The importance of making a will

Clare Love, a partner at leading Lancaster lawyers Oglethorpe, Sturton and Gillibrand, gives her expert opinion on the importance of making a will.

It is estimated that 75% of the UK population die without making a will. Will you be one of them?

A valid will gives you the option to provide opportunities for your chosen beneficiaries, and control, to a degree, how your estate is dealt with in the event of your death.

If you die without having made a valid will, the law steps in to govern how your estate should be dealt with in the form of the ‘Intestacy Rules’, which provide a general ‘one size fits all’ approach which may not accord with your wishes.

These rules set out who inherits and in what proportions. They also govern who is entitled to administer your estate.

The Intestacy Rules differ depending upon whether or not you are married or in a civil partnership, and whether you have children. They do not currently recognise co-habitees so, even if you have lived with your partner for many years, he or she will not automatically inherit from your estate on your death. In these circumstances your partner may have to bring a claim against your surviving relatives for reasonable financial provision. This process can obviously be divisive, expensive and create unnecessary ill feeling.

If you are married or in a civil partnership, the first person entitled under the Intestacy Rules is your spouse/civil partner. However, he/she will not necessarily inherit the whole estate. The amount they will inherit will be determined by how much is in your estate, how you hold assets, and which of your blood relatives survive you.

Case Study

Tom was an entrepreneur who had been busy for years running his business and had put off making a will. He presumed the Intestacy Rules would mirror his wishes for Tara and that she would inherit everything in the event of his death.

Tom, who died leaving an estate worth £450,000, is survived by Tara, two children from their marriage, and a child from a previous relationship with whom he had long since lost contact.

Under the Intestacy Rules Tara is entitled to his personal effects, the first £250,000 and income for her lifetime from half the remaining balance. When Tara dies the capital will be split equally among the three children.

The other half of Tom's estate is divided absolutely among the three children, who will receive their one third share on reaching the age of 18.

Under the Intestacy Rules Tara would be one of the people entitled to administer Tom's estate. As a consequence Tara will have the authority to be involved in the running of the business, a task she is not able to undertake, and which has serious financial implications, not just for Tom's estate but for the entire business which he had worked so hard to build up.

Avoid a tax burden

Dying without a will can increase the inheritance tax burden on your estate. If you have young children there is little that can be done to mitigate this after the event. If you don't make a will you lose the chance to consider leaving your estate in a tax efficient way and make provision to protect your assets for the future.

Choose suitable and willing guardians

If you have children there is also the serious question of who you would select as a guardian to look after them. It is far better for you to choose than for different family members to be forced to make the decision at an already difficult time.

Time to review your will

Even if you have made a will it remains important for you to review it at regular intervals, say every three to five years. Laws change, and in particular those relating to taxation. If your circumstances or those of your beneficiaries change significantly, whether this change is personal, or financial, then you should review your will to ensure that it accurately reflects your wishes.

FACT FILE

The definition of Intestacy

Intestacy is the name given to the process of administering the estate of a person who has died without leaving a valid will or, to put it another way, to have ‘died intestate'.

The Rules of Intestacy

In England and Wales the rules of succession are the Intestacy Rules set out in the Administration of Estates Act and associated legislation. Matters become more complicated when people own property overseas, particularly in jurisdictions such as France, where forced heirship rights apply giving certain entitlements to specific family members. Your domicile also affects which succession rules apply to your estate, and how it is taxed. It is important to seek proper advice so you can consider your options and choose what you think is best in the circumstances.

Clare heads up OSG’s Wills, Trusts and Probate, Inheritance and Succession Planning Department. She is a fully qualified member of the Society of Trust and Estate Practitioners (“STEP”) and, as such, is regarded as a specialist and experienced practitioner in this field. Clare is one of very few solicitors in this area who hold the qualification. She can be contacted 01524 846846.