Have you got round to making a Will? If not, you are not alone. It has been estimated that around two thirds of adults in the UK don’t have a valid Will. It’s understandable why so many of us put it off. Talking about what you would like to happen to your assets when you are no longer around can be a difficult and potentially emotional-charged conversation and involve some careful decision-making.
However, drawing up a suitable Will is the only way to ensure that your assets pass in line with your wishes after death. The rules governing the distribution of assets when someone dies without leaving a Will are complex and can in some cases result in disappointed beneficiaries and unexpected tax bills.
When someone dies without a valid Will in place, they are treated as dying ‘intestate’ and the rules to establish who inherits their assets are known as the ‘intestacy rules’. There are a number of common myths and misconceptions surrounding the intestacy rules which emphasise why it is so important to put a Will in place. Here are five to be aware of:
Myth one: Everything will pass to my spouse
Many married couples assume that if they die without leaving a Will, everything will automatically pass to their surviving partner, but this is not always the case. For example, under the current provisions, if the deceased spouse has children, up to the first £270,000 will pass to the surviving spouse along with any personal belongings. If there is any remainder, the surviving spouse will receive half of this and the other half will be divided equally amongst the deceased’s children. This can cause complications in the division of assets and may mean, amongst other implications, that the surviving spouse is not adequately provided for.
Myth two: My unmarried partner will be taken care of
Unmarried partners, no matter how long they have been together, cannot inherit assets from each other unless they have made a Will. Whilst certain jointly-owned assets may pass automatically to a surviving joint owner, this depends on the nature of the joint ownership and can lead to a situation where, for example, a half-share of a joint property will not necessarily pass to the surviving joint owner and will instead pass to relatives of the deceased. It is therefore particularly important for partners who aren’t married to put in place a Will that takes account of their wishes in their circumstances.
Myth three: My children will be looked after
The intestacy rules do not provide adequate protection for children for a number of reasons. The first is that intestacy rules do not address who would look after any children in the event that both parents die before they reach 18. Without any formal appointment of guardians, family members or friends would need to apply to Court to be granted the necessary powers. By putting in place a Will, you can choose who you would like to look after your children in the event that something unexpected should happen to you before they turn 18.
Secondly, should you die intestate and your spouse survive, they could draw up or change their will which could mean your children are disinherited after your death. Setting out your wishes for your children’s inheritance in your Will can protect against this. Thirdly, you may want to put in place stipulations on when your children inherit our assets on your death. You may feel that 18, 21 or 25 years old is too young for them to inherit and therefore setting out a plan or including a trust in your Will can address this. Finally, it’s also worth noting that the intestacy rules do not include any provisions for step-children.
Myth four: Not having a Will won’t affect your tax position
It is often assumed that the tax position will be the same whether or not someone has made a Will, but this is not the case. The inheritance tax rules are complex and by structuring your Will in a certain way, it is possible to maximise the inheritance tax reliefs available and ensure your loved ones are not paying tax unnecessarily.
Myth five: Everything will go to the Crown
You may have heard someone joke that they need to put a Will in place to ensure that everything does not pass to the Crown. In reality, this only happens in a very small number of cases and the Crown would only benefit if the deceased had no surviving relatives, taking into account parents, grandparents, siblings, aunts, uncles and nieces and nephews and their respective lineal descendants. This can lead to situation whereby distant family members end up inheriting from a relative they have never met or did not know existed. Putting a Will in place ensures that only those you wish to benefit do so – whether this be family members, friends, charities or other organisations.
I think I need a Will – what now?
No matter how old you are or what your assets or family circumstances are, it is always a good idea to have a Will in place to ensure your assets pass in line with your wishes and your loved ones are looked after. We have also a prepared a simple guide to the intestacy rules for further reference below:
At Progeny, we take a personalised approach to constructing your Will, preparing a bespoke document tailored to your specific circumstances and wishes. If you would like to discuss this further, please get in touch.