Ahead of Will Aid in November, we look at the rules that apply on intestacy: where someone dies without making a Will, and some of the key reasons why it’s worth making a Will.
In England and Wales, the rules on intestacy were amended in October 2014, so that when someone dies without making a Will, their assets would be divided as follows:
- Where there is a spouse/civil partner but no children, the estate passes entirely to them
- Where there is a spouse/civil partner AND children, the spouse/civil partner gets:
- Personal chattels (belongings)
- A fixed sum of £250,000 (or the whole estate if worth less than this amount)
- One half of the remainder absolutely, with the other half of the remainder shared between the children (note, this includes adopted, but not “step” children)
- Where there is no spouse/civil partner but there are children, everything passes to the children
- Where there is no spouse/civil partner, and no children, assets would pass to parents, siblings (or their children), half-brothers/sisters, grandparents and so on; if there were no relatives at all, then assets would pass to the Crown
It’s important to remember that some assets pass outside the estate and are not subject to intestacy or the terms of a Will, for instance jointly-owned property (“joint tenants”) where the property is automatically inherited by the survivor, or assets already subject to a Trust. Equally, some other assets such as pension benefits and death in service schemes are usually paid to nominated beneficiaries and not determined by Wills/Intestacy.
HMRC provides an online flow chart that describes what happens in different situations (and importantly, in the different parts of the United Kingdom, as the rules in Scotland differ in several aspects):
So, some key reasons to make a Will include that under the intestacy rules:
- The surviving spouse/civil partner does not necessarily inherit the family home.
- Unmarried “partners” or co-habitees have no automatic right to inherit under these rules, nor do dependants who are not related.
- It may be possible to save or defer substantial amounts of inheritance tax where relevant
- Parents can specify “the guardians” in their Wills who should be responsible for bringing up their children while they are under age 18 (age 16 in Scotland). The intestacy rules do not identify guardians for children and so, where there is no Will, someone may need to apply to court to be appointed. This is another very good reason for people with young children to make a Will.
- You may wish certain charities to benefit – this would not be the case under intestacy
Autonomy Wealth View: Making a Will is a vitally important part of financial planning, but one that we know is subject to more procrastination than many other issues. Will Aid is a partnership between solicitors and nine leading charities which offers those aged over 55 the opportunity to make a basic will and the solicitor will waive their fee in return for a donation to one of the charities. More details and how to make an appointment can be found on the Will Aid website.
The information contained within the document is for information purposes only and does not constitute investment advice and is based on our current HM Revenue & Customs guidance. Any tax reliefs are dependent on your personal circumstances and are subject to change.
The Financial Conduct Authority does not regulate tax advice or Will Writing.