Are you leaving behind an intestacy nightmare for your family?
There are so many myths, rumours and misapprehensions surrounding Intestacy Law that it’s no wonder thousands are surprised every year when their closest loved ones die without a will and leave them exposed to loss of expected inheritance, uncertain guardianship for their children and/or large legal bills as they resolve even the simplest matters relating to the estate.
Everybody’s situation is different and if you want to discuss your unique needs and wishes, you can start by booking a free consultation with one of our qualified experts, but to make the most of this consultation it helps to be aware of some of the potential pitfalls of an out of date or invalid will.
Here are 5 common nightmare scenarios that can be easily avoided with the right planning – could any of these apply to you?
“My father remarried and died without making a will – now I inherit nothing and I can’t believe that is what he wanted.”
Many people assume that your children will take first priority in the event of your death and so are automatically provided for, but this simply isn’t the case.
In the event of your death, the first £250,000 of your estate will automatically pass to your spouse (including the value of your house). The remaining amount will be split in half, with half to go to your spouse and the remainder split between any children or grandchildren. If your estate is worth less than £250,000 then your children may get nothing.
“My wife’s children have inherited part of the house and they want me to move out so that they can realise their inheritance now.”
Looking at it from the other side, what if you are the second (or third, or fourth) spouse and the house that you live in has a value above £250,000?
For example*, when John meets Lindsay he is divorced with two adult children. He owns his home outright and when they marry, the house remains in John’s name solely.
John passes away suddenly two years after his marriage to Lindsay. The chattels (car, furniture, etc) and the first £250,000 of his estate automatically passes to Lindsay. The value of the remaining estate is £126,000 and this is split in half with £63,000 going to Lindsay and the remaining £63,000 to be split between his two children (£31,500 each).
But the house that Lindsay lives in is currently worth £370,000. Lindsay’s inheritance only covers £313,000 of this value. As Lindsay can’t afford to buy John’s children out of their share, the children are putting pressure on her to sell the house so that they can realise the value now.
“My mother died before her divorce was finalised and now her ex-husband is claiming the house.”
Another way in which you might accidentally disinherit your own children is by not making or updating a will after a change of circumstances, such as separating from a spouse. If that spouse is not your children’s parent (or even if they are!), then they may still inherit your estate if you are not legally divorced at the time of your death and can choose not to leave anything to your children.
“My husband died without a will – now a large part of his estate has to be divided between me and our children, and this leaves us with a massive Inheritance Tax bill that we weren’t expecting.”
Even if you don’t divorce and remarry, passing on without a will can still leave an expensive headache for your surviving spouse and children.
As outlined above, if you die without leaving a valid will, your estate over £250,000 will be divided among your surviving spouse and children. If this entire estate goes over the Inheritance Tax threshold of £325,000 you could be leaving your children with a large tax bill to discharge before they can receive their inheritance.
However, if you will your entire estate to your spouse (with provisions for your children in the case that both you and your spouse have deceased) then your spouse can receive it free of Inheritance Tax. Your spouse will also receive your IHT transferable allowance, enabling them to will up to £650,000 worth of assets free of Inheritance Tax (for more detailed information on Inheritance Tax, please download our free guide, 7 Inheritance Tax Mistakes to Avoid Following the July 2015 Budget).
“My husband raised my daughter as his own from when she was a baby, but now he has died the estate is to be divided between me and the son he was estranged from. My daughter gets nothing.”
Although dependant step-children can make a claim for maintenance on an intestate estate, they receive no automatic provision and are unlikely to receive anything if they are not financially dependent on the deceased at the time of death.
To die without making a will is to create a minefield of potential heartache, hardships, feuds and expenses for the loved ones you leave behind.
If you would like specific, tailored advice on making your will, you can book a FREE consultation with one of our qualified advisors.
If you’d like to book a free consultation with one of our legal experts, book online or call 01342 477 102 and quote ‘Intestacy Blog‘.
*All examples are based upon the real experiences of our legal experts and clients, but the details may have been changed to preserve client confidentiality.