Not Made A Will?


“In this world nothing is certain but death and taxes” said Benjamin Franklin – over two centuries later this holds as true.

Whether we approve of it or not, Inheritance Tax is here to stay for the foreseeable future but whereas in the past it only affected the estates of those at least moderately wealthy, now with UK average house prices approaching £300,000 and London average property prices at over £500,000 even after the latest price hiatus, Inheritance Tax applies to the majority of homeowner’s estates.

As a general principle, if you want to pay Inheritance Tax, then don’t write a Will. It’s the best and fastest way to ensure that you make the maximum contribution to government coffers when you die. If, on the other hand, you would like to pass the maximum amount of your estate to family and friends, plan ahead and make a valid and up to date Will.

Nor can you rely on a Will made some years ago – tax legislation has been changing and increasing estate liabilities at a pace not seen since the modern legislative format and it is imperative that you review your Will regularly to avoid unnecessary tax traps.

What risks are you running by not making a Will? Parents with children under 18 MUST appoint GUARDIANS – this is IMPORTANT FOR ALL PARENTS!

Dying without a Will (Intestate) means that your estate will pass in accordance with the Administration of Estates Act 1925 and the Inheritance (Trustee Powers) Act 2014 – and that covers your property, your personal possessions and savings. Spouses and children do not automatically receive everything in the deceased’s estate.

There is a strict pecking order under the Act for deciding who gets what. Spouses get a rough treatment by the intestacy rules.

Examples:

The Deceased leaves a spouse but no children so the spouse receives:

  • All the personal chattels – such a furniture, jewellery, car, pictures etc.
  • A legacy of £450,000 and one half of the balance outright.
  • The remaining balance then passes to various relatives according to who has survived; first to the deceased’s parents but if not surviving then equally to surviving brothers and sisters (the law is being changed in late 2014 so that a spouse can indeed inherit the whole estate in circumstances where there are no children – but relying on the intestacy rules can still lead to delays and without a valid Will there are no proper provisions to deal with situations where both spouses die).

The Deceased leaves a spouse and children, the spouse receives:

  • All the personal chattels.
  • A legacy of £250,000 and the income from one half of the balance.
  • The rest passes to the children when they reach 18.

Now imagine how this can lead to problems, here are just a few of the major ones:

  • If the matrimonial home is in the deceased spouse’s sole name it might need to be sold to satisfy the various family claims.
  • Inheritance Tax may be due if the value of the estate passing to relatives other than the spouse is over the nil rate band of £325,000 (2014/15 – not to change until 2018!!)
  • If there are two or more children they aren’t going to receive much income when they are minors unless the estate is worth at least some hundreds of thousand pounds.
  • Children inherit their share at 18 – not necessarily the best age to give sums of capital.
  • Beneficiaries will be the administrators of the estate – perhaps they aren’t suitable.

Failure to make a Will can have disastrous consequences for the family wealth, relationships and liabilities. It leaves far too much to chance and the only likely smile will be on the face of the Chancellor of the Exchequer!

For more information, visit our Making a Will page, or please call Andrew Murray on 020 7631 4141 or email privateclient@bishopandsewell.co.uk


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