Despite this being an age of complicated financial affairs and intricate family relationships, more than two-thirds of people in the UK don’t have a will. So why do so many people simply refuse to make one?
Wills, or the lack of, have formed the basis of many a fascinating story. From Dickens to EastEnders, they have made and broken lives, ripped apart families and created millionaires. But as much as people might be fascinated by tales of surprise windfalls or bitter disinheritance, when it comes to our own affairs, it seems more often than not that we put our heads in the sand.
Only 3 in 10 people in the UK have a will. Every year HM Treasury gains millions from people who died intestate – without a will. And yet the fractured nature of modern families and an increasingly litigious society means making a will has never been so important. Surveys show that people put off making a will, often until they are well into their 50s. Three-quarters of the population have a will in place by the time they are 65, but that still leaves a sizeable number uncovered, not to mention those who die young.
Around 60,000 estates each year are ‘intestate’ (i.e. there’s no valid will in place) – almost 25% of the annual total. Making a will stops your heirs joining this number and makes sure your wishes are carried out when it comes to who inherits what. This is where Leap Finance can help you with expert advice and talk you through the implications of failing to make a will or ensuring that legally accurate documentation has been drawn up. Please read on to see why this area of law is so complex.
10 reasons why you should make a will.
Don’t leave your estate at risk by dying intestate
MAKING A WILL
- A will lets you leave clear instructions about how your estate is to be distributed. Without one it is subject to the intestacy rules and may not go to the people you would have chosen.
- A will lets you choose your own executors. If you die without one, your closest relatives will need to apply for ‘letters of administration’.
- A will lets you appoint guardians to look after your children if they are under 18, until they come of age. You can also make financial arrangements for their benefit.
- A will allows you to make specific bequests to individuals. These can range from items of jewellery to sums of cash.
- If you have remarried, a will can ensure any children from your first marriage get their rightful share of your estate.
NOT MAKING A WILL
- Unmarried partners may not receive anything from your estate, unless you have made a will in their favour.
- If your estate is divided according to the intestacy rules, your spouse or civil partner may not receive as much as you intended. (See the intestacy rules below.)
- If you die without leaving a will and have no spouse or children, your parents or siblings may inherit your estate, even if you would prefer it to go elsewhere.
- The absence of a will can sometimes lead to family disputes.
- Without a will, your family could face a larger inheritance tax bill than necessary as a will can help with the tax-planning process..
WHAT ARE THE RULES OF INTESTACY
When a person dies without leaving a valid will, their property (the estate) must be shared out according to certain rules. These are called the rules of intestacy. A person who dies without leaving a will is called an intestate person. Only married or civil partners and some other close relatives can inherit under the rules of intestacy. If someone makes a will but it is not legally valid, the rules of intestacy decide how the estate will be shared out, not the wishes expressed in the will.
Married partners and civil partners
Married partners or civil partners inherit under the rules of intestacy only if they are actually married or in a civil partnership at the time of death. So if you are divorced or if your civil partnership has been legally ended, you can’t inherit under the rules of intestacy. But partners who separated informally can still inherit under the rules of intestacy. If there are surviving children, grandchildren or great grandchildren of the person who died and the estate is valued at more than £250,000, the partner will inherit all the personal property and belongings of the person who has died, and the first £250,000 of the estate, and a life interest in half of the remaining estate. This means that if you are entitled to the life interest, you cannot get rid of or spend that part of the estate. You can, however, have the benefit of it during your lifetime.
For example, Susan was in a civil partnership with Tom and they adopted a daughter called Jia. Susan died without leaving a will. Her estate is worth £450,000. After Tom inherits her share of £250,000, the estate that is left is worth £200,000. Tom can have the benefit of (a life interest in) half of this – £100,000. She cannot spend the £100,000 capital itself. It should be invested and Tom is entitled to the interest from this during her lifetime. On her death, the £100,000 goes to Jia.
If the estate is worth more than £450,000, there are no surviving children, grandchildren or great-grandchildren, but there are surviving parents, the partner will inherit all the personal property and belongings of the person who has died and the first £450,000 of the estate with interest from the date of death and one-half of the remaining estate.
If the estate is worth more than £450,000, there are no surviving children, grandchildren, great-grandchildren or parents, but there are surviving brothers, sisters, nephews or nieces, the partner will inherit all the personal property and belongings of the person who died and the first £450,000 of the estate with interest from the date of death and one-half of the remaining estate.
Couples may jointly own their home. There are two different ways of jointly owning a home. These are beneficial joint tenancies and tenancies in common.
If the partners were beneficial joint tenants at the time of the death, when the first partner dies, the surviving partner will automatically inherit the other partner’s share of the property. However, if the partners are tenants in common, the surviving partner does not automatically inherit the other person’s share.
Couples may also have joint bank or building society accounts. If one dies, the other partner will automatically inherit the funds in the relevant account.
Property and money that the surviving partner inherits does not count as part of the estate of the person who has died when it is being valued for the intestacy rules. For example, Tom and Heather are married and own their flat jointly as beneficial joint tenants. They have a child called Selma. Tom dies intestate leaving the jointly-owned flat worth £300,000, and £50,000 in shares in his own name. The flat goes automatically to Heather. This leaves an estate of £50,000 which also goes to Heather, as it is worth less than £250,000. Selma inherits nothing.
If Tom had owned the flat in his name alone, his estate would have been worth £350,000. It would be shared out according to the rules of intestacy, that is, Heather would get the first £250,000 and the income or interest on half of the remainder during her lifetime. Selma would inherit half of the estate over £250,000 and the other half on the death of Heather.
Children of the intestate person will inherit if there is no surviving married or civil partner. If there is a surviving partner, they will inherit only if the estate is worth more than a certain amount.
Children – if there is no surviving married or civil partner
If there is no surviving partner, the children of a person who has died without leaving a will inherit the whole estate. This applies however much the estate is worth. If there are two or more children, the estate will be divided equally between them.
Children – if there is a surviving partner
If there is a surviving partner, a child only inherits from the estate if the estate is valued at over £250,000. If there are two or more children, the children will inherit in equal shares: One half of the value of the estate above £250,000 and The other half of the value of the estate above £250,000 when the surviving partner dies.
All the children of the parent who has died intestate inherit equally from the estate. This also applies where a parent has children from different relationships. For example, Alan and Grace were married and have two children, Tim and Annie. Alan and Grace get divorced. Alan then has a child, Mark, with his new partner Beata. Alan and Beata do not marry.
When Alan dies, Grace does not inherit under the intestacy rules because she is divorced from Alan and neither does Beata because she has not married Alan. Tim, Annie and Mark inherit all of Alan’s estate in equal shares. A child whose parents are not married or have not registered a civil partnership can inherit from the estate of a parent who dies intestate. These children can also inherit from grandparents or great-grandparents who have died intestate.
Adopted children (including step-children who have been adopted by their step-parent) have rights to inherit under the rules of intestacy. But otherwise you have to be a biological child to inherit. Children do not receive their inheritance immediately. They receive it when they: Reach the age of 18, or Marry or form a civil partnership under this age.
Until then, trustees manage the inheritance on their behalf.
Grandchildren and great grandchildren
A grandchild or great grandchild cannot inherit from the estate of an intestate person unless either: Their parent or grandparent has died before the intestate person, or Their parent is alive when the intestate person dies but dies before reaching the age of 18 without having married or formed a civil partnership.
In these circumstances, the grandchildren and great grandchildren will inherit equal shares of the share to which their parent or grandparent would have been entitled.
For example, Abdul has two sons, Iqbal and Ismail. Ismail has one daughter, Habiba. Ismail dies when Habiba is two years old. Abdul dies intestate when she is 20. Habiba inherits Ismail’s share of Abdul’s estate.
Other close relatives
Parents, brothers and sisters and nieces and nephews of the intestate person may inherit under the rules of intestacy. This will depend on a number of circumstances: Whether there is a surviving married or civil partner Whether there are children, grandchildren or great grandchildren. In the case of nephews and nieces, whether the parent directly related to the person who has died is also deceased, and the amount of the estate.
Other relatives may have a right to inherit if the person who died intestate had no surviving married partner or civil partner, children, grandchildren, great grand-children, parents, brothers, sisters, nephews or nieces. The order of priority amongst other relatives is as follows:
Uncles and aunts. (A cousin can inherit instead if the uncle or aunt who would have inherited died before the intestate person.) Half-uncles and half-aunts. (A half-cousin can inherit instead if the half-uncle or half-aunt who would have inherited died before the intestate person.)
Who cannot inherit
The following people have no right to inherit where someone dies without leaving a will: unmarried partners lesbian or gay partners not in a civil partnership relations by marriage close friends carers