Many do not give a second thought to writing a Will. They think it is something that they should do when they are older and we are all guilty of thinking we are invincible. But what would happen to your estate should you die without a Will?
The Laws of Intestacy
Without a Will your estate passes according to pre-set rules, known as the Laws of Intestacy. This could cause you tax issues on first death and mean that assets pass to relatives that you would prefer not to inherit.
Let’s take an example: husband and wife with two children aged 20-30 years old. They have lived in the same house for a number of years in London. The house is in the husband’s sole name, it is now worth £1.3 million and he had other assets in his sole name of £50,000. He dies and does not have a Will. The estate is distributed as follows. The first £250,000 and all of the household items (known as Chattels) goes to his wife. The remaining £1.1 million of estate is distributed half to the wife and half equally between the two children. Meaning £550,000 is given to the two sons. This causes an issue with tax. Everything that passes to the wife is tax free, as she receives a Spousal Exemption. However, the sons do not, they will use up the father’s Nil Rate Bands, so currently £100,000 is taxable at 40%. They will need to pay £40,000 in inheritance tax within 6 months of the date of death.
By putting a simple Will in place, this could be prevented.
If you die without a Will, your children could be at risk of care. Without a Will, a court decides who is best to look after your children. This means that they are taken into care until a decision is made. If families feud over who is best placed to look after the children then it could leave the children in limbo for longer.
Placing a guardianship clause in your Will can prevent this. No one would want their child going into care for any period of time if it can be prevented.
Having a will in place, ensures that your wishes are carried out in the event of your death.
If you are an adult with assets of any sort, it is important to make a will to ensure they are passed on to the desired beneficiaries when you pass on. Whether this happens when you are in your 30s or 40s or whether you live to a ripe old age, you still want to ensure your wishes are carried out in relation to who gets what from your estate.