Between 50 – 60% of the UK adult population still do not have a Will in place and it seems it’s not just everyday people like me and you who don’t (for the record I do!) By not having a Will you are making a choice for the Intestacy Rules (the Rules) to govern what happens to your estate – but do people understand what that means – a few consequences are set out below.
No control of your assets
A Will ensures that your assets pass to your chosen beneficiaries. If you don’t have a valid Will in place then the Rules take over.
Married / in a Civil Partnership? Most people are under the misconception that if you are married or in a Civil Partnership you don’t need a Will as everything will pass to the survivor … incorrect. It actually depends on the size of the estate as to whether the surviving spouse / civil partner receives everything or not under the Rules. When Rik Mayall died unexpectedly in 2014, without a Will, his £1.2m estate was divided between his wife and children.
What if you are estranged, separated or going through a divorce? Until the decree absolute your ex will still be a beneficiary of your estate under the Rules. Billie Holiday died whilst estranged but not divorced from her abusive Mafia enforcer husband. Without a Will her entire estate and royalties were left to him. American law dealt with the succession of Billie Holiday’s estate but the result under English law would have been very similar leaving the majority of her estate to him.
What happens if you aren’t married or in a Civil Partnership yet? The author of ”The Girl with the Dragon Tattoo”, Stieg Larsson was in a relationship with his partner for over 30 years but they never got married so on his death his estate and royalties all passed to his father and brother. Like Swedish law in this case, English law gives no benefit to unmarried partners.
More Inheritance Tax to pay
Only assets that pass to a spouse or civil partner are free of Inheritance Tax (IHT) which meant that in the case of Rik Mayall, above, his estate suffered approx. £60,000 worth of IHT. A Will leaving his wife everything would have passed free of IHT.
On her death in 1999, Jill Dando, had not married her fiancé and therefore her entire estate passed to her elderly father causing £250,000 worth of IHT. If Jill had married her fiancé the tax under the intestacy provisions would have only been £40,000 and with a Will leaving everything to him, as her spouse, there would have been no IHT.
Both the estates of Amy Winehouse and Tupac Shakur passed up a generation to their parents. Without a spouse or children under English law the Rules ensure estates pass to parents equally. This may not be your choice of beneficiaries but also passing money up a generation is not good tax planning as it can mean that the monies are taxed twice in quick succession.
Claims
If you allow the Rules to take control of the distribution of your estate then the likelihood is assets will not pass how you or your family expect. This can lead to claims against your estate which can take years and costs tens, if not hundreds, of thousands of pounds to settle. This happened in the estates of Picasso, Bob Marley, Martin Luther King and Jimi Hendrix. Martin Luther King was killed in 1968 and his family are still fighting over control of his estate today – James Brown died in 2006 and the estate was still being fought in 2018 – Jimi Hendrix died in 1970 and his siblings were in court in 2009 fighting over the rights to his iconic image.
Make a Will with a professional
It’s all very well making a Will but in order for it to be valid and stand a chance of not being contested you need to make a Will with a professional. There can still be claims against estates where Wills have been drawn up but by using a specialist it can lessen the chance. Also it ensures that your Will stands a better chance of being located – Aretha Franklin’s family found two of her handwritten Wills in a cabinet and under a sofa cushion!
You also need to ensure that your Will is kept up to date. Heath Ledger didn’t update his Will to include his daughter and Barry White’s outdated Will left everything to his second wife whom he had been separated from for years leaving his long-term girlfriend with nothing.
The moral of the story – make a Will and regularly review it. In our next blog Sophie Wallace will be talking about the importance of making a Will with a professional.