Where There’s A Will ……
November 3rd, 2008
Most people probably think that if they die without leaving a valid will, everything they own will pass automatically to their surviving spouse/civil partner. Not so!
Under the intestacy laws as they stand currently, if a person dies and is survived by both a spouse and children, the surviving spouse will receive the personal chattels and the first £125,000 of the estate. Half of the balance of the estate will pass outright to the children and the surviving spouse will receive a life interest (a right to income) in the other half. When the surviving spouse dies, the children will then receive the other half absolutely.
If, on the other hand, the person who dies intestate is married with no children but has surviving parents, brothers, sisters, nephews and nieces, the spouse inherits the first £200,000 and half of the remainder absolutely, with the balance passing to the parents. If there are no parents, the balance passes to the brothers and sisters, but if there are no brothers or sisters, the balance passes to nephews and nieces. Only if there are also no nephews and nieces would the whole estate pass to the surviving spouse.
In a welcome move however, the Government has recently announced changes to the amount the surviving spouse/civil partner will be entitled to receive from the estate of a person who has died without a will.
These changes mean that if death occurs on or after 1 February 2009, the survivor will now be entitled to the first £250,000 (if the deceased had children) and the first £450,000 (if there are no children, but there are surviving parents, brothers, sisters, nephews or nieces).
Whilst these increases are welcome, the obvious solution of course is to have a valid will that clearly states who should benefit from the assets on death. This should ensure that the estate is distributed as you want and can be drafted so as to minimise Inheritance Tax.
If a will isn’t made, then as an absolute minimum the ownership of the family home should be held in joint names so that it passes automatically to the spouse on first death. In this circumstance, the intestacy laws will not apply to the family home and a surviving spouse with children will still get the first £250,000 of the estate.
The statutory legacies were last increased in 1993 so let’s hope we don’t have to wait another 15 years before the limits are reviewed again!