New English intestacy rules
The new English intestacy rules came into force on 1 October 2014 – but how do they affect you?
Well, if you are cohabiting with a partner, regardless of how long you've been a couple or whether you have children together, there is no change whatsoever and you run the risk of leaving your partner with absolutely nothing.
Married with children
If you are married with children, the law used to state that your spouse or civil partner would receive the first £250,000 of your estate. The children would be given half of the rest, with the other half being kept by the remaining spouse as "life interest", handed down to the children when that spouse died. Now, the spouse is entitled to £250,000 plus half of the remainder. The other half is automatically made available to the children once they turn 18.
Married without children
Where once the surviving spouse was entitled to £450,000 and half of the rest, with the other half going to blood relatives beginning with parents, the spouse will now receive the proceeds of the entire estate.
A loophole in the law, which used to indicate that children who were subsequently adopted after the death of one or both of their parents could potentially lose their inheritance, has been closed. This now means that they will receive their inheritance, even if they go on to be adopted by someone else.
As mentioned earlier, unmarried couples run the risk of leaving their partner without any inheritance whatsoever. If there are no children from the partnership, the deceased's entire estate goes to blood relatives – parents, siblings, nieces and nephews. If there are children however, the same rules apply, except the children will be first in line to receive the inheritance.
Although we always stress to all individuals the necessity of making a will, this is especially valid for couples who may have lived together for years and even had a family but never married. Please be aware that despite these new intestacy rules, if no will is in place then your partner will receive nothing in the event of your death.
Cohabiting and intestacy
Recently, changes to intestacy laws meant that cohabiting couples can now claim more property from the estate of their deceased partner, if no will has been prepared which indicates to the contrary. This doesn't mean however, that unmarried partners have the same claim to each other's estates as they would as a married couple.
There are now around three million unmarried couples living together in the UK. Many are under the impression that there is a law which states that after living together for a number of years, that they are automatically classed as "common law spouses" and are therefore granted the same rights as married couples. In actual fact, whilst partners live together without marrying, then they have almost no rights at all, when it comes to probate and inheritance.
When it comes to a home, one of the best ways to protect each other's interest in the property is to draw up a property purchase contract either as joint tenants, or tenants in common. As joint tenants, the property is equally owned by both so if one person dies, the surviving partner will automatically inherit the whole property. As tenants in common, the partners own specific shares in the home, which then means that they should both prepare wills, indicating that on their death, the surviving partner should inherit their share.
Remarried? What your children stand to inherit
Should you have had a will drafted during your previous marriage, then the event of your new marriage will automatically mean that the original will is revoked, so will not be considered valid. If you haven't made another will since that time, then in the event of your death, the rules of intestacy will apply – just as if you had not made any will at all.
On 1 October 2014, the rules of intestacy will change and if no will is made after your remarriage, then it is likely that your spouse will benefit from all personal belongings, all jointly held assets and up to £250,000, as well as half the residual estate. The other half of the residual estate will be passed onto your children directly or held in trust for them, until they turn 18. They will not receive your spouse's half of the residual estate, even after their death.
To ensure that your hard earned cash and other assets are left to the appropriate people then, it is vital that you have another will made out, after you have remarried. Should your spouse then survive you, any assets held jointly with them will automatically pass to that person. If you have children either jointly, from another marriage or both, then make the responsible decision to draft a new will, so that they will directly benefit from your wealth, after you've gone.
Intestacy – tracing bank accounts
Unfortunately, if a person dies without leaving a will and their estate is therefore passed into intestacy, there is no easy way of tracking down their financial details, unless they have paper copies of documents stored on file.
Frankly, it’s no use hoping that a financial institution will simply pick up on the fact that a customer has died. Currently, they have no way of accessing such information, although most will write to the customer if there has been no action on their account for some time. Unfortunately, this trigger often doesn’t arise until at least after 12 months and sometimes, up to three years.
Recently, a new service has been set up, whereby a free tracing service is available for lost bank accounts and savings and investments. This is somewhat faster, with a response received from banks within three months and NS&I institutions within one month. This service can be accessed at www.mylostaccount.org.uk
Bear in mind however, that you will be expected to demonstrate how you have a valid claim on the deceased’s account, before you may be given any information or access to the funds.
Should you finally be granted access to the deceased’s financial assets, then these need to be distributed among the beneficiaries, in accordance with English intestacy law. If the value is not substantial, then you may be granted access to the funds immediately. However, more valuable accounts will only be accessible once a Grant of Representation has been awarded.
Law Society guidance on Sharia wills triggers heated debate
In a questionably misguided attempt to recognise differing faiths, the Law Society recently issued guidelines for will writers who are asked to draft a Sharia-compliant will.
Although IWC Ltd has been writing Sharia-compliant wills for some time now, the Law Society decided to formally notify will writing and legal professionals, that Sharia wills would indeed be considered valid, but only if they were signed according to the Wills Act 1837.
Writing a will which complies with English law and adheres to specific religious principles is not always straightforward, however. For example, Sharia and its derivatives including Shia and Sunni, have differing laws. What about if a Muslim dies without a will and their estate is passed into intestacy? Can their wishes regarding distribution of their assets in accordance with Sharia guidelines still be fulfilled?
Another key challenge when writing a Sharia-compliant will is that unlike wills written purely under English law, beneficiaries cannot be named at the time of writing, and are not identified until after the individual’s death. This added complication can obviously add delays to the probate process, whilst research is carried out and any disputes resolved.
This move by the Law Society has since been criticised by many will writing and law professionals, who have accused the body of being “incredibly naive” – so much so, that it is now being threatened with possible legal action.
The Lawyers’ Secular Society (LSS) argues that there are many religions being practised in the UK, and that by “bowing down” to one particular religion, the Law Society is in effect, ignoring all other religions including Judaism, Pagan and Scientology. Instead, the LSS would prefer to see all wills written in strict adherence purely to English law, to provide a just and even playing field to individuals of all religions and faiths.
Do I need to make a will?
We're often asked the question: "Do I need to make a will?" It's a common misconception that if parents only have one child, then that child will automatically inherit both parents' entire estates and so no will is needed.
Leaving aside the problems and delays that intestacy can bring to the probate process, let's also consider that the old concept of a "traditional" family is now fading, rapidly. Many people marry for a second or third time and have children with multiple partners. What happens then?
Making a will is not simply stating to whom you would like to leave your worldly possessions. For those with children under the age of 18, it is essential that you formally state who should be the child's guardian, in case the worst ever happens.
We have seen countless cases whereby step families can co-exist beautifully – until the natural parent dies and confusion descends about who should receive what. Even if the parents were married, if no will exists to state who should benefit and why, then anxiety, bitterness and conflict can raise their ugly heads, to the extent that the family unit may be split.
Don't make the mistake of thinking that all will be well and that a relative, friend or the government will automatically know how you would like your hard earned cash and assets to be distributed. Remove any doubt by formalising your wishes legally in a will.
Witness signed will with false name
A Bridgnorth man acted as a witness and signed a will using a false name, it was revealed last week.
Joseph Alan Bate died in 2008, leaving an estate worth £60,000 but not having written a will.
Presumably, the late Mr Bate’s neighbour, Daniel Ball, learned that the estate would be passed into intestacy, forging and presenting a will to the Probate Office in 2010.
In an attempt to fool the authorities, Ball asked his friend, Tufayl Ahmed, to act as witness. Ahmed agreed and signed the forged document, using a false name.
Fortunately, it was very evident that the will was a fake, and no monies were transferred from the estate of the deceased. Instead, both men were arrested.
In an attempt to extricate himself from any wrongdoing, Ahmed declared that he believed the document was not a fake will but a reference for his friend. Sadly for him, the fact that he used a fictional name contradicts his claims.
Ball will be sentenced in the new year, whilst Ahmed was handed a two year suspended prison sentence and ordered to undertake 150 hours of unpaid work.
When it comes to disabled persons and inheritance, it is unfortunately a myth that disabled individuals automatically receive a portion of a parent’s inheritance after their death.
The parent, if they make a will, is under no obligation to leave anything to the disabled person. However, under the current rules of intestacy, it is likely that they will receive an equal portion of the estate if they are a son or daughter of the deceased.
If you are registered disabled and need assistance with your day to day living expenses yet have not been left any inheritance by your parent, then it may be you can make a claim under the Inheritance (Provision for Family and Dependants) Act 1975, if probate was granted less than six months ago.
To make an application under the Inheritance Act, simply contact the IWC inheritance and probate specialist team for further details.
Every responsible adult should make a will, but wills for businesspeople are an absolute must, if unpleasant issues after your death are to be avoided.
Particularly if you run a family business and would like to see it continue after you’ve gone, having a will in place will mean that the business is much less likely to be broken up or sold to someone outside of the family unit.
As most people know, when someone dies without making a will, their estate is passed into “intestate” in order to be distributed according to English laws. This rule still applies if the deceased ran a business, with no differentiation made between personal and business assets.
You may not even own the whole of the business in its entirety. If you are a majority shareholder, then your shares will also be distributed in accordance with English intestacy rules if no will is in place, which means a high proportion of the shares could be bequeathed to someone who is not au fait with dealing in stocks and shares.
It seems unfair if you have worked hard all your life and built up a business, simply to see the results of your labours frittered away after you’ve gone. Plan wisely not only for succession purposes, but to ensure that those who need the proceeds most are guaranteed to receive them.
This is not a common problem, but we are sometimes asked the question: “What will happen to the estate if the sole beneficiary has died?”
In most cases, if the beneficiary outlived the deceased by more than 30 days but then died before probate was granted then the rules of intestacy may be applied to the distribution of that person's inheritance if they had no will. A lot would depend on what the first person's will stated, assuming they had a will. This more complex situation would take place if there were no surviving beneficiaries and no issue of beneficiaries.
Depending on the structure of the family, distribution could be very complicated, with shares of assets often not equal. However, who is likely to receive something is listed below, in order of priority:
- Surviving spouse or civil partner (even if separated or in the process of divorce)
- The deceased’s surviving children
- Brothers and sisters
- Uncles and aunts
- Half uncles and aunts
In some instances, it is not clear who the remaining survivors are and in cases such as these, it may take the services of a reputable heir hunter to track them down, particularly if there are relatives who live abroad.