Recent statistics show around two-thirds of adults have not made a will, and at least a third of us will pass away intestate.
Intestate means that you passed away without leaving a valid will. If that happens, the property of the ‘intestate person’ will be shared out according to the ‘rules of intestacy’.
The laws of intestacy are very strict, and while the law is designed to ensure that your nearest, in particular your spouse or civil partner, are cared for when you die, that may not be what you want.
We are not suggesting that you leave your spouse or civil partner out of your Will. What we are saying, however, that unless you are happy for the law to decide for you, you should make a Will and make those decisions for yourself.
Of course, it’s not all about the money. If you have minor children, you really ought to think about who will look after them if you were to pass away also. The minor children's surviving parent would automatically assume responsibility for the minor children but what if that parent had predeceased you or what about the unthinkable situation where you were to die together?
Unlikely some might think, but you don’t have to be engaged in risky sports to run a risk of passing away together. For example, statistically, you are more likely to be involved in a car accident together with your loved one than someone you may have a pint with regularly down the local.
That’s because you travel to places together, shopping, a weekly trip to the in-laws etc.
It would, therefore, make abundant sense to insert a guardianship clause in your Will to ensure your little loved ones are looked after by someone who would raise them in the way you would like, sharing your hopes and aspirations.
Tax Matters & Inheritance Tax
If that’s not enough to get you thinking, watch out for the tax collector! Not content with dipping his hands into your pocket when you’re alive, HMRC will hope to get their hands on your hard-earned loot once you pass way too. Any money or assets left over after your debts (no they don’t die with you) and your funeral expenses, are subject to inheritance tax.
Your beneficiaries will get the first £325,000 (tax year 2020/21) free of inheritance tax, but anything over that could be subject to a whopping 40%. Think about the average value of a house today, and you’ll see it doesn’t take much for your estate to be enough to leave your loved ones with an unwelcome tax bill when you pass away.
There is some good news, however! Whilst planning early may not entirely remove an inheritance tax liability, with some smart thinking you could certainly make sure your loved ones get to keep a whole lot more.
The information provided in this article is not intended to constitute legal advice and you should take full and comprehensive legal advice on your individual circumstances by a fully qualified Solicitor before you embark on any course of action.
Wills, Trusts & Probate team
020 7183 1485