Do you really know what happens if you die without a Will?

Do you really know what happens if you die without a Will?

by | Jul 5, 2018 | Estate Planning, Inheritance, Wills

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. Your spouse will receive the first £270,000 of your estate.  So, if you do not solely own more than £270,000 your spouse receives your entire estate.  However, if your estate is in excess of £270,000 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.

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.

Why some choose not to write a Will

Why some choose not to write a Will

by | Jun 29, 2018 | Lasting Powers of Attorney, Wills

So many people find it hard to get around to writing a Will (only 45% of adults have a Will). That inertia may be for any or all of the following reasons or you may have some reasons of your own:

  • You think it will be too expensive
  • You haven’t the time
  • You don’t want to take time off work to do it
  • You can’t decide or agree together on what happens to your estate or children
  • You don’t want to think about it as it is too difficult or morbid
  • You think “it” will never happen to you at your age and you can do a Will later
  • You think you will be “tempting fate” if you make a Will
  • You don’t know who to choose to write the Will as you aren’t sure you can trust anyone
  • You think the family will “get everything anyway”
  • You think you haven’t got anything to leave so you don’t need a Will.

So, if you are to stand a chance of getting around to “it”, here are some pointers to help you make “it” happen:

  • Choose an environment that makes discussing such personal and delicate issues as easy and comfortable as possible. Most people prefer to be at home as it is their ‘space’ and they have all their documentation to hand. However, some people prefer the formality of an office. Many professionals only offered online appointments during the pandemic, so if you are not familiar with this method, you may need to involve a technology-savvy friend or family member to help. Choose a time that suits you which may be in the evening if you work during the day.
  • Choose a provider that doesn’t charge for their appointments by the hour. To take proper and thorough Will instructions takes time and sensitivity. You don’t need to be worrying about how much it is costing you. The provider should furnish you with a quote once what you want and need has been established. It should then be up to you whether or not you proceed. . The first appointment should always be used as a fact-gathering exercise for you and your circumstances.
  • Your advice should be bespoke to your circumstances because one size doesn’t fit all. Therefore, your provider, Will-writer or solicitor should know what they are talking about. Just because the company has a glossy brochure doesn’t make it an expert. Just because they are a solicitor doesn’t mean they write many Wills. Think of your GP – they know about many aspects of medicine but they aren’t like a consultant who is an expert in their field. Whoever you choose, make sure they hold the appropriate qualifications.
  • You should like and trust your provider as you will be talking about really difficult issues and personal information. Your provider should be empathetic and patient. They should be experienced in helping you make decisions on difficult topics, often topics that provoke heated discussion between you and your partner or topics on which you don’t agree or can’t decide. Such situations should be very normal for the provider as it will be a regular occurrence for them; after all, families are families and people are people!
  • It is very rare that people DON’T need a Will. “Having nothing” is not usually true and you are just storing up potential problems for your family.
  • Not having a Will at your death means your estate will fall according to the Law of Intestacy. This is a very blunt instrument and often leads to issues in our modern world. It is often quoted to me that “my parents didn’t have a Will and everything was fine”. That was then but now people lead more complex lives than ever before. Less people get married or marry several times, many people have children from several marriages or relationships and people definitely own more assets than they used to.
  • Even if the Law of Intestacy endeavours to make sure the beneficiaries are who you would choose them to be (although this will not be the case in every instance), it may mean that the person in charge of your estate and your body isn’t the person you would choose it to be. This can be very distressing and contentious for those who you would normally have chosen.
  • And finally… regarding superstition. Putting a Will in place has as much effect on whether you get run over by a bus as not having a Will!! But at least it is less problematic for those you leave behind!!

So, with all this considered, do the right thing, give yourself and your family the peace of mind and consideration they deserve and GET ON WITH IT!!!

Protecting your Will and other vital documents

Protecting your Will and other vital documents

by | Jun 29, 2018 | Lasting Powers of Attorney, Wills

As important as writing your Will is, it is equally important to keep it safe and in a location that is easily found when the time comes for it to be needed. As such, we are adamant that our clients must be sure their documents are stored in a secure safe to protect against fire, water, theft, loss and tampering. If the Will is lost or damaged at the time of death, your thoughtful estate planning will be disregarded, even if your chosen executors knew your wishes.

Family Wills provides a will storage service to ensure that your executors are able to action your wishes. We will also store your original Lasting Power of Attorney (LPA) documents as part of this service. We have decided to provide this service as a direct result of one of our client’s experiences.

Our client was offered Will storage but he was happy he had a “safe place for his documents”.  He even took the precaution of giving his executors an unsigned copy of his Will and Family Wills’ contact details.  When they called us for the signed Will, we had to let them know that our client had chosen to keep the original document himself and that it should be among his possessions – it wasn’t; they found everything but the Will. Ultimately the Will was ruled to be presumed revoked by destruction.

This meant that our client had now died intestate and through that law, in his case, this meant that his parents now inherited his estate.  It therefore fell to our client’s parents either to distribute the estate according to his wishes through a Deed of Variation, both timely and expensive, or to allow all the assets to default to them. In the end, the parents got their letters of administration and all his assets. The people our client wanted to benefit got nothing.

Nobody will ever know what happened to the Will. Maybe our client intended to revoke his Will. What we do know is that if we had held the Will in storage for him then his wishes would have been carried out.

If you choose to forego a specialty storage facility for your Will, be sure to store your documents as advised and be sure to let your executors know where to find your Will and how to access it.

A million pounds tax free? – I don’t think so!!!

A million pounds tax free? – I don’t think so!!!

by | Jun 15, 2018 | Inheritance, Wills

Are you aware the Inheritance Tax laws changed on April 6th 2017? Are you one of the many who now believe they have £1 million before they pay any inheritance tax? You are most probably wrong! Do you have children / grandchildren (direct lineal descendants)? Are you married? Do you have a property that you live in or have lived in (a qualifying residential interest)? How much debt do you still have on your property? All these factors contribute to whether you will get the extra Residence Nil Rate band. Confused yet?

As an attempt to satisfy the promise of £1 million inheritance tax-free, the new Residence Nil Rate band was introduced in April 2017. Experience to date shows that many people are under the misconception that everyone now has £1 million and it really is not that simple.

Everyone has their own tax-free allowance of £325k (‘ordinary nil rate band’) which has been fixed until April 2026. As the survivor of a married couple, you will benefit from your spouse’s £325k (‘transferable nil rate band’), providing they haven’t used any of it up at their death or with lifetime gifting. So, when you have both died, your family will benefit from £650k before tax is paid.

Each individual now has an additional £175k (‘residence nil rate band’), again fixed until April 2026, to pass on to their family, inheritance tax-free, but they must pass it to direct lineal descendants: children, grandchildren, adopted children, stepchildren, foster children, spouses of deceased children provided they have not remarried. What if you do not have any direct lineal descendants? You will not qualify for this extra allowance. Unfair?

The additional allowance must be in the form of property (or if you have downsized since 8 July 2015) that you live in or have lived in (i.e. excluding buy-to-lets, unless you had previously lived in it). That property can pass to your spouse at your death. Then, at your spouse’s death, your estate will get both your allowance and your spouse’s allowance (i.e. a transferable residence nil rate band). This will mean that as a married couple you will have £1M before inheritance tax is payable; the 2 ordinary nil rate bands of £650k plus the 2 Residence nil rate bands of £250k. If you are unmarried, beware! If you pass your property to your partner at death and then on to your children, you will lose one allowance. Unfair?

The value in the property is also a consideration. The value is the net value i.e. minus your mortgage. So you may own a £350k property as a married couple but you have a £250k mortgage. Hence only £100k (between you) rather than £350k will qualify for the additional allowance.

Trust planning within Wills is common and very useful. However, beware, some trusts will disqualify you from the new allowance. Specialised estate planning is required to ensure you still retain the benefit from trust planning as well as the additional tax allowance.

As you can see it’s a minefield. So, don’t assume the inheritance tax free allowance you think you will get and seek proper legal advice.