We look at the issues that can arise, if you have not got everything in order before you die.
Making a Will is a job that people tend to put off, sometimes never getting around to making one before they pass away. Does that matter?
Intestacy
If you die without having a valid Will, then you are classed as dying intestate. Your estate will be administered under the terms of the Administration of Estates Act 1925, which establishes the order of distribution of your assets.
What goes where will depend on whether you have a surviving spouse, and if you have children.
- If you have a surviving spouse and no children or other descendants, then generally the surviving spouse inherits the entire estate
- If there are children, then the surviving spouse inherits a fixed sum (currently £322,000) plus one half of the remaining estate, and the other half of the excess is divided equally among the children. If the estate is worth less than £322,000, the surviving spouse or civil partner inherits everything
- If there are children but no surviving spouse, then the children inherit in equal shares
- Children also inherit if they are grandchildren or great-grandchildren of the deceased, and their parents have died before the deceased, then they will stand in place of their parent.
- If there is no surviving spouse and no children, then the estate passes to:
- Parents of the deceasedIf no parents, then siblings of the deceased or their childrenIf no siblings, then grandparents of the deceasedIf no grandparents, then aunts and uncles, or their children
- If none of the above, the estate passes to the Crown.
It may be the case that your affairs and family structure are straightforward, and everything would pass to your spouse under intestacy, and in that case, you may feel that it is not worth worrying about a Will. That may be true, although it is relatively inexpensive to have a simple Will drawn up, which would at least give you certainty, and should make it easier to apply for Probate.
There are, however important considerations which can affect many families. Stepchildren are not entitled to inherit under the rules of intestacy, unless they have been legally adopted by the deceased. Cohabiting partners, those living together, but not married or in a civil partnership, also have no rights under the rules of intestacy. In that instance getting a Will made should be cheaper than the cost of a wedding, although there may be other reasons (tax or otherwise) for getting married.
Making a Will can ensure that your assets pass to the people you want to receive them. If the drafting of your Will is done in conjunction with estate planning, it can also look at your exposure to IHT and enable the Will to be drafted in a tax efficient manner, whilst still reflecting your wishes.
Survivorship and joint assets
If you own assets jointly, such as property or bank accounts, these pass to the surviving joint owner under the survivorship rules, regardless of the rules of intestacy, or anything you may state in a Will. You should look at the possibility of severing a joint tenancy and holding property as tenants in common instead, if you do not want your share of a joint asset to pass under the survivorship rules.
Digital assets
These days more and more of us have things in the virtual world, where there is no physical asset to find and pass to a beneficiary, such as photos, music, social media accounts, NFTs, Bit coin and other forms of cryptocurrency. There are queries around whether you own or use the content, with many sites having in their terms and conditions that you use things on licence (such as digital music content) and therefore it may not be yours to pass on. You should, however, have ownership of photos and music that is stored electronically on your device. Therefore, for any important items, such as photos you may want to consider backing these up on a disc/personal hard drive or printing out hard copies.
The first thing to consider is how these sites/cloud storage etc can be accessed by your Personal Representatives (PRs), when you are no longer around. Terms and conditions state that usernames and passwords should not be disclosed, and many sites will not grant PRs access, even with a copy of a death certificate. Some companies will allow you to nominate a legacy contact that can be granted access following your death. You will need to ensure you set this up in your lifetime and ideally keep a copy of the paperwork for this with your Will if you have one, as your PRs will need this, along with your death certificate, to gain access.
Cryptocurrency is not easily accessible by your PRs without specific information such as the digital keys. If these are lost or unknown, the assets may be lost forever. It is therefore essential to ensure that your PRs are aware of their existence and understand how to access and manage them.
We can help you navigate the world of Inheritance Tax and estate planning, and work with a solicitor to ensure that your Will is drafted in a way that meets your needs.
