If you’re a fan of BBC One’s Heir Hunters, you may find yourself wondering whether you have a long-lost relative who’s died with an unclaimed fortune that may one day be passed to you. For those who haven’t seen the show, it follows the work of probate researchers who trace long lost relatives of people who have died without a will and don’t seem to have any living relatives.
While it makes for compelling viewing, the show highlights a serious issue: all too often people die without a will in place, which means their estate cannot be passed to the people they would want it to.
Worse still, if no one can be found, the estate could even go to the Treasury.
The reason for this is that an estate without a will becomes subject to ‘intestacy rules’. As such, the assets within that estate have to be distributed in a specific way, which may bypass the individuals the deceased would want to receive them.
Read on to learn more about intestacy rules, and why they could jeopardise the financial security of those closest to you.
Without a will you have no control over who receives your assets
While you might assume that your wealth will automatically be passed on to your loved ones if you die without a will, the reality could be very different. This is because it falls under strict guidelines set out by the 1925 Administration of Estates Act, which are known as the intestacy rules.
Under the rules your assets are shared among living relatives using a set order of priority, no matter how close you are to those relatives. As such, your estate could go to someone you’d rather didn’t receive it and may bypass the person you would want to benefit from it.
If you’re unmarried, your partner won’t receive anything from your estate
Under intestacy rules, if you are living with someone but not married to them, your partner would be classed as ‘non-family’’. This is the case no matter how long you have been living with them.
As such, your partner would not be considered when your estate is distributed, even if they’re financially dependent on you. Furthermore, no consideration will be given to any stepchildren.
If you’re unmarried and have adopted or biological children, they’ll receive your estate. In the event that they’re deceased, their children or grandchildren receive your assets.
If you don’t have children or grandchildren, your parents will be given preference regardless of how close you are to them. If they’re not alive, the estate will be distributed in the following order of priority:
- brothers and sisters (full siblings take priority over half-siblings)
- grandparents
- uncles, aunts and cousins.
If you’re married, your spouse may receive less than you’d want them to
As a married person with no children, your estate will be passed to your spouse. If you’re married with children, your estate will be split in the following way:
- all personal property and belongings will be passed to your spouse
- the first £250,000 of the estate also goes to your spouse
- half of whatever’s left, with the rest being divided between your children.
As a consequence, your spouse could receive less than you would want them to.
The Government could end up receiving your entire estate
If you do not have any living relatives, your estate passes to the Treasury. Worse still, this could happen even if you have a partner and children who would depend on it.
This is why creating a will to ensure your wealth goes to the people you would want it to, as smoothly and as tax efficiently as possible, is so important.
Join our easy-to-understand webinar on how wills and trusts could help you
As part of our commitment to helping everyone understand the world of wills, trusts and finance, AFH will be hosting an easy to understand and informative webinar in October. It will see television’s Mark Foster talk to AFH’s Chief Advice Officer Austin Broad, and Malcolm Noblett of AFH Trusts and Estates, about how wills and trusts can be used to:
- ensure your estate reaches the people you would want it to
- speed up the process of passing your estate to loved ones
- ensure friends and family’s financial security after your death
- reducing your estate’s exposure to Inheritance Tax
- protect the estate from ‘sideways disinheritance. This is where your children or grandchildren are deprived of their rightful inheritance because your surviving spouse remarries.
Follow the link to register for our first webinar: ‘How to reduce stress and anxiety for loved ones after you’ve gone.’ which takes place at 6pm on Wednesday 23 October.
Get in touch
Alternatively, contact us if you would like to discuss how creating a will or trust could help you. As one of the UK’s largest independent financial advice companies, we understand how someone’s estate and wider wealth is intertwined.
That’s why every one of our professional advisers are qualified estate planners, and have a deep working knowledge around:
- will writing
- dealing with probate
- how IHT works and how to mitigate a liability
- using trusts to protect wealth.
Just call us on 0333 010 0008 or speak to one of our financial advisers, as we’d be delighted to help.
Monday 21 October 2024