Love it or hate it, Valentine’s day will soon be upon us. For some, it will mean an obligatory purchase of a Clinton’s card and overpriced bunch of red roses. For others, perhaps a little more thought will go into choosing a gift that their partner really wants – even if it is a rather unromantic Outdoor Tech OT1351 Buck Shot Pro Bluetooth Speaker (which by the way, would be a fantastic gift, should my other half be reading this and wondering).
In effect this strange festival, originally a Western Christian feast day, means 24 hours of imposed public romance rather than a day for private, genuine affection. Rather than make this year’s Valentine’s day about “crushingly predictable expectations and equally crushingly predictable disappointments” (as the witty and brilliantly astute Katie Glass puts it), there is a simple way to show you truly care for your partner which doesn’t involve anything red, tacky or cliché. Making sure their future is secure.
Only a third of us have a Will, with many choosing to leave this simple act until later in life. Perhaps we’d rather not consider the idea that we might pass sooner than expected. Or perhaps we don’t think our estate is sufficiently large to justify making this simple document.
On that point, remember that you can take out relatively cheap life insurance which will pay for your debts and funeral expenses when you die, and also leave enough money to ensure your partner does not struggle financially. Life insurance can form part of your estate or it can be written in trust. The best solution for you will depend on your individual circumstances and you should speak to us for advice.
When someone dies without a Will, they are said to have ‘died intestate’. Intestacy, or dying ‘intestate’ means that you didn’t make a valid Will before you died. Certain rules are applied to say what happens to your estate in these circumstances. These rules might not work as you expect.
Making a Will is not just about avoiding the complications of dying intestate. What many people fail to consider is that the act of making a Will – and what they put in it – forms part of their legacy. This is about the message that they leave behind to their loved ones when they are gone. Failing to adequately provide for those we love suggests a lack of thought or care. It can add to the pain that those closest to us will already have to deal with at a very difficult time. It can also cause a myriad of difficulties within the family, breaking down relationships when people should otherwise be coming together to support each other.
The heartbreaking story of Danaë Brook which we covered in October last year is a stark reminder of how the pain of losing a partner, best friend and companion can be intensified by the legal and financial turmoil that follows where no valid Will exists – see ‘An unsigned Will left a widow’s life in ruins‘.
The rules of intestacy: who will inherit
The rules of intestacy are complex but as a general guide:
- If you were married / in a civil partnership and there are children, grandchildren or great grandchildren, your spouse or civil partner will inherit all your personal property and belongings, the first £250,000 of the estate, and half of the remainder of your estate. The rest goes to your children or grandchildren, depending on a number of factors.
- If there are no children, grandchildren or great grandchildren, your spouse or civil partner (if you were married to them / in a civil partnership at the time of death) will inherit your entire estate, including all of your personal property, belongings and wealth. If your spouse / civil partner was informally separated from you, they can still inherit.
- If you were divorced / the civil partnership was dissolved, they cannot inherit.
- If you and your partner were just cohabiting, they will not inherit anything (although they may still be able to ask for help – see below).
If you own your home as ‘Joint Tenants’ rather than ‘Tenants in Common’ with your partner, your partner will automatically inherit your share of the family home on your death. The same applies for joint bank accounts and other jointly owned property. The automatically inherited property does not count when calculating sums under intestacy rules. However, leaving your family home or assets to your partner this way can cause a lot of problems – see ‘When your partner inherits everything’ below.
Applying for help from the court
If you die intestate and someone close to you has no right to inherit from your estate under the rules of intestacy, they can apply to the Court for financial help. The Court can award regular payments, a lump sum or the transfer of property (such as the family home) from your estate, if they deem it appropriate. Not everyone has the right to apply – for example, if the person has been cohabiting with you, they would need to have lived with you for at least two years immediately before your death to be eligible. However, this doesn’t mean the Court will make such an award. Their judgement will take into account all the circumstances, including the needs of those who would otherwise stand to benefit from your estate. Where a claim is unsuccessful, this can leave the claimant with crippling legal bills, as we saw in the Ames case last year.
The fact that people can apply to the Court for a share in your estate is one of the very good reasons why it is important to make a Will. Those applying to the Court may not be who you would have wanted your assets to go to – and it may mean that the people you care about most are worse off financially as a result.
When your partner inherits everything
If you own your home as ‘Joint Tenants’ and your partner automatically inherits it, this can cause a wide range of problems.
First, if your partner should need care in the future, the Local Authority can take almost everything they own – including the share of wealth that they inherited from you – until there is just £14,250. Once their assets have dwindled to £14,250, the Local Authority will take over paying for the care.
Secondly, if you die and your partner remarries, their new partner could end up with your share of the wealth – either because your partner remakes their Will or because they also die intestate. Your children or grandchildren could see very little if any of your share.
These problems can be avoided by ensuring that you own your home as ‘Tenants in Common’ rather than ‘Joint Tenants’ and by making a special type of Will which puts your assets into a trust upon your death.
A trust is a way of managing assets (which may include the family home, other properties, money and investments) for people. There are three types of people involved with a trust:
- the ‘Settlor’ – the person who puts assets into a trust – i.e. you;
- the ‘Trustees’ – the people who manage the trust – you choose who; and
- the ‘Beneficiaries’ – the people who benefit from the trust – for example, your partner, children or grandchildren.
With a trust, you can specify that your partner will be able to use the family home on your death but once they die, it will go to who you have chosen – your children or grandchildren, for example. Your partner can move home with the permission of your choice of trustees, but they cannot simply sell the home and take the money.
The benefits of a Trust Will
There are many benefits to creating a trust using your Will. If, for example, one of your children goes through a divorce, ordinarily any inheritance might be split with their ex spouse/civil partner. Alternatively if they run into financial difficulties, their creditors may want to take the inheritance to pay off their debts. You can prevent either of these scenarios by leaving the property in trust – so for example, you can specify that your partner gets use of the home during their lifetime, then your children, then your grandchildren, and so on. Since the property never belongs to the children – they only get use of it – it cannot be taken by their creditors, ex partners etc. The trust can last for up to 125 years if you choose, allowing you to truly keep your property in the family! Speak to our team about the many benefits of arranging your affairs this way – or order our free information pack, without obligation.
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