Thinking about what could happen after you are gone is never going to be the most cheerful of topics. It often feels easier to ignore rather than to confront and make plans for it.
As such, making a will becomes easy to overlook too. Many people assume it is something to be done when you’re older or they just lose sight of it amongst the bustle of daily life.
But the truth about wills is: when you make a will, it isn’t really for you. True, a will lets you set out your wishes for your estate (which is generally all of your money, property and possessions at the time of your death), and it lets you appoint people to carry out those wishes, but really a will is for the people you leave behind: your family and friends, even the charitable causes you support.
Without a well-drafted, up-to-date will in place at the time of your death, you almost certainly make the situation more difficult for your loved ones. In this blog post, we explain why, and look at what happens if you die without a will.
A set of rules will decide where your property goes
If you die without a will, your estate will be passed on according to a procedure called the intestacy rules. These rules set out an order of priority for any family members who could inherit from you. The order of priority is as follows:
- Your spouse or civil partner
- Your children or grandchildren, great-grandchildren or further direct descendants. Collectively these are referred to as ‘your issue’.
- Your parents
- Your brothers or sisters (or their issue)
- Your half-brothers or half-sisters (or their issue). A half-brother or half-sister is someone with whom you share only one parent.
- Your grandparents
- Your aunts or uncles (or their issue)
- Your half-blood aunts or uncles (or their issue). A half-blood aunt or uncle will be the child of only one of your grandparents.
Generally speaking, the whole of your estate will go to the first one of these ‘classes’ which applies to your situation (running through in order from 1 to 8). For example, if you have parents living, they will only receive your estate if you do not have a spouse/civil partner or any children/grandchildren etc who survive you.
There is an exception, however. Your estate will be shared out differently if its value is over £250,000 and you are survived by a spouse or civil partner and by your children or other issue. In this case, your spouse/civil partner will receive the first £250,000 of your estate and 50% of the remaining value of your estate above that figure. The other 50% will be shared amongst your issue.
When sharing out your estate amongst the people in a particular class, someone’s issue will only inherit if the closer relation to you has already died. So, for example, your nephew or niece will only receive a share of your estate if your brother or sister – their father or mother – has already died at the time of your death. A grandchild will only receive a share if their parent (your child) has not survived you.
Some people cannot inherit through the intestacy rules
It is important to note that certain people cannot inherit from you through the intestacy rules under any circumstances. These include:
- Unmarried partners
- Your step-children or the step-children of other relatives
Making a will allows you to choose whoever you wish to receive all, or part, of your estate after you are gone. This enables you to share your estate amongst a wider range of people if you want. You can also specify that particular items, such as treasured possessions, are to be left to certain loved ones.
Uncertainty for your family and friends
When you make a will, you appoint certain people to be your executors. Executors are responsible for handling the distribution of your estate and putting the terms of your will into effect. If you have died without a will, your loved ones will have to decide amongst themselves who should manage your estate – something which may cause disagreements.
If you have young children, who would look after them?
A particularly significant uncertainty relates to the guardianship of young children. If your children are under 18, you can appoint guardians for them in your will, in the event that anything should happen to you and your partner. If you do not make a will, there will be no clear indication of your intentions and the families of you and your partner might easily disagree over who should take care of the children. This could even cause legal disputes over guardianship.
Many young families are unaware of this aspect of making a will. Perhaps this is why suggests that nearly 6 in 10 parents in the UK (59%) do not have a will, or have a will that is out of date.
No inheritance tax savings
Everyone’s estate is assessed for inheritance tax upon their death. Not all estates have to pay inheritance tax as there is a value threshold (called the ‘nil rate band’) up to which tax is charged at 0%. This is currently set at £325,000. Any of your estate’s value above this threshold will be taxed at 40%.
However, the inheritance tax rules allow for a number of ‘exemptions’ and ‘reliefs’ which can reduce any tax payable. For example, if at least 10% of an estate’s net value is being given to registered charities, the tax rate charged on any value above the nil rate band will be reduced from 40% to 36%.
There are also other ways of structuring a will to make passing on your property more tax efficient. For example, setting up certain trusts in your will could mean the property in the trust is not taxed as part of your estate. The less tax your estate has to pay, the more value will be passed on to your loved ones.
Avoiding these difficulties by making a will
Making a will allows you to solve the above problems in advance and provide for your loved ones in the best possible way after you are gone.
At A M Davies Solicitors, we believe making a will should be straightforward and backed by expert legal support. We do all we can to help our clients in a way which is convenient for them. If you are struggling to find time to make a will, we are often able to arrange appointments with you at your home or work.
For advice, or to start making your will, please just get in touch with us.