New Estate Planning and Wills – the rules
New rules have come into force this Autumn, which govern how an estate is distributed for those without a valid Will in place.
If you are married with children and die without a Will, the first £250,000 and the personal chattels, will pass to your spouse. The remainder will be divided into two, with one share passing outright to your spouse and the other to your children. Previously the share to the surviving spouse passed into trust, from which they would receive the income during their lifetime and the capital preserved for the children on their death.
Whilst the new rules have simplified matters by removing the trust structure, for those with children from a previous marriage, circumstances could become complicated. There is now the possibility that a greater portion of your estate will move away from your children than under the old rules – if the surviving spouse is not minded to benefit the stepchildren. Equally those that are separated but not divorced could find their estranged spouse receiving a greater proportion of their estate than their children. For co-habitants, if an unmarried individual dies without a Will, their partner still receives nothing! Where there are no children the surviving spouse receives the entire estate.
In addition to ensuring your assets pass to your intended beneficiaries there are other reasons for completing a Will:
- To protect funds against spendthrift beneficiaries or against divorce/bankruptcy.
- To appoint guardians to minor children; if no guardians are named the children may be placed in foster care until the courts/local authorities decide who should look after them.
- To appoint someone you want to handle your estate (an executor).
- To avoid Inheritance Tax – if you rely on the intestacy rules this could lead to an immediate charge if funds pass to your children.
- To indicate your funeral wishes.
- To provide guidance on whom you would like to look after any pets you own; for example family, friends or perhaps an animal sanctuary.
If you need to set up your Will, or review an existing one, please contact Ben Haulkham or call +44 (0) 1903 222326.