Increase in statutory legacy
I’ll come straight to the point – if you don’t have a Will, you have no ability to choose who will inherit your assets when you die because the statutory ‘intestacy rules’ will apply. In short, this means that your assets may not pass according to your wishes.
Under current rules, if you have children, your spouse or civil partner inherits the first £250,000 of your estate (known as the ‘statutory legacy’), all your personal items and 50% of your remaining assets. The other 50% of your remaining assets are split between your children.
If you are in a registered legal partnership but do not have children, your spouse or civil partner would inherit your whole estate. If you are unmarried, your children would inherit everything. Substitution provisions ensure that should one of your children have passed away in your lifetime, their children (if any) would inherit their share of your estate in their place.
The intestacy rules provide a set order for other categories of relatives to inherit from you should you have no surviving registered legal partner, children or grandchildren.
The government has announced that there will be an amendment to the statutory legacy from 6th February 2020, increasing this initial fixed sum for registered legal partners from £250,000 to £270,000. The value of the statutory legacy will continue to be reviewed every five years.
While this change is welcome, it doesn’t mean the requirement to make a Will is negated, or that a Will is any less valuable. Be warned - the intestacy rules take no notice of estrangements or complicated family dynamics. Aside from the freedom to determine how your assets will pass, there are other really important reasons that a Will should be top of your priority list in 2020…
If you die intestate and aren’t married, you have no automatic right to benefit from each other’s estates under the intestacy rules, irrespective of the duration of your relationship. In certain circumstances, a surviving cohabitee may be able to claim for maintenance from their partner’s estate under the Inheritance (Provision for Family and Dependents) Act 1975 – however the outcome of this sort of litigation is never guaranteed and the whole process can be costly. Having a Will in place allows you to distribute your estate as you wish.
Guardians for minor children can be appointed in your Will. Should the worst occur and you and your partner both die whilst your children are under the age of 18, someone you’ve chosen and nominated will have legal responsibility for them. Where a Guardian isn’t appointed, it will be up to the court to choose who will care for your children and the reality is that they could end up in foster care whilst a decision is being made.
If your circumstances aren’t straightforward, making a Will allows for your estate to be dealt with in a manner that minimises or eliminates your Inheritance Tax liability. Consideration could also be given to inserting a trust in your Will to protect one half of your home from care fees, should the survivor of you need to go into residential care in the future.
Above all, making a Will gives you peace of mind that you have control over your circumstances and that your wishes are accurately reflected.
If you want any advice about matters raised in this article, you can contact me, Clare Nelson, by phone on 01603 724688 or by email at cvnelson@cozens-hardy.com.