18 August 2023
If you have not made a valid Will, the law sets out who inherits your estate. Your estate comprises your bank accounts, investments, personal belongings and property held in your sole name.
Any assets you own with someone else (like a joint bank account or a property held as joint tenants) will be inherited by the surviving co-owner automatically. However, any assets held in your sole name will fall under intestacy law.
The law is restrictive and old-fashioned. If you have a spouse but no children, then your spouse is the only person who will inherit from you. However, if you have both a spouse and children the law divides your assets between them.
The law states that your spouse will inherit your personal belongings and a “statutory legacy” which is essentially an outright gift of a set sum. Your spouse will also receive a half-share in the balance of your estate, with the other half-share being divided equally between your children on statutory trusts.
The statutory legacy was increased from £270,000 to £322,000 by the Administration of Estates Act 1925 (Fixed Net Sum) Order 2023.
The increase in the amount payable to surviving spouses was a welcome change. Spouses (married couples and civil partners) do not pay inheritance tax on gifts to each other. Therefore increasing the gift to spouses potentially reduces the amount of inheritance tax due from your estate. This can also be achieved by signing a deed of variation, however that requires the co-operation of all parties who are affected.
When most people make a Will, they usually wish to make their spouse their primary beneficiary, with their children only benefiting after both spouses have died. Therefore the increased statutory legacy better achieves what most people would want to happen on their death.
Under intestacy law the definition of your children includes all biological children as well as your legal children. So, you can see how complications can arise and the inheritance prescribed by law may not be what you intend to happen.
Avoiding this old-fashioned division of your assets is achieved by simply making a Will. You can make a will on whatever terms you see fit; it is entirely up to you. You can also arrange your will in the most tax-efficient manner if that is a priority for you.
If you would like assistance to prepare a Will or if you need advice about an intestate estate, making a will or preparing a deed of variation please contact our trusted and experienced Wills, Trusts & Probate solicitors based at our Bournemouth and Christchurch offices.
Please note, this is not legal advice. It is intended to provide information of general interest about current legal issues.
