Private Client Solicitor, Jennifer Duckett, talks about the implications of not making a will.
This is a question I’m asked a lot. I think a lot of people incorrectly assume that if they’re married or in a civil partnership and they die without a Will, the survivor of them automatically inherits everything.
If you die without a Will then the Rules of Intestacy dictate who inherits your estate. These rules state that your spouse or civil partner inherits the first £250,000 of your estate, together with your personal possessions. Anything over and above £250,000 is then split in half, with one half passing to the surviving spouse and the other half passing equally between any surviving children. The Rules of Intestacy don’t provide for cohabiting couples, regardless of any length of time they have been in relationship, but they would, however, include a spouse from whom you are separated.
The Rules of Intestacy tend not to be what people would actually want to happen given the choice. The only way that you can control where your estate goes when you die, and the only way you can decide who would administer your estate for you, is by making a Will.
The inheritance tax consequences of not having a Will should also be carefully considered. When you die, generally speaking your estate pays inheritance tax at a rate of 40% on anything above the nil rate band (which is currently £325,000) and the residence nil rate band (which is currently £150,000).
However, anything that spouses and civil partners leave to one another when the first of them dies is exempt from inheritance tax. When the survivor dies, they can then claim their spouses nil rate bands as well as their own, leaving maximum of £850,000 in the 2019/20 UK tax year available to their estate upon which no tax is paid.
Because the Rules of Intestacy provide for beneficiaries other than the spouse, e.g. children, to inherit from the deceased’s estate, this in turn means that the nil rate band and residence nil rate band cannot be maximised. By not making Wills, married couples and civil partners are potentially triggering an inheritance tax liability where there does not need to be one.
Regardless of how simple you consider your circumstances to be, and regardless of the value of your estate, taking professional advice regarding your Wills during your lifetime could prevent considerable stress for your loved ones after you’ve died.
Contact the Neves Private Client Team to discuss your personal requirements.