Recent research indicates that 36% of over 55s have no Will in place. This figure increases through the lower age brackets with 68% of 35-54 year olds and 76% of 18-34 year olds thought to be without Wills.
Some of the reasons given were:
- ‘I’m not wealthy enough to need one!’
- ‘I’ll do it later!’
- ‘Well it will pass to my next of kin anyway!’
When someone passes away without leaving a Will they are ‘Intestate’. Their estate, (for example property and money in the bank) is distributed in accordance with statutory rules which outline who are entitled. The person with the highest entitlement under the rules also has the right to deal with the administration of the estate.
Whilst the rules are largely common sense, there are many situations where the beneficiaries would not be those people the deceased particularly wanted to benefit.
Well it always passes to surviving relatives…
Sheila is the last surviving relative of Violet, her second cousin. They have always been very close and Sheila looked after Violet when she became unwell.
If Violet passes away without a Will the law considers that Violet and Sheila are not sufficiently closely related for Sheila to inherit. In this case, Violet’s estate would pass to the Crown as ‘Bona Vacantia’ (ownerless property).
Doesn’t everything pass to my spouse?
David and Jane have been married for five years and have two young children. David dies suddenly in an accident at work leaving a total estate of £400,000 of which £350,000 represents his share of the family home.
Under the statutory rules, Jane is entitled to the first £250,000 plus half of the remainder. She is therefore entitled to £325,000. The remainder will go equally between the children and be held on trust until they attain 18. Jane will therefore either inherit not quite half of the family home, or could choose to take some of her entitlement as cash and own less of the family home.
What about jointly owned property & cohabitees?
Amy (aged 26) has purchased a property jointly with her partner John. They have no children and have not married. Amy received a gift of £20,000 from her grandmother which she used toward her deposit.
If Amy were to pass away, Amy’s parents would be entitled to her bank accounts, investments and personal effects.
However, the form of ownership of the house will dictate who becomes entitled on Amy’s death. If Amy and John own their property as Joint Tenants, Amy’s interest in the house may transfer to John automatically on her passing. Alternatively, as Tenants in Common, Amy’s interest in the property will transfer to her parents under the Intestacy Rules.
Amy’s parents are retired and have their own property and assets. They had been making lifetime gifts to reduce the potential Inheritance Tax burden on their estates and, under the laws of Intestacy their estates are both now increased by Amy’s passing.
In order to ensure that the end result reflects Amy’s wishes and is tax efficient she should have written a Will. This is particularly so if she wanted to leave John a gift as cohabitees have no right to inherit under the law of Intestacy.
If you would like to discuss the impact of intestacy on your estate or you are considering making a Will, please contact a member of our Wills and Probate Team on 01279 755777.