If you haven’t written a Will, the law decides through the Laws of Intestacy who will inherit your assets when you die. This means the beneficiaries of your estate may not be the people you wish to inherit them.
The rules differ across the UK. The Laws of Intestacy are designed to protect your spouse and any children or adopted children. The Laws of Intestacy do not recognise unmarried partners or step-children.
Should you die without a Will:
- Your unmarried partner will inherit nothing and may need to go to court to get any entitlement to the estate. This may prove costly with the incurring of legal fees.
- Assets you intended to pass to your spouse may have to be shared with children.
- Blood relatives may receive a share of your estate in addition to your spouse.
- Inheritance rights would firstly be shared between spouse and children. If you had no children, your estate would then be shared between your spouse and your parents. Then brothers and sisters if your parents are deceased would share your estate with your spouse. Even more distant relatives could share your estate with your spouse on your death if they are your closest living relatives.
- Separated spouses still have rights to inherit from you until you are formally divorced from them.
- Close friends would not benefit from a share of your estate
- Charities and other organisations would also not benefit from a share of your estate.
- In the event that you had no living relatives your estate may go to the Crown.
Should you die intestate (without a Will) the relatives who under the Laws of Intestacy will be expected to be the executors of your estate. They may not necessarily be the best people to do this. A will allows you to appoint the executors you wish to manage the closure of your estate.
The failure to leave clear details of what you own or details of your debts can often cause unnecessary time delays and distress for loved ones after a person’s death. It’s advisable to leave a list of your assets and liabilities with other important documents (and keep it regularly up-to-date) to help minimise the distress to loved ones.
Your estate may also attract a higher Inheritance Tax liability as a result of dying intestate. The establishment of a Will and an estate planning strategy can help reduce exposure to Inheritance Tax.
What can you do in a Will?
A Will allows you to nominate the intended beneficiaries of your property, assets and possessions. The beneficiaries can include family members, friends, charities or other organisations. If deciding to have children as beneficiaries it is advisable to consider placing their inheritance in trust whilst they are minors.
A Will allows you to:
- Leave exact sums to individuals or organisations
- Leave percentages of your estate to individuals or organisations
- Make gifts and leave legacies to charities
Wills can be challenged after your death. Exclusion of financial dependents such as spouses or children could lead to a Will being challenged. The principles behind the laws of inheritance intend that natural beneficiaries (your closed relative(s)) should benefit from some of your estate on death unless there are good reasons for them not doing so. Legal professionals may often refuse to draw up a Will if natural beneficiaries are being unreasonably excluded from inheritance.
The position of Jointly Owned Assets
Jointly Owned Assets take a variety of forms – joint bank accounts, joint tenancy in terms of property; partnerships; company shareholdings. Joint bank accounts can continue to be assessed whilst an estate is in probate. However this depends upon the nature of the joint bank account and whether the joint members of the accounts are also beneficiaries of the estate. For example in the situation of a partnership bank account, the surviving partner may not be the beneficiary of the dead partner’s share; the beneficiary instead being the family members of the dead partner. In this case management of the bank account would not pass solely to the surviving bank account holder. The dead partner’s beneficiaries would instead inherit the dead partner’s share of the account monies.
The position of jointly owned Assets in partnerships and limited companies after death depends ultimately on the structure of the partnership and limited company. Some partnerships or limited companies may have structures where ownership of the dead partner’s or dead shareholder’s share passes to the other partners or shareholders and not to the natural beneficiaries of the dead partner or dead shareholder. They may often have life insurance in place to compensate natural beneficiaries such as spouse or children for the loss of partnership or share ownership rights. Where the above structure does not exist then the partnership share or limited company share would be inherited by the natural beneficiaries of the dead partner or dead shareholder and form part of the dead partner/ dead shareholder’s estate.
Property can be held either as ‘tenants in common’ (common owners in Scotland) or ‘joint tenants’ (joint owners in Scotland).
Tenants in Common each have distinct shares of the property. The shares may not be equal. The inheritors of shares on death can be the other tenants in common or can be another beneficiary. The use of tenants in common ownership was often used for Inheritance Tax reduction strategies prior to the introduction of the Combined Spouse Inheritance Tax allowance in 2007.
Joint Tenants jointly own the property. On death of one of the joint tenants the remaining joint tenants automatically inherit your share regardless of the beneficiaries in your Will.
Assistance from Legal Professionals
It’s advisable to seek help from legal professionals such as solicitors or will-writers when drawing up a Will. Legal professionals can help ensure that the Will is correctly drawn up and that mistakes that could lead to the Will being invalidated are avoided.
It is worth shopping around for Will-writing services as fees can vary between different solicitors and will-writers. Ideally you should make sure that any legal professional you use is regulated by the Solicitors Regulation Authority or belongs to the Society of Willwriters or the Institute of Professional Willwriters. These organisations have codes of conduct to govern the practice of members affiliated to them.
Drawing Up A Will
Executors
Executors are the individuals appointed to ensuring that the wishes contained in your Will are fulfilled. It is best to appoint at least two executors in your Will in case one is unwilling to act as Executor as the time of your death. Potential executors should be asked whether they are agreeable to take on the role in order to avoid a later refusal.
Professionals such as solicitors or financial advisers can be appointed as executors but they could charge for their services. Non professional executors can always appoint solicitors or financial advisers to help them manage an estate after death should they wish to do so.
Beneficiaries
The beneficiaries are the people you wish to inherit your property and assets after your death. They can be family members; friends; charities or other organisations.
Legal Professionals
You may wish to have a legal professional draw up your Will or not. Although it is advisable to employ a legal professional you are not required to do so.
Witnesses
All Wills need to be witnessed by independent witnesses in order to have legal validity. Independent witnesses should ideally be non family members and non beneficiaries of the estate. It is important to be aware that some Wills have been challenged in the courts on the basis that witnesses could not remember witnessing the Will.
List of Assets & Liabilities
It is useful to include a list of assets (property, life insurance plans. Bank accounts etc) and liabilities (mortgages, loans, credit cards etc) with your Will.
Secure Storage
Once a Will has been completed it is advisable for it to be stored either with a legal professional and/or with a copy at home with your other important documents.
Reviews
Your Will should be regularly reviewed to ensure that it continues to meet your preferences regarding how you wish your estate to be inherited at the time of your death.