…So as to make sure your Estate goes to where it is intended
You may have seen in the news recently that there is an on-going High Court litigation involving two sets of children as to who should inherit an estate worth approximately £300,000 following the death of an elderly couple.
The couple each had children from previous marriages and it seems they did not have Wills. Tragically, they were both found dead from hypothermia in their bungalow. Medical evidence has been sought to ascertain who died first as this is crucial to determine which set of children stands to inherit the combined estate.
In absence of a Will, the Intestacy Rules dictate what happens to an estate:
- Jointly held property usually passes automatically to the surviving owner;
- Personal possessions pass to the surviving spouse, along with the first £250,000 of the estate;
- The remainder is then split 50% to the surviving spouse and 50% to the children; or
- If there is no surviving spouse, the estate is split equally between the children.
In this case, the estate of whomever died first would pass entirely to the surviving spouse (as their share did not exceed £250,000 in any event). On that spouse’s death (even if only moments later) it would pass to the surviving spouse’s children. The children of the first to die would not therefore inherit anything.
If it cannot be determined who died first then the law of Commorientes (dating back to 1925) will determine the order of death, and the elder is deemed to die first. In this case, that would mean the husband is deemed to have died first and the wife’s children inherit the entire £300,000 combined estate.
Another situation where commorientes can apply is if a couple were involved in a car accident or similar simultaneous incident where it was impossible to determine the order of the death. It is clearly undesirable to leave it to fate and can mean one side of the family misses out. Appropriate Wills could have provided for both sets of children to inherit, regardless of the order of death.
Further problems with an Intestacy
Relying on the Intestacy Rules can also cause problems if either spouse’s estate exceeds £250,000, as that could mean that on first death, assets pass to children. The survivor may well need the funds and may have to claim against the estate of the first to die if they did not receive reasonable financial provision.
Also, if assets passing to the survivors children include part of the matrimonial home then it would present a risk to the survivors continued occupation, either because the children force a sale or had to sell because of circumstances, own financial need, divorce, bankruptcy etc.
Second Marriages
Second marriages, in particular, always require some careful planning. If each wishes for their respective children to get something once they have both gone then it may not be a good idea to simply leave the first to die’s estate to the survivor outright. The surviving spouse may remarry, change their Will to benefit just their children or otherwise gift assets to their children in their lifetime, meaning the children of the first to die do not inherit.
A life interest trust can help to provide access to funds from an Estate but in a controlled way to protect the assets for all children involved. Please contact our Wills, Trusts & Probate team for my details on life interest trusts.
Unmarried Couples
Couples who are not married or in civil partnerships (collectively referred to as ‘unmarried’ for brevity) have extra issues that need careful consideration. The Intestacy Rules do not make any provision for a surviving unmarried partner which could mean that the first to die’s share of the property and cash is inherited by their children or wider family. In this case the surviving spouse may have to make a claim against the estate if they were financially dependent on the deceased which is very costly, stressful and time consuming. A Will can help ensure that a surviving unmarried partner will be looked after.
Tax Implications
It is important to consider the tax implications for unmarried couples both with and without a Will to ensure the available tax allowances are secured and maximised as unmarried couples do not have the same advantages as married.
If you would like assistance with preparing suitable Wills or administering an Estate please contact our Wills, Trusts and Probate team on 01733 882800 or email [email protected].
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