General Practice Guideline


Dear Colleague,

What happens if I die without a Will?

We hope that the following may be of interest to the practice.

The law sets out clear rules for what happens to your estate property, personal possessions and cash if you die without a Will. Passing away without a Will is known in legal terms as dying intestate and the rules that govern the distribution of the estate in such circumstances is known as the law of intestacy. This is a rigid and inflexible method in dealing with the administration of an estate.

Under the Administration of Estates Act 1925, the spouse and children do not automatically receive everything in the deceased's estate. Invariably the surviving spouse is treated harshly because the survivor's entitlement is limited to a sum of 125,000 (plus personal effects), with a limited interest in half of the balance which remains after that. The other half passes to any children.

If there are no children but surviving siblings or parents, then the surviving spouse or civil partner takes a sum of 200,000 and one half of the balance, with the other relatives taking the other half. The surviving spouse or civil partner can only take the whole estate if there are no surviving children, siblings or parents.

It should be noted that (non civil) partners have no legal entitlement to benefit under the intestacy rules; where any element of dependency may be involved (between the deceased and the surviving partner) then an application can be considered for reasonable provision under the Inheritance (Provision for Family and Dependants) Act 1975. This can be a cumbersome and long drawn out process.

We can offer professional advice on how to secure the correct disposal of your estate to ensure your last wishes are respected and your chosen beneficiaries are looked after.


Inheritance Tax planning

Apart from Will planning; lifetime non contentious planning should not be forgotten in relation to Inheritance Tax (IHT). Proper and regular use of the available exemptions and reliefs is a fundamental first step for individuals who may still have a liability even after using both nil rate bands (for spouses/civil partners).

The nil rate band for 2008-2009 is 312,000 or 624,000 in total for married couples/civil partners.

For example, clients should consider:

  • ensuring the current 3,000 Annual Exemption is used by each spouse/civil partner.
  • maximising annual small gifts exemption of 250 ideal for any number of grandchildren/godchildren!
  • making regular exempt gifts out of surplus income to reduce the size of the potential estate on death.
  • ensuring maximum use is made of both Business and Agricultural Property Relief where appropriate.
  • taking advantage of the potentially exempt transfer regime (PET) to make outright gifts to individuals or trusts. Each spouse (or civil partner) can gift up to the IHT Nil Rate Band limit into a Discretionary Nil Rate Band Trust every seven years with no adverse IHT consequences.

    It may be the case that members of the practice already have an existing Will, which was made some years ago, and requires reviewing to allow for changing personal and financial circumstances.

    Furthermore, the Finance Act 2008 has confirmed (from 9 October 2007) that the IHT Nil Rate Band is now fully transferable between spouses (or civil partners) as appropriate. It is important, therefore, that sufficient flexibility should be included within a Will to ensure that the IHT Nil Rate Band can be utilised in the most tax efficient manner.


    UK National online Wills register

    Finally, we are pleased to announce that Lockharts has recently become a Founder Member of the UK's online register of Wills www.certainty.co.uk. We are able to offer you, free of charge, Will registration if your existing Will is dated prior to 6 October 2008.

    Why Register?

    Changing circumstances, moving to another area, or simply the passage of time can sometimes make if difficult to identify an individual's last Will. The Register ensures that solicitors across the country can log the existence of Wills in a central place. This should ensure your Will, or any updated version of it, is not overlooked.

    The national online Wills register service offered by Certainty is fully endorsed by both the Law Society and STEP (Society of Trust and Estate Practitioners),

    If you would like to find out more about Will or lifetime IHT planning, or you would like to instruct us to start the process of producing a Will for you, please contact me, or my secretary Sandra Wiltshire, and I shall be pleased to assist you and advise as necessary.

    Yours faithfully,

    Andrew Murdoch
    Associate
    (ACIB, AIFP, TEP, Dip PFS)

    am@lockharts.co.uk
    saw@lockharts.co.uk
    www.lockharts.co.uk


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