Intestacy – your estate may not go where you thought!
Many people die each year without leaving a Will believing their nearest and dearest will be looked after as they must surely inherit their estate. Sadly, intestacy law may not allow your estate to be distributed as you may wish. This article looks at what happens if you die without a will.
1 If you die leaving a husband/wife/civil partner (“Spouse”) and children
Your Spouse takes all your personal chattels e.g. jewellery, furniture, stamp collection and speed boat and receives a statutory legacy of £250,000. Anything above this is divided into two. If the death is after 1 October 2014, your Spouse receives a half share of the estate. The other half goes on statutory trust for your children. If your child or children die before you leaving children, the parent’s share will be divided amongst their children. Statutory trusts means that the sum is held on trust for the minor beneficiary until they reach 18 or marry under that age when the property will become theirs absolutely.
2. If you die leaving children or grandchildren, but no Spouse
Your children, or grandchildren if your children die before you leaving children, take your entire estate.
3. If you die leaving a Spouse
Your Spouse receives everything.
Under both 1 and 3 above:-
(a) Your Spouse must survive you by 28 days in order to qualify; and
(b) Where the estate includes an interest in your family home your Spouse can have this as part of his or her share of your estate. Furthermore in the case of 1 above your Spouse may require the personal representatives to buy out his or her life interest.
4. You leave a Spouse but no children/grandchildren, parents or brothers or sisters with both the same parents
Your Spouse receives everything.
5. You leave no Spouse, children/grandchildren, parents or brothers or sisters with both the same parents
Your estate will go in the following order to:
- Your half brothers and sisters
- your grandparents
- your parents’ whole blooded brothers and sisters (or their descendants if they die before you)
- your parents’ half brothers and sisters (or their descendants if they die before you).
If no one meets any of these categories your estate passes ‘bona vacantia’ to the Crown. It will not go to any friends or charities you may have supported in your life.
IMPORTANT MATTERS TO CONSIDER
Having read the above you need to consider your nearest and dearest.
If you were to die, could your Spouse survive on £250,000 and a half share in the rest of your estate? Would you want your Spouse’s home to be co-owned with your children, possibly from a previous relationship? If the children went bankrupt, divorced, simply wanted the money or to punish your Spouse he or she could lose his or her home.
You sometimes hear of mothers suing their children under the Inheritance (Provisions of Family and Dependants) Act 1975 if they do not have enough to live on and, if the children are under the age of 18, they cannot give some of their inheritance to their parent, even if they wanted to. An application to court can be very costly and take a long time.
What about your close friends or a charity you have supported for years? They will not inherit whilst a disliked relative may receive your estate.
Your children and grandchildren will be entitled to their money at age 18. Would you want them to have access to all that cash at such a young age?
By not making a Will you are also denying yourself access to some of the tax planning strategies which may help to decrease the Inheritance Tax which is payable on your estate. It also means that your personal representatives i.e. the people who are responsible for gathering your assets, paying your debts and distributing monies do not hold any authority until the Probate Registrar appoints them by issuing a Grant of Letters of Administration whereas in a Will, the personal representatives are in office as soon as you die, and not from when they get the Grant of Probate.
It should however be noted that, if the family home is held in joint names as beneficial joint tenants (but not as beneficial tenants in common) then it will pass automatically by survivorship and not be treated as part of the estate of the first spouse to die. i.e. it does not form part of the £250,000 legacy.
e.g. Peter, a father dies leaving a widow, Jane who is a housewife, and two children Tom aged 4 and Ben aged 3. His estate is worth £600,000. The house is held as tenants in common with his wife and is worth £400,000. Jane would get Peter’s personal possessions including his car. She would get £250,000 which could be the £200,000 interest in the house and £50,000. The remaining £350,000 is divided into two. £175,000 is held on trust for Tom and Ben when they reach 18. The income can be used for them prior to that and half the capital used to set them up in life e.g. go towards a university course or buying a house. The remaining £175,000 is Jane’s. Is that enough for Jane to live on, particularly as the main breadwinner has died?
Please contact us to discuss making a Will. The preparation of a straightforward Will is not an expensive process. Nevertheless some of people persist in remaining intestate. The ability to face the fact of one’s own eventual mortality is a skill which we all have in varying degrees. However, once you have executed a valid Will which gives effect to your current wishes, you will have leapt the hurdle and can put the matter behind you … except that your Will will need to be kept under review in the light of any changes of circumstance, and in any event every 5 years!