Do you have clients who can’t quite see the value in making a Will? Are you yourself up to date with the consequences of not making a Will i.e. the Rules of Intestacy?
The changes to the Intestacy Laws enacted on 1st October 2014 mean that for married couples and civil partners without children, previously the first £450,000 of the estate plus half of the remaining estate went to the surviving spouse. The other half allocated to the deceased blood relatives for example parents, brother/sisters etc in accordance with the rules of succession. Under the new rules the surviving spouse will receive the estate in its entirety.
For married/civil partners with children, previous the surviving spouse would receive the first £250,000 with children receiving half of the balance above this figure immediately with the other half held on trust (with a life interest for the survivor)until the second death. From the 1st October, the life interest is no longer in place with the surviving spouse receiving the first £250,000 with immediate entitlement to half of the remainder, the children taking the remaining half upon attaining the age of 18.
Jane has a child, Katy aged 21, from a previous relationship and now Jane has a new husband, John. Jane and John live together but the house is owned by Jane and valued at £400k. Jane also has savings of £200k which will support Jane and Johns income for their approaching retirement. Katy has a difficult relationship with her stepfather, John.
Should Jane die, under the rules of intestacy John will receive the first £250k of the value of the estate with immediate entitlement to 1/2 of the remainder, £175k. Katy will be immediately entitled to the other ½ of the remainder above the statutory £250k legacy to John ie. £175k.
This could compromise Johns ability to remain at the home in which he currently resides and could create financial hardship for him. Equally, overall his inheritance from Jane’s estate will be greater than that of her daughters.
If Jane had written a will, she may have opted to gift the house to her daughter in Trust with a lifetime interest for John. Katy will then be the ultimate beneficiary of the property upon the death of John with him having the option to reside in the house for the remainder of his life. Jane may have then gifted £100k to John and £100k to Katy to evenly distribute the remainder of her cash assets.
However, if there is no Will there is no choice!
Remember that BTWC can provide full support and training to enable you to deliver Estate Planning solutions to your clients. If you are new to Estate Planning or seeking a refresh, join us on one of our Q1 2015 Training Days;
February 18th - The Bentley Hotel Lincoln