Don't Delay in making that Last Will

What is Intestacy Law ?

Any person who dies without executing (making) a valid last will is known as dying INTESTATE and in that event the deceased's estate is distributed according to the Law on Intestacy. Hopefully you will already be aware of the importance of making a Last Will, so that your true wishes will be made known at the time of your death.

FAQ regarding Wills

Children

Q: Can children under 18 inherit?
A: Children cannot inherit until they reach the age of 18; below this age, the funds are held in Trust. If you think 18 is too young for your children to inherit a large sum of money, within a Will, you can specify that they not receive the capital sum until a later age. They will, however, be entitled to receive any income from the trust fund as soon as they reach 18. Apart from this, the Trustees decide what income and/or capital can be used for the benefit of the children e.g. school fees.

Divorce

Q: I'm divorced -- what will happen with my existing will?
A: Getting divorced does not cancel a Will, but a gift to a divorced spouse lapses, unless a contrary intention appears in the Will.

DIY wills

Q: Can I make my own will?
A: Yes, you can. But there are significant risks in doing so -- which you will not be around to sort out. It could mean substantial legal fees to put things right -- quite apart from the upset and confusion it could cause those you leave behind. You should consider:

A Will that is not clear under the law is open to challenge and your wishes may be overruled.

A Will not made under the correct procedures can be rendered invalid.

When making your own Will you may overlook some possibilities and unforeseen changes in circumstances.

Executors

Q: Can an executor be a beneficiary?
A: Yes. Often the main beneficiary is one of the executors.

Q: Do I need a solicitor to act as executor.
A: No, this is not necessary.

Guardians

Q: Do I need to nominate guardians in my will?
A: You do not have to, but a Will can be a convenient place to name a guardian. Without nominated guardians, the courts will decide who will look after your children.

Intestacy

Q: What happens if I die without a will?
A: Many people erroneously think that their Estate will go to their partner when they die. This isn't necessarily the case. For Example, an unmarried partner will be entitled to nothing.

Even a spouse may not receive the entire Estate and worryingly, may not receive enough to maintain their current lifestyle.

Inheritance Tax

Q: Will I incur Inheritance Tax (IHT)?
A: If your estate is worth more than £300,000 (twice this for couples) it will be subject to the rules governing IHT.

The first £300,000 of a single person's estate will pass free of IHT. This is known as the Nil Rate Band personal tax allowance. The remainder will be taxed at 40% (e.g. if you have an estate worth £400,000, you will pay tax on £100,000 (£40,000 tax).

A married couple with assets over £600,000 can save tax by both setting up, in their Wills a Discretionary Trust of a sum of money equivalent to the Nil Rate Band personal tax allowance, in favour of their spouse and children. This is explained in more detail in Help Notes within the Will Questionnaire itself.

Importantly, gifts to a registered charity are also tax free.

There are other tax allowances for gifts of agricultural or business interests, but they are beyond the scope of these notes. If you have such interests and would like to find out if you can take advantage of these allowances, you should consult a solicitor or accountant.

Marriage

Q: Do married couples need two Wills?
A: Both of you need to make a Will. A pair of similar Wills are called 'mirror Wills'. Getting married or remarried cancels a previous Will unless the Will expressly states otherwise.

Updating a will

It is important to ensure your Will is up-to-date. Here are some points to consider:

- An existing Will can be updated using a codicil, or by re-making your Will. It is usually better to re-make your Will.
- An existing Will may contain a legacy that has been distorted by inflation
- Your circumstances may have changed
- An existing Will may refer to an executor who may have died.
Nominating a firm of solicitors as joint executors is a safeguard.

The consequences of not having a Will

Without a valid Last Will and Testament, obtaining Letters of Administration and appointing an administrator, can take months or sometimes even years. In the meantime your surviving spouse or partner has all the usual: household, weekly, monthly, and daily expenses to find and they will probably be on a reduced income, plus it will be at a time when they most need reassurance. Your surviving spouse or partner may not have access to money; she or he would normally have a right to, because the assets could be frozen until all the formalities have been sorted out, (someone else deciding who gets your life's assets). If you have got a valid Last Will it should take no longer than three months to obtain Probate and release your assets to the people who you chose.

If you do not make a last Will and die Intestate, then your estate will be distributed as follows:                    

Order of Entitlement under the Intestacy rules.

The administration of estates act 1925. Administration of estates acts provisions.

First, where there is a surviving spouse he or she takes everything unless the Intestate left certain relatives.

(a)    If the Intestate also left issue (that is children, grandchildren and remoter lineal decedents) the spouse and issue share the estate provided the issue satisfy the requirements of the statutory trusts.

(b)   If the Intestate left no surviving issue, but left a surviving parent or parents, the parent(s) and the spouse share the estate. The parent(s) take(s) the property absolutely or in equal shares. If no parent survives but the Intestate left a living brother or sister of the whole blood (or other issue) they share the assets with the spouse, provided that they satisfy the requirements of the statutory trusts.

If the Intestate left no surviving spouse, the estate is distributed as follows.

(a)    To issue on the statutory trusts, but if none then to

(b)   Parents absolutely (and equally if both are alive), but if none, then to

(c)    Brothers and sisters of the whole blood (i.e. the children of the same parents as the deceased) on the statutory trusts, but if none then to

(d)   Brothers and sisters of half blood, (i.e. those who share one parent with the deceased) on the statutory trusts, but if none then to

(e)    Grandparents absolutely (and equally if both are alive), but if none, then to

(f)     Uncles and aunts of the whole blood i.e. brothers and sisters of the whole blood of one of the parents of the deceased) on the statutory trusts, but if none then to

(g)    Uncles and aunts of the half blood (i.e. those with one parent in common with one of the parents of the deceased) on the statutory trusts, but if none then to

(h)    The Crown, Duchy of Lancaster or the Duke of Cornwall as “bona vacantia”

Section 46(1) (vi) of the administration of estates act 1925 gives the crown a discretion to make provisions for dependents of the Intestate whether they are related to the deceased or not. Similarly the Crown may provide for “other persons for whom the Intestate might reasonable have been expected to make provision”.

It should be noted that each category must be considered in the order listed above and only if there is no one in a particular category is it necessary to consider the next category. Furthermore since a blood relationship is vital under the intestacy rules, the spouse of a person within one of these categories has no right to share in the estate.

  All of the above can take considerable time, and the costs incurred to sort it out are deducted directly from  the deceased estate, costing considerably more than it would to make your will now? and insure that your estate goes to whom you chose?

Glossary of Terms

Administrator: someone who is appointed by law to settle your affairs if you die without a Will

Beneficiary: anyone who receives from a Will

Codicil: to change an existing Will you can add a codicil. Often it is as easy and no more costly to make another Will.

Crown or Treasury: the government. If you do not have a Will and have no next of kin, the Crown receives your estate.

Estate: is the total value of everything you own at your death, less any outstanding commitments.

Executor/Executrix (M/F): those people you choose to make your Will happen. You may have one or two. Often this will be a friend and a local solicitor.

Funeral arrangements: directions you can give in your will regarding your wishes such as details of your burial, cremation, funeral services, 'In memoriam' gifts in lieu of flowers, etc.

Inheritance Tax: a 40% tax payable on larger estates. (A legacy to charity is free of Inheritance Tax).

Intestacy: the name for the situation that arises when someone dies without making a Will.

Legacy: a gift in a Will. It can be
- Specific legacy: a definite object or property
- Pecuniary legacy: a gift of a specific sum of money
- Residual legacy: (the residue): a gift of the money or asset left when other legacies and expenses have been paid - i.e. the remainder.
- Life Interest: eg 'to my wife for her use in her lifetime, then to charity'
- Conditional Interest: a legacy which is dependent upon an event or specified criteria being met.

Probate: the legal process to establish your Will is valid. If not, and administrator is appointed

Testator/Testatrix (M/F): this is you - the person making the Will.

Trust: an arrangement you can make in your Will to administer part of your assets after your death. You can only make a limited Trust (To make a Nil Rate Band Discretionary Trust). For more complicated Trust provisions, you should contact a local Solicitor (See one of the solicitors listed).

Witness: Two witnesses must see you sign your Will and you must also watch both of them sign it. They must also watch each other sign the Will. No beneficiary (or their spouse) should sign the Will; if they do, any gift to them or their spouse will be invalid and will fail.

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