Two-thirds of UK adults are without a Will- are you one of them?!
In 2021, an estimated two-thirds of UK adults have not made a Will to pass on their wealth.
Without a Will, there is a risk that your estate will not go to those you want to receive it. This means that disputes could arise between family members and others who may consider that they should receive a share of your assets.
It also means that the opportunity to legitimately minimise the amount of Inheritance Tax payable has been lost and estates, where no Will exists, may be liable to pay a substantial sum to HM Revenue & Customs.
What happens to your estate if you do not leave a Will?
Even if you have a Will, there are certain circumstances when your existing Will may revoke, for example, if you get married, unless there are particular provisions within your Will. The same applies to a civil partnership.
Many believe that if they do not have a Will, then “everything” will be inherited by their husband or wife. This is not the case.
What a surviving spouse inherits is limited to:
a. All personal possessions;
b. The first £270,000 of your estate by value; and
c. One half of any excess estate above the £270,000 threshold.
If you intend for your spouse to inherit more than this, then you should immediately consider preparing a Will.
Whilst it is not something you probably wish to think about, but without a Will, you have not left any provisions in the event that your spouse passes away before you. What will happen to those assets on the second death? It is important that such provisions are made through your Will.
If someone does not leave a Will, their estate will be distributed in accordance with the Rules of Intestacy. These rules set out a strict order in which relatives will inherit.
Whilst on the topic of marriage, what about if this is your second marriage? You may wish to consider including provisions within your Will to specifically exclude that person to ensure protection in the event that a claim is made by the ex-spouse upon your death.
Another issue to take into account is any minor children.
If you pass away and there are no other people who are considered to have parental responsibility (see here to understand what parental responsibility is), then a family member, such as a grandparent, aunt/uncle, niece/nephew, cannot simply decide that they will look after the children. They would need to make an application to the Court seeking parental responsibility for the children and this is not only costly and time-consuming, but your children will be in the care of the local authority in the meantime.
It is therefore important that your Will makes arrangements for a guardian in your Will so that that person can take on the responsibility of caring for the children without the involvement of the Court process or the local authority.
Where the deceased does not have a spouse or children, the next relatives in line to inherit are parents, followed by siblings, grandparents and uncles and aunts.
Cohabiting partners and stepchildren will not inherit anything under the Rules, however, close their relationship was to the deceased. If they were supported financially by the deceased during their lifetime, they may be able to make a legal claim against the estate.
Administering an estate where there is no Will
The administration process can be more complex when the deceased did not leave a Will. It may not initially be clear who will deal with the winding up of the estate, or there may not be anyone who wishes to take on this role, which can be difficult and time-consuming. As well as defending potential claims on behalf of the estate, the administrator will need to ensure they identify all potential beneficiaries, advertising in the press where necessary.
The Bereavement Index 2021 and the results were quite unfortunate, particularly that 40% of those who recently lost someone say their mental health was affected by dealing with the administrative work that is involved.
To compound matters, 88% of legal professionals say that they believe that the bereavement process is “slow and inefficient”.
I can understand where professionals the results refer to are coming from, as they also refer to financial institutions being the biggest cause for delay (which they say 64% of their clients cause them distress).
Whilst many individuals feel that they can take on the burden of administering an estate, it can not only be very complicated and time-consuming but also very stressful, only causing effects to their mental health whilst they are already going through a bereavement.
What should you do if you want to leave a Will, but you do not want your children to inherit?
Some people avoid making a Will as they are reluctant to leave money to certain relatives. In fact, an increasing number of celebrities, including Daniel Craig, Sting, Andrew Lloyd Webber, Simon Cowell and Nigella Lawson are opting not to leave their fortunes to their children, hoping that instead their offspring will work hard and support themselves.
If you decide to take this approach, then as well as setting out your wishes clearly in your Will, you should talk to your children and explain why you are not going to be leaving them your money.
You can also consider other options, such as leaving money in trust until they reach a certain age or providing money for things like education or a deposit for a home. Whatever you decide to do, communication will help avoid disputes, as will ensure you have a valid, up-to-date Will in place for when the time comes.
The list can go on as to how important it is to have a Will. It is not until a person experiences the devastating effects there are when passing away intestate, do people then understand the importance of a Will.
Please contact me with your questions.
0207 183 4595
The information provided in this article is not intended to constitute professional advice and you should take full and comprehensive legal, accountancy or financial advice as appropriate on your individual circumstances by a fully qualified Solicitor, Accountant or Financial Advisor/Mortgage Broker before you embark on any course of action.