Estimated Two-thirds of UK adults are without a Will
An estimated two-thirds of UK adults are without a will. We look at the risks of not having a Will in place to pass on your wealth.
Without a Will, there is a risk that your estate will not go to those you wish to receive it. This means that disputes could arise between family members and those who consider that they should receive a share of your assets.
It also means that the opportunity to legitimately minimise the amount of Inheritance Tax payable has been lost. Estates for which no Will exists may be liable to pay a substantial sum to HM Revenue & Customs.
What happens to your estate if you do not leave a Will?
If someone does not leave a Will, their estate will be distributed in accordance with the Rules of Intestacy. These rules set out a strict order in which relatives will inherit.
If the deceased was married with children, then their spouse will inherit all of their personal possessions. They also inherit the first £270,000 of the net estate, ie. what remains in the estate after all bills and other liabilities have been paid.
The remainder of the estate will be split so that the spouse receives one half and the deceased’s children share equally in the other half.
Where the deceased does not have a spouse or children, relatives are next in line to inherit. Firstly parents, followed by siblings, grandparents and uncles and aunts.
Cohabiting partners and stepchildren will not inherit anything under the Rules of Intestacy. Despite their relationship with the deceased. If they were supported financially by the deceased during their lifetime, they may be able to make a legal claim against the estate.
Administering an estate where there is no Will
The administration process can be more complex when the deceased did not leave a Will. It may not initially be clear who will deal with the winding up of the estate. There may not be anyone who wishes to take on this role, which can be difficult and time-consuming. As well as defending potential claims on behalf of the estate, the administrator will need to ensure they identify all potential beneficiaries. This involves advertising in the press where necessary.
What should you do if you want to leave a Will, but you do not want your children to inherit?
Some people avoid making a Will as they are reluctant to leave money to certain relatives. In fact, an increasing number of celebrities, including Daniel Craig, Sting, Andrew Lloyd Webber, Simon Cowell and Nigella Lawson are opting not to leave their fortunes to their children. Hoping instead that their offspring will work hard and support themselves.
Deciding to take this approach, means setting out your wishes clearly in your Will. Importantly you should talk to your children and explain why you will not be leaving them your money.
You can also consider other options, such as leaving money in trust until they reach a certain age. You can choose to provide money for things like education or a deposit for a home. Whatever you decide to do, communication will help avoid disputes as well as having a valid, up-to-date Will in place.
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