Who needs a will?

Making a will is something that some people simply do not want to consider – it reminds them that they cannot live for ever. But the fact is that, if you die intestate, your money could end up with the ‘wrong’ people.

Who gets your money when you die?

The rules on inheritance, where there is no will, changed a year or so ago and it is important to remember that unmarried couples (who are not in a civil partnership) have virtually no rights whatsoever. There is no such thing as a common law marriage, for legal purposes.

If a person dies intestate with a surviving spouse or civil partner and children the spouse/civil partner is entitled to £250,000 (previously £125,000), the deceased’s personal possessions and a life interest in half of the residue of the estate. The children will be entitled to half of the residue immediately and the other half on the spouse’s death.

If a person dies intestate leaving a spouse or civil partner but no children the spouse/civil partner is entitled to £450,000 (previously £200,000) plus the personal possessions. The spouse is also entitled to half of the residue immediately, with the other half going to relatives of the deceased ranging from parents, through siblings to more remote relations. If there are none, the money goes to the Crown.

If the person leaves a spouse only and no siblings, nephews or nieces then they will be entitled to the whole estate.

Those not in a ‘legal’ relationship
If a person dies unmarried with children, the children will be entitled to the whole of the estate equally (or their children if they have predeceased). Any unmarried partner would need to make a claim against the estate under the Inheritance (Provision for Family and Dependants) Act 1975 to seek financial provision from the estate.

If a person dies unmarried with no children the whole of the estate will pass to the relatives of the deceased ranging from parents, through siblings to more remote relations. If there are none, the money goes to the Crown.

Make sure the ‘right’ people benefit

The risk of doing nothing
The way the intestacy rules operate highlights the need for unmarried couples or families with step children (who are only covered by automatic entitlements if adopted by the person who dies) to make a will. Otherwise they are still not provided for under the intestacy provisions.

Will it be expensive?
However unpalatable it may be to think about death, leaving your money to chance should not be an option for anyone. The cost of making a will need not be high. The cost of not doing so could be suffering for those you care most about.

Of course, planning who gets your money after your death also allows you to consider how to minimise the potential impact of inheritance tax on your estate. After all, even if the Crown is not going to get your entire estate, you could well become a 40% taxpayer when you die, if your estate is more than £325,000 (up to double for a married couple or civil partners). Advanced planning can reduce the impact.

It is important always to seek independent financial advice before making any decision regarding your finances. For further information, please contact SDB Strategic Planners Ltd. The value of investments is not guaranteed; you may get back less than you put in.

NOTHING CONTAINED IN THE ARTICLE SHOULD BE CONSIDERED AS GIVING INDIVIDUAL FINANCIAL ADVICE. PLEASE NOTE THAT THERE MAY BE VARIATIONS FOR THOSE LIVING IN SCOTLAND AND NORTHERN IRELAND. 

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