Not having a will means that when you die your assets have to be distributed in a certain way, following the laws of intestacy. This means your estate may not be passed on as you wish and not necessarily in the most tax efficient way either.
The Government has made some changes to these the laws of intestacy via The Inheritance and Trustees Powers Act 2014 (which we shall certainly not abbreviate to TITPA) which was given Royal Assent on 14th May 2014. If you are curious to read the bill in its entirety, you can do so here.
If you have clicked the above link and, like myself, you find the bill to be so laden with paragraph and subsection references that it is borderline illegible, fear not!
The key changes are:
- If you die intestate (you have no will) and you have a surviving spouse or civil partner but no children, your spouse is entitled to your entire estate absolutely.
- If you die intestate, with a surviving spouse and issue (the affectionate legal term for children) the first £250,000 plus half of your estate beyond this passes to your spouse and the remainder to your issue, held in Trust until they are 18. The spouse can therefore deal with their own assets, rather than just receiving the income on that portion over £250,000, while the children have access to their portion of the estate – much simpler than the old rules.
The changes passed in the bill should lead to much less paperwork and administration in cases of intestacy, as well as meaning that the children do not have to wait until the surviving spouse dies in order to inherit a portion of their entitlement which is a real plus where the respective parties do not get on.
Despite these changes, we cannot strongly enough stress the importance of having a will in place and, preferably, reviewed on a regular basis.