What happens if you die without a Will?

We explain how writing a Will could lessen the financial burden for your loved ones when you die.

The start of a New Year is a good time to refocus and review your finances. Whilst you may be on track with your savings and investments, you may need to complete or update your Will.

In March some national charities offer supporters a simple Will written or updated free of charge by a participating solicitor.

But even without the financial cost – is it worth getting a Will? Surely your money will go to your nearest and dearest when you die even if you don’t have a Will? Sadly, that’s not always the case, in fact dying without a Will could bring severe financial difficulties to your loved ones, as this example shows:

Jane and Tom have been together for a decade, aren’t married and share their mortgage-free family home in Surrey with their five-year-old son Josh.

If Tom dies without a Will, Jane and Josh could find their home and lifestyle at risk.

It’s a common misconception that everything automatically passes to a surviving partner. In fact, as Tom and Jane were never married, Jane wouldn’t inherit a penny.

And if they owned the family home as ‘tenants in common’, Tom’s share of the home forms part of his estate, rather than being passed to Jane.

Instead five-year old Josh would receive his father’s share of the house and any other assets after any Inheritance Tax (IHT) had been paid. It may be necessary for the family home to be sold just to cover the tax bill. The remainder of Tom’s assets would be held in trust for Josh until he turned 18.

This article and the information provided is to help you make your own decisions but is not personal advice. If you’re unsure, seek advice.

Click here to view our article: 3 reasons why Estate Planning is non-negotiable > 

The importance of Wills

If someone dies without a Will, what happens to their estate can differ significantly from what they would have chosen. Assets will follow government rules known as the rules of intestacy. Under these rules only spouses or civil partners and some other close relatives can inherit an estate.

The system for working out who will inherit what is complex and affected by the value of the estate, whether or not there’s a surviving partner (married or in a civil partnership) and the existence of any blood relations. There are even circumstances when the estate passes entirely to the Crown without anything going to carers or cohabiting partners .

A professionally drafted Will is the first step towards making life easier for those you leave behind. You can’t reduce the emotional blow of losing a family member or partner, but having a valid Will can lessen the administrative and financial blow. It also gives you greater control as to who receives what and when.

Taking action today to formalise your wishes means your loved ones aren’t forgotten or ignored when you’re gone.

You can also limit the IHT they may have to pay.

Pass money to your loved ones sooner

Each tax year anyone can give away up to £3,000 IHT free. But there are also lesser-known gift allowances, like £5,000 when a child gets married (£2,500 for each grandchild), and £250 to any number of individuals, provided you haven’t already given them a gift using a different exemption. It’s also possible to make unlimited gifts from any surplus income.

Outside the exemptions, any gifts you make will normally fall outside your estate provided you live for seven years after making the gift, so planning early can help reduce your estate’s IHT liability. Tax rules can change and benefits depend on individual circumstances.

Don’t leave it until it’s too late

If you’re planning to pass on as much of your wealth as possible to your family, don’t put it off – get planning as soon as it makes sense for you. The first step is to make sure you have a valid Will in place.

Then we can help you understand how you may be affected by IHT, you just need to book a free consultation with one of our experts. Just call 01244 347 583 or email us at info@innesreid.co.uk.

We won’t waste your time, or your money. But we’re just as likely to simply reassure you or refer you to a trusted local solicitor or tax adviser if that’s better for you.

If it looks like we can help, we’ll book your free initial consultation with a specialist financial adviser. There’s no pressure to take advice, but if you choose to there’ll be a charge, which we’ll discuss with you. No personal advice will be given during the initial consultation.