Jane Forbat explored in the last newsletter the reasons for disputed wills. This month we are looking at the consequences of not having a will.
Figures released by the National Consumer Council suggest that 27 million adults in England & Wales do not have a Will. That amounts to 64% of the population that are leaving it to the laws of intestacy to determine how their assets (also known as their ‘estate’) will be dealt with on death.
The intestacy rules set out who among your family will receive what from your estate. If you die leaving a surviving spouse/civil partner and children or other close relatives and the estate is of sufficient value, the surviving spouse or civil partner will receive your personal effects and a fixed net sum, referred to as the statutory legacy.
Since the rules came into force in 1925, until this year the amount of the statutory legacy had only increased seven times, the last in 1993. At that time the statutory legacy was set at £125,000 where the deceased left a spouse and children and £200,000 where the deceased left a spouse and no children.
The Ministry of Justice announced with effect from 1 February 2009, the statutory legacy, where there are surviving spouses or civil partners and children, has been increased to £250,000. Where there is a surviving spouse or civil partner and no children then the amount increased to £450,000. The recent changes to the intestacy rules are to be welcomed. The increase brings it in-line with the rise in property prices and the overall increase in the value of an average estate. According to the Government’s own research up to 3,600 surviving spouses/civil partners a year were at risk of being forced to sell the family home to meet the claims on the deceased’s estate of other family members entitled on intestacy.
Some common traps for the unwary
- It is often wrongly assumed that in the absence of a will, your estate passes to your surviving spouse/civil partner. This is not necessarily the case. If you do not have a will your estate will be distributed according to the table below.
- If you are not married or in a civil partnership, the person living with you (“cohabitee”) has no automatic right to inherit your estate. In fact, he or she will inherit nothing under the intestacy rules.
- If your marriage breaks down or you separate but do not divorce, your spouse (husband or wife) may inherit all or some of the estate.
- If you do not have a will it may be left to the court to appoint guardians of children under 18. If you have a will you can stipulate who the guardians are to be and if necessary, make financial provision for them.
- If a transfer of your assets exceeds £325,000 (the nil rate band for 2009/10) the amount over and above that may attract inheritance tax at 40%.
- Upon marriage – your will is automatically revoked unless it contains provisions to the contrary.
Not all intestacies arise because someone did not write a will. Commonly, the will may fail to deal with all of the estate or the will was not validly made because the person making it did not have sufficient mental capacity to know what they were signing or the legal requirements for signing and witnessing the will were not complied with.
The Matrimonial Home
If you own your family home with your spouse/civil partner and hold it as joint tenants at the time of your death, your spouse/civil partner will automatically become the sole owner of the property. Therefore, property held as joint tenants will pass outside the rules of intestacy. Details of how you own your property can be obtained from the Land Registry.
If your family home is held by you and your spouse/civil partner as tenants in common at the time of death, your spouse/civil partner will only be entitled to their share of the property (usually 50%). Your share will form part of the estate. Therefore, depending on the value of the property, there is a risk that your spouse/civil partner may not be able to continue to live in the property after your death.
If the family home is held by you alone at the time of death, the entire property will form part of the estate and will be distributed according to the rules. Again, there is no guarantee that your spouse/civil partner will be able to continue to live in the property.
Beneficiaries
If surviving relatives are not easily identifiable, it may be necessary to employ the services of a professional tracing company. The expense for this will be borne by the estate and can cost many thousands of pounds. The amount of money available for distribution to the beneficiaries will be reduced and the money that is left may be distributed to distant relatives not known to you.
Dealing with an estate in the absence of a will can prove extremely distressing for the family. It is a time consuming, expensive and stressful process. In some cases it has a lasting effect on the family because of damage to relationships.
You will see that under the laws of intestacy your estate can only pass to your relatives. The only way you can define to whom it passes and in what proportions, is through a will.
It is therefore important that you review your will regularly (at least every 5 years) and if you have any concerns about your will, you consult a solicitor.
| Surviving relatives | Where surviving spouse or civil partner | Where no surviving spouse or civil partner |
| Children or remoter descendants | Spouse/civil partner will take: 1. your personal possessions 2. £250,000 cash or equivalent 3. a right to use and enjoy half of the remaining estate for their lifetime. On their death, this half share in the estate will pass to your children equallyThe children will take: 1. the remaining half of the estate equally If a child dies before you, the share that he/she would have taken will pass to any children that he/she may have |
All your estate will pass to your children equally, with any share of a child who has died before you passing to his/her children equally |
| Parent(s), and you have no children or remoter descendants | Spouse/civil partner will take: 1. your personal possessions 2. £450,000 cash or equivalent 3. half of the remainder of the estate entirelyParent(s) will take: 1. the remaining half of the estate entirely (equally if both of them survive you) |
All your estate will pass to your parents, equally if both of them survive you |
| Full brothers and sisters (including their children) | Spouse/civil partner will take: 1. your personal possessions 2. £450,000 cash or equivalent 3. half of the remainder of the estate entirelyBrothers and sisters will take: 1. the other half of the remainder of the estate entirely and equally If a brother or sister dies before you, the share that would have passed to that individual will go to their children instead (i.e. to your niece or nephew) |
All to your brothers and sisters in equal shares (or to the children of the brother or sister if they have died before you) |
| Half brothers and sisters (including their children) | All to your surviving spouse/civil partner | All to your half brothers and sisters in equal shares (or to their children as above) |
| Grandparents | All to your surviving spouse/civil partner | All to your grandparents (equally if both survive you) |
| Full uncles or aunts (i.e. the brothers and sisters of a parent, including their children) | All to your surviving spouse/civil partner | All to your uncles and aunts equally (or to their children as above) |
| Half uncles and aunts (i.e. the half-brothers and half-sisters of a parent, including their children) | All to your surviving spouse/civil partner | All to your half uncles and aunts equally (or to their children as above) |
| No surviving relatives | All to your surviving spouse/civil partner | All to the Crown (i.e. to the Government) |
For more information please contact Rebecca Fisher on 020 8971 1020 or email rebecca.fisher@morrlaw.com
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