Ian Barton from Charterhouse Wills discusses the recent changes to Intestacy Rules and the importance of having a valid Will in place.
Although it is pleasing that the changes to the intestacy rules have simplified matters, the fact remains that if you rely on the rules, you still lose control over what happens to your estate. You allow the Government to make the decisions for you, which could mean that your final wishes about what happens to your property, savings, investments and personal belongings are not carried out.
When someone dies without leaving a valid Will, we must carefully draw up a family tree to establish who is entitled to inherit from that estate. Depending on the complexity of the family, the administration of the estate can be prolonged. Often this delays a family being able to have closure following a death especially when it is necessary to trace people living overseas.
In order to ensure that your estate goes to the persons that you want to benefit as quickly as possible, it is crucial that you take the right advice and put an effective Will in place.
A Will allows you to decide who inherits your estate and when, based on the individual needs of your beneficiaries. Very few of the Wills that we prepare actually distribute the estate in the same way as the rules of intestacy would have done.
Married couples and civil partners without children
Where there are no children, the entire estate will now pass to the surviving spouse. Whilst this does simplify the process, it means that the deceased's parents, brothers and sisters or their children do not inherit anything.
When the second spouse subsequently dies everything passes to their family (or new spouse if they have remarried) and the family of the first spouse to die will receive nothing.
Married couples and civil partners with children
The surviving spouse receives the first £250,000, all chattels (personal belongings) and half of the remaining balance. The other half of the balance must go to the deceased's direct descendants (children, grandchildren, great grandchildren) once they reach the age of 18.
Even if the surviving spouse could afford to manage financially without the other half, most people would agree that it is unwise for children to receive their inheritance at the age of 18.
Married couples who have lived apart but never divorced are still considered to be married in legal terms. If you do not have a Will, your estate could be shared with family members that you are no longer on good terms with.
Couples who are not married or civil partners
Unmarried couples are especially vulnerable as they will receive nothing from their partner's estate if they die intestate. For this reason, it is extremely important that unmarried couples in particular have valid Wills in place to ensure that their property, savings, investments and personal belongings go to the people that they are intended for.
Stepchildren, in-laws, close friends or charities
They have no right to inherit where someone dies without leaving a Will.
The intestacy rules are not designed to distribute your assets in a tax efficient manner. This could mean that your family will pay unnecessary inheritance tax to the taxman.
The new definition of chattels (personal property)
Up to the 1st of October 2014, 'personal property' or 'chattels' have had an archaic and arguably ambiguous definition which includes 'carriages', 'linen' and 'scientific instruments'.
Under the new rules chattels are now defined as anything that is not monetary, held as an investment or a business asset.
It is evident that there could be disputes over what is meant as an 'investment'. People see investments as different things and where there are collectable items of value in an estate, there could be a dispute over whether they pass to the spouse as 'chattels' or form part of the estate that the children might inherit as an 'investment'.
A Will allows you to decide who specifically receives your personal belongings and any family heirlooms.