Intestacy problems on the rise
The BBC reported yesterday that according to Citizens Advice, the number of enquiries it receives about intestacy problems has more than doubled over the last five years.
Despite attempting to drive home the message that dying without a will can cause immense stress and financial pressure on those left behind, Citizens Advice still received 3,747 intestacy enquiries last year, compared to 1,522 in 2011.
These figures appear to contradict the findings of a survey carried out by YouGov last year, which indicated that 38 percent of people in England and Wales had made out a will – a rise of three percent from the previous year.
Failing to make out a will does not only mean that the funds from an estate may not be distributed in the way that the deceased would wish. It also means that any charities could potentially miss out on vital income. Also, effective estate planning will not have taken place and so the next of kin could lose thousands of pounds unnecessarily, by way of inheritance tax.
The BBC report for example, cites the case of a man who left around £700,000 but no will. His cousin administered the estate but this process took around two years and £240,000 was given to the tax man. The rest was split among 17 people, a number of whom had never even met the deceased.
Interestingly, the number of enquiries received from executors of a will also rose last year to 11,137 from 8,160 in 2011. This shows how estates are becoming increasingly more complex, making the role of executor more difficult, particularly for those who attempt to distribute an estate without taking specialist advice from a probate expert.
There will come a time – we hope – when you understand just how important it is to make a will. And when that time comes, we are here to help you write your will exactly as you want it. There are some important questions that you can answer which will make the process a lot smoother when you feel ready to write your will. And don’t worry – a will can be amended at any time if you think of something you want to add, or need to remove something.
Why Am I Writing A Will?
Asking this question of yourself will put your will and your wishes into perspective. Reasons for writing a will can include wanting to state exactly how you want your estate to be divided after your death; lowering the inheritance tax bill that your family would otherwise have to pay; making sure that the people you love and are responsible for are well provided for after your death; ensuring that a charity you enjoy supporting can benefit from your estate.
Who Needs To Be Included In The Will?
This next question is obviously one of the most important of all. Who should benefit from your will? You need to ensure that everyone you want to include is there, and you also need to specify what it is you want them to have. You can leave individual gifts, or you can set up a trust. This is the time when you can even make provision for a family pet to be cared for if there would be no one else to do it.
Whilst thinking of whom to include, you will also need to decide on your executor. This should be someone you trust and who is calm and organised. And it is always wise to have alternatives in mind in case the person you initially wanted cannot or will not take the task on.
Will My Will Be Valid?
This question will lead you to check that your will is going to be legally valid after you die. Sometimes people make wills and think everything is fine, only for their families to discover that there is a problem during probate, which slows down the process and can cost a lot of money. In order to have a valid will it must explain how you want your estate shared when you die, it must be signed and dated in the presence of two witnesses, who must then also sign and date the will (although bear in mind the witnesses cannot be in line to inherit anything from the will, as this will also make it invalid). The will must also not have been made under duress. Ideally, you should have your will drawn up or at least checked by a qualified solicitor.
How Do I Begin?
Once you have decided on exactly who should have what, and ensured that your executors and witnesses are happy to help, the next question is what to do next. After all, most people will only ever write one will, and it is not something that the general public enjoy talking about very much – so it is a bit of a mystery. Firstly, have your plan to hand. Then write the will (this can be done by a solicitor, a specialist will writing service, or by using a DIY will kit).
According to research by the Office of National Statistics, deaths in the UK in the last decade have risen dramatically. This is, apparently, due to a rise in dementia and Alzheimer’s related deaths, as well as flu becoming more and more virulent. This is especially true of the flu virus A(H3N2), which kills a number of older people in the UK every year. The flu vaccine is less effective every year, and with outbreaks in care homes it becomes worse all the time.
In 2015, there were 529,613 registered deaths in England and Wales, which is a 5.6% increase from 2014. Of those deaths, 86 percent occurred in people over 75.
Life expectancy is currently at 79.3 years for men and 82.9 years for women. This has fallen by 0.2 years for women and 0.3 years for men.
Most of these deaths happened in the first few months of the year, due to the weather and the fact this this is the time that the flu virus attacks most strongly. Hospital admissions are up at this time, putting a strain of the NHS’s infrastructure.
Deaths with Alzheimer’s as the underlying cause are at a 5 year high.
This is one of the reasons why it is so important to write a will, and keep it as up to date as possible. With the death rate for those over 85 rising steadily, and with Alzheimer’s cases growing in number, having a will is an essential part of anyone’s life.
It is the dream of many a Brit – to retire to Spain and to live in a property bought with savings that have taken a lifetime to build. And that dream does come true for a high number of British citizens, with as many as 800,000 British ex-pats living there now.
And of course, if you don’t want the upheaval of moving to Spain but are keen to own a holiday home there, that’s another great way to enjoy the country and even make a little money from renting it out.
But Spanish law and English law don’t necessarily mix, and it is wise to seek out advice should you be planning to leave your Spanish property to your family.
Recently, a court ruling showed that millions of British holiday home owners have overpaid in inheritance tax – and they are to be reimbursed. One group has already been refunded 3.3 million euros, as they should never have been charged these fees in the first place. And there are many more who are due a refund as well. The money will all come from the Spanish tax authority (the Spanish Hacienda). Now that a precedent has been set, there is another 7 million euros of claims waiting to go through the Spanish courts.
The charges were originally made when the owner of a property died, and that property was passed on to relatives or friends. The amount of inheritance tax for non-resident homeowners was usually worked out as two thirds of the property value – and the law said that that money had to be paid within six months of inheriting the property.
The problem was that for Spanish homeowners the inheritance tax rate was far lower – meaning that in some cases a resident Spanish homeowner would be pay nothing on a house that a non-resident British person would pay two thirds on.
It was found to be basically unfair.
The refund, however, is not automatic, and those who are affected must take their claim to the Spanish courts. It is a complicated process, but the average refund is in the region of 30,000 euros.
Many wills contain charitable donations – it can be a wonderful way to give back (literally) something to a cause that has helped you or a family member, or one that you feel particularly strongly about. It can be anything from a few pounds to a large percentage of your estate. The choice is yours.
Recently, a man named Peter Gibbons, did just that. He decided to leave money in his will to Ipswich Hospital since they had treated him for heart disease, and made the last few months of his life more comfortable. Mr Gibbons was a former second hand car dealer, and he left a massive £1.5 million to the hospital.
Friends of Mr Gibbons were not surprised when they heard what he had done – he had always had good things to say about Ipswich Hospital. He had been in and out of their care many times in the six years prior to his death at age 90, and he had never had a bad experience. What Mr Gibbons’ friends were surprised about was the amount of money he had left the hospital; none of them had any idea he was worth so much. They had always considered him ‘thrifty’, and although there were rumours about how much money he had, they had never seen any evidence of it.
A spokesperson for the hospital confirmed that the £1.5 million was the biggest donation they had ever received, and that it would go on to help many thousands of people who needed the hospital’s help. Four wards are now due to be renovated – including the children’s ward – and the rest of the money will go towards various smaller projects.
On 5th December 2005, same sex civil partnerships were officially recognised (thanks to the Civil Partnership Act 2004). This means that, for the past decade, it has been entirely possible for the surviving partner of a same sex civil partnership to inherit from their deceased partner in the same was as a spouse would inherit from their deceased husband or wife.
Therefore, if there is no will then the rules of intestacy will be used in order to split the estate and any assets, assuming the civil partnership has been formally recognised. The rules of intestacy state that a spouse or civil partner is the first to be recognised when splitting the estate, and after that are any children, including those from a previous relationship.
Making a will means that, assuming it is a valid will, there will be no need to employ intestacy rules – this can save time and a messy legal situation which can be upsetting for everyone at an already difficult time. A civil partnership will is really no different to any other will; it is a reflection of why you want to happen to your money, property, assets and possessions after you die. Therefore there is no reason why someone in a civil partnership shouldn’t write a will; it makes it easier on everyone involved.
For same sex couples who have not had a formally recognised civil partnership ceremony, a will is the only way to ensure that their surviving partner will inherit anything. The rules of intestacy do not cover ‘unpartnered survivors’. It doesn’t matter if the couple have been together for decades, nor how happy they may have been – if there is no will then the rules of intestacy dictate that, since there is no spouse, the children are next in line to inherit. If there are no children, it is the deceased’s parents, grandparents, siblings and so on. But a partner is not mentioned at all. This can be challenged using the Inheritance (Provision for Family and Dependents) Act 1974, but it can take a long time and be very expensive. It is better all round if a will is made in the first place.
What is the "Residential Nil Rate Band" and will it affect me?
Have you heard about the impending Residential Nil Rate Band? Last year, the government announced that starting from April 2017, some homeowners with estates valued at less than £2 million will benefit not only from the current Nil Rate Band of £325,000 per person, but an additional Residence Nil Rate Band of £100,000 per person, (rising to £175,000 by April 2020), on their death. For a married couple or those in a civil partnership, this means that up to £1 million of their estate can be passed on, without attracting any inheritance tax fees.
There are conditions, however. For the Residence Nil Rate Band to take effect, the property in question must be passed on to either a child or a grandchild of the deceased. In addition, the property must also have actually been the deceased's main residence at some point, even if they subsequently moved to a smaller house or into a care home.
As with the existing Nil Rate Band, the Residence Nil Rate Band can be passed to the surviving partner if not used on the death of the first, making a possible maximum total of £1 million.
Where estates are valued over £2 million, the Residence Nil Rate Band will decrease by £1 for every £2 over this value.
Although this is great news for most of us, those who have set up a discretionary trust in the past should be careful. A discretionary trust was initially a useful way of passing on a person's Nil Rate Band to their children or grandchildren, before the law changed in 2007. For those with estates valued under £2 million, this clause could interfere with the application of the new Residence Nil Rate Band. However, for those with estates valued over this amount, a discretionary trust may remain the sensible financial option.
Celebrities may have a completely different life to the ‘normal people’ who look up to them – they may have more money, go to more parties, win more awards… but when it comes to writing a will, they are just as forgetful as the rest of us. And yet, due to the huge fortunes that many of these well known people amass, they are in just as much need of writing a will as anyone else. Otherwise what will happen to the money, the property, the cars and jets and businesses?
It’s a lesson that Prince should have thought about. However, the 57 year old singer’s unexpected death on 21st April 2016 has revealed that the icon never actually made a will, despite his assets being worth hundreds of millions of dollars. The final figure is yet to be established as there are so many different revenue streams to tie up.
Due to the fact that Prince had no will, his estate has been found to be intestate. There are specific rules that need to be followed to work out who would inherit and how much, and because Prince was not married, had no surviving children, and his parents were both deceased, the bulk of the estate will most likely fall to his six siblings equally. However, since there was no will probate will take much longer and cost much more than it otherwise would have done.
Not only that, but there is no executor for the estate, and therefore Prince’s bank has been named as the ‘special administrator’ in order to try to straighten things out.
One of Prince's assets is his home and recording studio, Paisley Park.
And there is one more potential issue. A woman named Darcell Gresham Johnson has stepped forward to claim that she is another of Prince’s siblings. She says that she and the singer-songwriter had the same mother, and she is petitioning to receive a portion of Prince’s estate.
This declaration will add another layer of confusion to a messy estate and asset list, and will also add more time to the case as steps are taken to prove Johnson’s story.
For some, genealogy is life changing. From something that for others is a hobby, for those who really want to look deeper into it, it is something that can become not only an obsession, but a job. There are many professional genealogists who specialise in creating family trees for other people, or hunting heirs who might be due an inheritance.
But why is it so important?
There are, of course, important reasons for wanting to find missing family members or ancestors. Some of them could be health issues. If there is a history of a particular disease in the family, it can help doctors to diagnose it more quickly. This can save lives as in some cases.
Stories are also important. People like – and need – to know where they have come from, and the stories about the past can help them connect not only to their ancestors but also to themselves. These stories can also determine more information about historical events and put them into perspective.
Genetics doesn’t have to be about health issues. It can be about something as simple as finding out whether you look like something related to someone in the past. This is another way of finding out where you come from and how you fit into the extended family tree.
For those who have been adopted genealogy might be the only way of finding out more about the birth family. The same is true for a birth family searching for an adopted child. Tracing a family tree can bring the answers that would otherwise have been missing forever.
You might have family letters, Bibles with names written in them, you might be named after someone and you want more information about them…
Families can be very complicated things. Genealogy can help to simplify it.
Writing a will is so important – imagine what would happen to your loved one – and your property – after you have died if you haven’t written a will. We’ve put together some tips on writing the perfect will to make it easier on everyone after you have passed on.
1. Choose reliable executors
The job of executor is an important one, and one that has a lot of responsibility behind it. Choosing someone to take on the role is a decision that should be carefully thought about. It should be someone who is organised, reliable, able to deal with money (large or small sums), and who is able to follow your instructions well. Make sure they are happy to take on the role before you commit their name to paper.
2. Appoint guardians
Another potentially difficult yet essential decision is that of who would be your children’s legal guardian after you die. If you child or children are under 18 and you haven’t appointed a guardian then the courts will appoint one for you, and that person might not be the best person to care for your children.
3. Be specific
When writing your legacies, be specific in what you want to be left to whom. If anything is unclear it could lead to problems in probate and a lengthy court case.
4. Make sure there is money left over
No matter what you want to leave to people, you must make sure that there is money put aside to pay off the estate.
5. Make sure everything is accounted for
It is also important to ensure that everything you own is accounted for. If not, your will and estate could become subject to partial intestacy which could cause problems further down the line.
6. Finish up
Once you have written your will make sure that it is signed by you, and by two witnesses. Once it is complete, your will should be stored somewhere safe that is easy to find and access in the event of your death.