I think we all know that dying without a Will is not a good idea but do we really know why? Most people think of the potential financial hardships but there are more emotional and emotive reasons also.
Let’s start with what happens if you die without a Will and who gets what. Dying without a Will is called dying INTESTATE. There are statutory laws – called the Law of Intestacy – that govern how your estate will pass if you die without a Will.
Remember that any assets owned jointly will NOT be governed by your Will or the Law of Intestacy. Instead, those joint assets pass by the Law of Survivorship, i.e. the remaining joint owner(s) get the lot. So, if you and your partner/spouse own everything ‘jointly’, should you die, your partner/spouse gets everything. However, anything not owned jointly (i.e. any assets solely owned by you) will fall according to the Law of Intestacy.
So, now it depends on whether you are married or not? If ‘yes’, then the next question is ‘do you have children’? If ‘no’, then your spouse inherits the lot but don’t forget that is also the case if you are separated but not yet divorced.
However, if you do have children, it gets a little trickier. As per recent changes made to the statutory gift which come into effect on 26th July 2023, your spouse will now receive the first £322,000 of your estate. So, if you do not solely own more than £322,000 your spouse receives your entire estate. However, if your estate is in excess of £322,000 that excess balance will be split 50% to your spouse and 50% to your children (held in trust until they are aged 18). Your personal chattels go to your spouse. This can cause many obvious difficulties, especially if your spouse is not the parent of your children.
If you are not married, it gets even trickier. If you have children, they receive your entire estate, NOT your partner – even if your partner is the parent of your children! If you don’t have any children, your parents will receive your entire estate – these monies may end up going on their care fees. If your parents are not alive, your estate falls to your siblings and of course down to their children (your nieces and nephews) should your siblings die before you. Do you really want your nieces and nephews to inherit rather than your partner to whom you aren’t married?
If all that fails, the next level down is to your half-siblings, then grandparents and then aunts/uncles and of course their children should they die before you. If all that fails… then your estate passes to The Crown!!
So, you can see why the Law of Intestacy is often called a ‘blunt instrument’!
There are other aspects that are often not thought about. If you haven’t got a Will then you haven’t nominated your own Executors and Trustees. The former are the people to whom you give the responsibility of administering your estate and body. The latter, often the same people, are those who manage monies and trusts on an ongoing basis. If you haven’t nominated your own Executors and Trustees then it will be down to those closest to you to act as your Administrator.
There are strict rules as to who can apply to be your Administrator. The order is as follows: the surviving spouse where the deceased was married or in a civil partnership; children of the deceased; grandchildren; surviving parents; surviving brothers or sisters; nephews or nieces; another relative.
Let’s take a look at that list. What if you don’t like or trust or get on with any of those people? They are now in charge of disposing of your body, organising your funeral, distributing your money, liaising with the family and the ongoing management of money and trusts. Are there any people on this list within your family who you would not like to act in such a way on your behalf?
What about all the aspects of your life that won’t be reflected in the Law of Intestacy?: gifts to family and friends; gifts to stepchildren; care of pets; gifts to charity; guardianship of children; ongoing management of your business; excluding estranged beneficiaries; tax planning… to name but a few.
Heartache, family disputes and financial hardships may all occur at what is already a very difficult time. Do you want that for your loved ones? No, of course you don’t, so go to the effort and expense of having a well-crafted Will to make sure your wishes are adhered to.
As always, we would be delighted to talk this through with you so do email us on firstname.lastname@example.org or call the office on 0191 406 0747.