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No Will - No Worries?

20 March 2023

A large part of my career as a Private Client lawyer is properly advising on the need to have a considered and effective Will. But for some of us, would dying without a Will really be a complete disaster for our assets and our family – or would things work out okay?

There are three issues to consider here. The first two apply where there’s no valid Will:

  1. The “intestacy rules” as to the division of an estate where there’s no Will;
  2. The fact that some assets pass effectively on death independent of any Will or of the intestacy rules; and

The third applies where there is a Will but it no longer reflects the testator’s (the person making the Will) wishes:

  1. The law and impact of revoking a Will.

WHAT HAPPENS UNDER INTESTACY?

Under the intestacy rules, if you’re married but have no children, everything passes to your surviving wife/husband/civil partner.

If you have children, then your wife/husband/civil partner takes your personal belongings, the next £270,000 in value, and half of what’s left. The other half passes to your children (at the age of 18 if they’re under that age when you die). If there’s less than £270,000 in the estate (ignoring the personal belongings), then the surviving wife/husband/civil partner inherits everything.

If you’re not married but leave children, those children take everything.

If you’re unmarried and have no children, then your estate passes to your parent(s) if alive, otherwise in accordance with a prescribed order depending on what relatives you leave.

The most common misconceptions about the intestacy rules are:

  • Everything passes to your wife/husband/civil partner – it won’t if your estate is more than £270,000 and you have children.
  • A “common law” spouse (i.e. a partner to whom you are not married) is treated the same as if you were married - they won’t be. They are not recognised under the intestacy rules and may need to bring a claim under the Inheritance (Provision for Family and Dependents Act) 1975 for a reasonable share of your estate, which may mean they need to sue their own children.

The intestacy rules only apply to the division of your “estate”, i.e. assets you own in your name that don’t pass on your death by other means.

 

WHICH ASSETS PASS ON DEATH INDEPENDENT OF THE WILL OR INTESTACY?

  • A property, perhaps the family home, held as “joint tenants” will pass automatically to the survivor on death;
  • A joint bank account passes to the surviving account-holder automatically;
  • A Self Invested Personal Pension (S.I.P.P) is applied at the discretion of the managers of the fund - normally in accordance with an expression of wishes form;
  • The proceeds of a life insurance policy written “in trust” for the surviving spouse/family members.

It’s therefore possible that a person with substantial wealth in a jointly owned property and pension but with modest other personal assets can be assured that their spouse or civil partner (if they have one) will see that value on their death, rather than a share of the estate passing to the children under the intestacy rules on the first death.

Nevertheless, and generally, the persons most “at risk” from an undesirable application of the intestacy rules are married couples, or those in a civil partnership, with children under 18. It is more usual to see everything pass to the survivor on the first death and for the children to take the estate on the second death. This is efficient from an inheritance tax perspective because there is no tax on the first death; tax is deferred until both parties to the marriage or civil partnership have died.

If a sizeable proportion of the estate passes to the children on the first death under the intestacy rules then any balance passing to the children over the nil rate band of £325,000 (or £500,000 if the additional “Residence nil rate band” is available) will bear tax at 40%. If the bulk of the value in the estate is represented by the family home, then a widow/widower may need to sell the house to pay the tax.

If the children are over 18, they may agree that the estate should pass in its entirety to their surviving parent and enter into a deed of variation to that effect (which will defer the tax). But they might equally choose not to do so, and if the children are under 18 then such deed of variation isn’t possible.

 

INTESTACY - A ONE SIZE FITS ALL SOLUTION?

The intestacy rules are, by necessity, a “one size fits all” solution that may not actually fit many family circumstances very well. This is particularly so in the absence of a coherent legal regime for established but unmarried couples. Further, while the intestacy rules might address the desire of couples on a second marriage/civil partnership to divide their estate between the new spouse and the children of the first relationship, they don’t reflect the more common desire of couples with children to leave everything to the survivor on the first death. The intestacy rules would also not work in a situation where there are family disagreements or family members do not get on where those family members would be those who would inherit on intestacy. However, for some, for example a widow/widower with children or a single parent, the intestacy rules most often achieve exactly the result desired - to leave everything to the children equally. 

Where an existing Will is out of date and no longer reflects the family circumstances and wishes, a new Will or codicil is needed. If the intestacy rules produce a result much preferred to the terms of the existing Will, then revocation of the Will means that the rules apply until a new Will is made. It is a misconception that revocation of an existing Will revives an older Will.

Revocation can take place by destroying the existing Will (for example by tearing it up or burning it) with the intention of revoking it. Therefore, leaving written evidence or telling the appropriate persons that you’ve revoked the Will is useful so there’s no doubt over your intention.

 

This article is in no way intended to suggest that, for many, Wills are unnecessary. Anyone who has assets and cares about what happens to those assets on death should properly and sensibly make a Will. Wills do more than direct who gets what - they deal with, for example, the appointment of chosen executors, guardians for the children should parents die before they’re 18, an expression of funeral wishes and where the burden of inheritance tax should fall.

The first steps in reflection about what might happen on death might be to establish:

  1. Which assets do I have that will/won’t pass under my Will or intestacy? How is our home held, is my pension/nomination form up to date, are my life insurances written in trust?
  2. How would assets within my “estate” pass under my existing Will or on intestacy?

Further Information

If in doubt, and in the interests of peace of mind, please contact Lucy Bluck or another member of the Private Client team.

 

About the author

Lucy Bluck is an associate in Kingsley Napley's Private Client team, where she acts for clients in relation to various matters including the preparation of wills and Lasting Powers of Attorney, lifetime succession and estate planning and the administration of estates.

 

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