The BBC reported that in 2011 only three in 10 people in the UK had a will and the Treasury gained £53m from people who died intestate – without a will. The year before it was even higher at £76m.
In order to help our readers understand the importance of having a will and the implications of not having one, we have prepared a series of posts which look into the key facts.
Having a valid will is one of the fundamental issues that any individual concerned with financial matters must address. Whenever advising on inheritance tax planning the first question that needs to be asked is about the will – whether one has been made and, if so, what its provisions are. Apart from the fact that having a will means that you decide who should benefit from your estate on your death, the inclusion of appropriate provisions in a Will can provide the opportunity to save substantial amounts of inheritance tax. However, this aspect is less important for married couples following the introduction of the transferable nil rate band rules from 9 October 2007.
The legal term for this is intestacy. This means that the law dictates who inherits the deceased’s property. Different provisions apply depending on which country in the UK you are domiciled.
From 1 February 2009, if a person dies domiciled in England or Wales without leaving a valid will then a surviving spouse will receive all of the personal chattels absolutely and a statutory legacy from the estate. The statutory legacy will be £250,000 where the deceased leaves children, and £450,000 if there are no children but there are parents and / or siblings. To benefit the surviving spouse must survive the deceased spouse by 28 days.
What happens to the remainder depends on whether there are children or not. If there are children, they take one-half of the remainder absolutely. If the children are aged under 18, their one-half share will be held on statutory trusts for their benefit – this is basically accumulation and maintenance trusts until they attain age 18. The surviving spouse gets a life interest in the other half (the capital passing to the children on his/her death).
If there are no children, the other relatives in a prescribed order get the rest.
The rules are different in Scotland and Northern Ireland.
If you are still not convinced about the need to have a will, read our next post in the series.
Alternatively, if you would like to setup your will and are looking for a recommendation get in touch.