In the first of a series of articles by Steven Dawson, the Head of the Private Client Department at MKB and current President of the Sheffield and District Law Society, we look at some recent changes to the rules about who inherits if you die without having made a Will.
“Whilst we at MKB would never encourage our clients to go without a Will, it is a sad statistic of modern life that around half of the adult population of the UK do not have Wills. If someone dies without a Will the Law dictates who inherits their estate and often this can produce a result that is not what the person themselves would have wanted.
For years the rules that apply to this (called “the Intestacy Rules”) have been falling behind, and I am therefore pleased to report that as of 1st October 2014 the rules on Intestacy are being brought up to date to meet the needs of modern families.
From 1st October 2014, the Inheritance and Trustees Powers Act 2014 puts into place new rules about who inherits if the person who has died has not made a Will.
Two of the key changes are broken down below:
- What happens when a spouse/civil partner dies leaving no Will and there are no children?
Where a person dies leaving a spouse or civil partner and no children, the spouse / civil partner will inherit the entire estate. Previously other relatives such as surviving parents or siblings would receive a share if an estate was worth more than £450,000. This welcome change prevents the surviving spouse / civil partner having to seek the help of the Court to avoid having to sell assets, including potentially the family home, in order to pay off other family members.
- What happens when a spouse/civil partner dies leaving no Will and there are children?
Where a deceased leaves a spouse or civil partner and child(ren), the spouse / civil partner will inherit the first £250,000 and personal “chattels” (basically “possessions”) plus 50% of the rest of the estate. The child(ren) will inherit the other 50%. Previously an unnecessarily complicated procedure involved the spouse / civil partner receiving income from 50% of the balance or some “formula” being applied to calculate a value to pass to them. This often meant tying up a large part of the estate for a number of years which was unnecessarily complicated and problematic for everyone.
Whilst these new changes are most welcome and far better than the previous rules, it still may not be the case that you would be happy for your estate to pass this way. One of the major gaps in this new law is that co-habitees do not have the same rights as married couples. The Rules, as good as they are, can also understandably not cover all different scenarios that may arise. What if you were worried that your spouse may remarry after your death and give everything to the new “toyboy/girl”? What if you don’t get on with one of your children or feel that one of your children needs a bigger slice of your estate than the other? Or what if you want to give a little to your grandchildren to help them with university fees or the get a foot on the property ladder?
Well, the answer to that is easy – make a Will. Wills aren’t just for the elderly, and shouldn’t be put off for another day. Everyone needs a Will. In fact, more often than not, it is the younger people who need Wills most! Single people, unmarried couples, the recently (or about to be) divorced, business people – the list is endless but it is often the more complicated lifestyles and assets of the younger generations and middle aged people rather than the elderly which means that arguably they are in more need of Wills than the elderly. Sadly, however, it is these age groups that often have no Will in place.
I know it’s not a pleasant subject to think about, and that’s why it is easy to put off, but by doing a Will now you avoid the Intestacy Rules (as welcome as the new version is!) and make it clear who inherits (and crucially on occasion, who doesn’t inherit!) your estate.
And for those who think making a Will is too much doom and gloom to handle, I will leave you with the following quote from a client of mine, which I think sums up beautifully how we try to make our clients feel:-
“Thanks for that – I’ve been dreading it for years, but you made it painless, and actually quite fun”