Dying without a will – the hard facts

‘I really must get around to writing a will!’ I have heard that refrain from several wealthy individuals recently and it’s often easy to assume that everyone who should have a will knows that and has one. But such assumptions are dangerous.

I am constantly surprised by who doesn’t have a will. However, the surprise works both ways because those who haven’t made a will are usually amazed to learn from me how the intestacy rules will operate on their death if they don’t make one.
Time for a quick refresher, then, on some of the more challenging aspects of the UK’s intestacy rules. These rules can apply to English domiciled individuals in respect of all their assets or non UK domiciled individuals in respect of their UK real estate:

• If you die married with children, your spouse may not inherit everything. Your spouse may only have full control over your personal chattels and £250,000 of your wealth.

• If you die married without children, it’s the same as above but your spouse has control over just £450,000. Your parents may well inherit at least some of your estate. (However, this is changing as of 1 October 2014, courtesy of the Inheritance and Trustees’ Powers Act 2014, so that your spouse will now inherit everything in this situation.)

• If not all your assets pass to your spouse on death, there could be Inheritance Tax to pay on your death and, depending upon the value of your estate, it could be substantial. This downside is often overlooked.

• Your spouse may have to sue your estate for reasonable financial provision.

• Unmarried life partners/cohabitees receive absolutely nothing under the intestacy rules. If you want to look after them, you have to make a will. Otherwise they will also have to sue your estate for financial provision but will have to show need for maintenance.

In practice, the harshness of the intestacy rules is often softened because jointly owned assets, such as the matrimonial home, usually pass automatically to the surviving spouse/partner as a result of the law of survivorship and therefore the intestacy rules do not bite on them. However, it’s not a great idea to rely on it as there can be evidential difficulties. Also, dying without a will means that no one is in charge of the assets from the moment of death – a ‘rudderless estate’ ensues until an administrator is appointed by the Probate Registry but that can take a little while. This can prove very traumatic for families at what is already a very difficult time – who wants to hand their family that kind of problem?

In contrast, dying with a will naming an executor means that someone is in charge the moment that death occurs. As well as bringing certainty of direction at a difficult time, this can prove immensely useful when it comes to managing certain assets such as family company shares or investment portfolios, which cannot be left to drift until the grant is obtained several months later.

Put simply: if you love someone enough to want to leave them assets, please make a will.