil-rate bands and reliefs are used, and how business or investment assets are positioned. Reviewing who owns what, and in what proportions, before the will is drafted is part of the accountant's structuring work. Where business assets are involved, the succession side is covered in our business relief and succession guide.

Several significant assets pass outside the will by nomination rather than under it. Pension death benefits usually follow the nomination form held by the scheme, not the will. Life policies written in trust pay out directly to the named beneficiaries. Some other accounts and benefits work the same way. If the nomination is out of date, or contradicts the will, the asset can go to the wrong person regardless of what the will says, and the executors cannot simply correct it.

Keeping nominations current and consistent with the will is part of the same review. A nomination that still names a former spouse, or that was never completed at all, is one of the more common gaps that surfaces only after death. Because these assets sit outside the will, they need their own deliberate decision rather than an assumption that the will covers everything.

Pensions are also changing. From April 2027, unused pension funds and certain pension death benefits are due to come within the scope of inheritance tax, where they have generally sat outside it. That is a material shift for anyone whose estate plan assumed the pension would pass free of inheritance tax, and it makes the nomination and the wider estate structuring something to revisit rather than leave as set. An accountant can model what the change means for a specific estate and how it interacts with the inheritance tax allowances and reliefs.

Gifts to charity in a will are free of inheritance tax in their own right, but the will can also reduce the rate on the rest of the estate. Where someone leaves at least 10% of the net estate (broadly the value after the available allowances) to charity, the inheritance tax rate on the remaining taxable estate falls from 40% to 36%. For estates already planning a charitable legacy, structuring the gift to cross the 10% threshold can mean the charity benefits and the family's net position improves at the same time.

Whether the reduced rate produces a better outcome for the family depends on the size of the estate and the proportion given, and the 10% test is calculated on a specific definition of the net estate rather than the headline value. This is a calculation worth doing precisely, with an accountant, before the will is drafted, so the charitable gift in the will is sized to achieve the intended effect rather than landing just short of the threshold.

An estate plan is a snapshot of a position that keeps moving. Marriage can revoke an existing will in England and Wales unless it was made in contemplation of that marriage, so a wedding can leave someone unintentionally without a valid will. Divorce changes how parts of a will are read and usually means nominations and ownership need revisiting. Births, deaths in the family, selling a business, or a significant change in the value of the estate can each turn a sound plan into one that no longer reflects what the person wants.

Rule changes matter just as much as life changes. The April 2027 pension treatment, movements in the allowances, and shifts in the reliefs all mean a plan that was efficient when it was written can drift out of date without anything in the family changing at all. A will and the structuring around it are worth reviewing periodically, and certainly after any of the big events above, rather than being filed away as finished.

Reviewing a plan is lighter work than building one, but it is the same coordination: the accountant checks the tax position and the ownership and nominations still fit, and the solicitor updates the will where the drafting needs to change. We run that review and work alongside your solicitor, so the tax consequences are confirmed before any new will is signed.