The amount that a spouse or civil partner gets automatically on the death of their spouse/civil partner goes up by an additional £20,000 on the 6th of February. This applies only where the person that died did not leave a will (known as intestacy). The new allowance brings the spouse/civil partners legacy to £270,000. If there are no children, the spouse/civil partner will get the rest of the estate but if there are children, the spouse/civil partner will get half of the rest of the estate while the children get the other half.
Some may see this additional amount that goes to the spouse as a reason to celebrate, but the better reaction would be to treat it as a wake-up call. If you are in a position where you can still make a will, then that’s what you need to do rather than wait for the intestacy rules to rob you of the opportunity to decide what should happen to your estate. Intestacy rarely achieves the best result for most estates.
Intestacy means a failure to make advance plans for your estate. People should not be rewarded for their failure to plan. Why would you want the government to decide for you who should inherit all that you own? Why wouldn’t you want to make that decision for yourself? How you want things split between your loved ones? Who is best placed to make that decision – the government or you?
There are many reasons why you shouldn’t rely on intestacy for passing inheritance to your loved ones. It usually achieves unfair results. There is a recent case where a mother had to sue her two young children, to try and get more money from the estate of her late husband who died without a will. He assumed that she would get everything and so did not bother to make a will. The problem was that the automatic inheritance did not leave her with enough money to provide the same lifestyle the family had before her husband died. She was left to go to court to ask the judge to give her more money from her children’s share of the estate.
Another reason why people should not rely on the intestacy rules is inheritance tax planning. The result of intestacy is often to impose an extra tax burden that could have been avoided if the person had a made a will. There are many probate cases where the estate has to pay inheritance tax because of the children inheriting directly and thereby wasting the exemption from inheritance tax that would have applied if the spouse had inherited that share.
It is so much better to plan things properly in advance and take advantage of all the inheritance tax breaks that the government allows between spouses and civil partners. But, most importantly, take advantage of the opportunity to choose who you want to inherit. Don’t let the government make that decision for you. Find out more about the intestacy rules here.
You can get in touch for expert advice from family wealth solicitor, Remi Aiyela on making your will.