Wills

Have you got a Will? Do you know what happens if you don’t have a Will?

When an individual passes away without a Will, predetermined rules outline the inheritance process. Such a person is termed as ‘intestate’. This can be either full intestacy, where there’s no valid Will due to reasons such as marriage invalidating it or improper signing, or partial intestacy, which occurs when the Will doesn’t cover the entirety of the estate. This might happen if a beneficiary predeceases the Will maker without an alternative beneficiary listed or if a beneficiary invalidates their portion by witnessing the Will.

Surprisingly, about 60% of people don’t have Wills. Among seniors over 65, nearly 25% don’t. The reasons often range from costs to misconceptions about estate transfers. Many assume their assets will automatically go to their loved ones.

So, what happens when you don’t have a Will? The inheritance follows this order:

1. Spouse/Civil Partner
2. Descendants (children, grandchildren, etc.)
3. Parents
4. Siblings and their offspring
5. Half-siblings and their offspring
6. Grandparents
7. Aunts, uncles and their children
8. Half-aunts/uncles and their offspring

Who inherits and how much depends on factors like the size of the estate, the date of death, and surviving relatives. If you don’t have a will, certain family members or partners may not inherit as you’d wish. For instance, unmarried partners, stepchildren, or same-sex partners might miss out.

Some complications can arise:

Tax implications: If your remaining estate exceeds £250,000, half might go to your children, potentially burdening your spouse with unforeseen taxes or forcing your kids to sell assets for unexpected tax bills.

Example: Consider Jane and James. They co-own a £1.2 million property. James, having additional assets worth £600,000, dies intestate. James’ tax exemptions total £425,000. Even after using his exemptions, there’s a £50,000 taxable portion, leading to a £20,000 inheritance tax. A well-drafted Will could have prevented this.

Modern Families: Nowadays, families are more diverse. They might have members from previous relationships, and intestacy doesn’t cater to every kind of familial structure.

Example: James, a divorcee with children, remarries. On his death, his £200,000 estate goes to his new wife, who has her own children. If she dies intestate, her children inherit everything, leaving James’ kids with nothing.

Same-Sex Couples: Unmarried same-sex couples may face challenges. If one partner dies intestate, the assets might go to their biological family, excluding the surviving partner.

To ensure your assets are distributed as you wish, drafting a Will is crucial. Consult with an Estate Planner or a solicitor, and get advice from a Financial Adviser to navigate the complexities.

Will writing is not regulated by the Financial Conduct Authority.