Hi

Although the intestacy rules are being updated, they still don't fit with modern life. They are therefore best avoided, by having a Will in place to ensure your beneficiaries aren't left with a messy situation...

When an individual dies without a Will in place, the intestacy rules are invoked. These rules dictate how their estate is to be divided amongst surviving family members.

One obvious problem with this is that assets may not be left where the deceased would want them to go. With more complex, modern families, this could result in monies passing to those who would perhaps not have benefited at all had there been in a Will in place.

The intestacy rules are changing in October, based on some of the recommendations made by the Law Commission in 2012. While these changes were intended to modernise the rules, they still don't go far enough, and many of the recommendations have not found their way into the new legislation. For example, there remains no recognition of common law spouses or co-habitees and, in such circumstances, there is no statutory claim on the estate, meaning the surviving common-law spouse could see the estate being divided amongst distant family members.

Additionally, leaving assets in accordance with the intestacy rules can lead to unnecessary inheritance tax charges. For example, a surviving spouse may receive all or most of the estate (depending on whether there are children) but, if that spouse is non-UK domiciled and assets worth more than double the nil rate band (less in some circumstances) are left to them, there will be a tax charge.

Ensuring that a valid Will is in place and avoiding the intestacy rules is essential for all except the simplest of estates. Even then, with no Will, it can take longer to gain access to bank accounts and other assets. Not only does a Will permit assets to be distributed to beneficiaries in accordance with the deceased's wishes, but it should also deal with non-financial matters such as guardianship of minor children.

Of course, when a Will is being put in place, it is the opportune moment to consider inheritance tax and what planning should be undertaken. Inheritance tax planning opportunities are very wide - in some cases there are financial products or arrangements which can assist - for many though, understanding the wider family circumstances can often highlight ways in which gifts can be made in a controlled and tax efficient way.

Take action now: If you would like a review of your inheritance tax position and have a personal balance sheet prepared please contact noel@guilfordaccounting.co.uk.

 

Noel Guilford

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