Have you considered leaving a will? Do you know how your estate would be distributed should you die unexpected tomorrow?
You may have read recently that Rik Mayall died without leaving a Will. This means he died intestate and the rules of intestacy determine who inherits his estate and in what proportions. The rules take into account marital status, children and surviving relatives and contrary to popular belief, these rules do not necessarily leave the entire estate to the spouse.
In Rik’s case, his children stand to inherit part of his net estate (ie. What is left after payment of any expenses and inheritance tax due). As his estate is reported to be over a million pounds, part of the sum passing to his children will suffer inheritance tax. The law at the time of his death allowed his spouse to receive £250,000 of assets, together with the deceased’s personal chattels. His children get half of the remaining estate, which is why inheritance tax is payable on the assets that they receive. His widow then receives a life interest in the remaining half which means that she receives income, but not capital from half the residue of his estate.
The intestacy rules have since changed to allow a spouse to receive £450,000, the personal chattels and half the residue of the estate absolutely. This is effective for deaths since 1st October 2014. Children still receive the remaining half share equally between them. However, Inheritance tax would still be payable on the childrens’ share.
But all of this begs the questions: Why would you wish to rely on the intestacy rules? Why not make a Will yourself to pass your estate to the people you wish to benefit, in the most tax efficient way?
The deceased will normally want the surviving spouse to benefit from the whole of the estate, ensuring they have financial stability and to avoid any inheritance tax becoming payable.
If you would like more advice regarding your circumstances, please do not hesitate to contact Rachael Dronfield.
