Wills Case Study

What happens when I die without a will?

More people have been made aware of the issue of Intestacy due to the popularity of the TV programme “Heir Hunters”.

Having to trace people entitled to benefit form an estate is not uncommon. If no persons entitled to the estate are found, the estate passes to the Treasury to be used as public funds.

A typical scenario is where we located members of the family of an elderly lady who died intestate (without making a Will).

The lady had never married, had no children but had brothers and sisters.
With the help of a friend of the deceased lady we put together a family tree and located most of the family members. Missing beneficiary insurance was put in place as a precaution if a further beneficiary entitled came forward to make a claim after the estate had been distributed.

The administration of the estate would have been so much easier if the deceased had made a Will.

A Will is revoked by Marriage

One of our property lawyers introduced us to Pauline and Greg who were buying an investment property. Pauline and Greg had been married for 2 years, Pauline had been married previously and divorced, this was Greg’s first marriage.

It came to light that Pauline had made a Will after her divorce which left her house and her money to her now teenage children from her first marriage. We explained that this Will was no longer valid as it has been revoked by her marriage to Greg. Pauline had incorrectly assumed that unless she amended it her Will remained in place and be valid.

Pauline simply had to make a new Will. If she had not done so, the Intestacy Rules would direct that the first £250,000 of her estate would pass to Greg as her husband which was not what Pauline wanted.

Unmarried Partner without a Will

When one of a married couple or civil partnership dies intestate (without leaving a valid Will), the first £250,000 of the estate automatically passes to the surviving spouse or surviving civil partner. This is not the case however if one of an unmarried couple dies.

Maria sought advice from us after John her partner of 20 years died without making a Will. Under the Intestacy Rules his estate passed to his children of his former marriage who were quite clear in their assertion that Maria would get nothing.

We advised Maria that as she had lived with John as his wife for over 2 years and was financially dependent on him she was entitled to make a claim against his estate for suitable provision under The Inheritance (Provision for Family and Dependants) Act 1975. The matter was referred to our specialist department to represent Maria going forward.

Deliberate deprivation of assets

We are often consulted by retired people in their twilight years who are concerned about the rising costs of care homes should they need to be cared for in the future.

Many look at gifting their house (their major asset which they consider that they have worked hard for), to their children so if they need to go into a care home they would not own a house nor have many assets and would expect the Local Authority to assist with the care home fees.

The rules here are complicated and likely to change and proper advice should be sought to consider the options available.

Inheritance Tax Planning

Using the Transferable Nil Rate Band for married couples and civil partners

Since October 2007, it has become easier for married couples and registered civil partners to use the Inheritance Tax relief threshold on their estates (“the Nil Rate Band (NRB)). However, to maximise the relief the correct information must be supplied to the Revenue and it is important to get correct advice in this regard.

Married couples and registered civil partners are also allowed to pass assets to each other during their lifetime or when they die without having to pay Inheritance Tax. It doesn’t matter how much they pass on – as long as the person receiving the assets has their permanent home in the UK. This is known as ‘spouse or civil partner exemption’.

If someone leaves everything they own to their surviving spouse or civil partner in this way it’s exempt from IHT. It also means they haven’t used any of their own Inheritance Tax NRB. This can be used to increase the Inheritance Tax threshold of the second spouse or civil partner when they die – even if the second spouse has remarried. Their estate can be worth up to £650,000 in 2013/2014 before IHT bites.


Mark dies in May 2007. He leaves an estate worth £400,000 to his wife Sharon. She dies in August 2013, leaving £600,000. When Mark died the Inheritance Tax threshold was £300,000.

When Sharon died, the threshold had gone up to £325,000, so her estate was over the threshold.

None of Mark’s threshold was used when he died because he left his entire estate to his wife and he hadn’t made any lifetime gifts. So Sharon’s personal representatives can transfer 100 per cent of Mark’s threshold to increase her threshold. They don’t transfer £300,000 – the threshold when Mark died – but the percentage of the nil rate band he didn’t use, ie 100 per cent. They then apply this percentage to the threshold at the time Sharon died.

So Sharon’s threshold increases to £650,000, twice the 2012-13 threshold of £325,000, using 100 per cent of her nil rate band and 100 per cent of Mark’s. This means there’s no Inheritance Tax due on her estate.

Reducing IHT – gifts out of excess income

An example of this relief could be where a successful business woman (our Client) with her own company has substantial income from the company which is far more than she and her husband need.

She would like to help her son and daughter financially, they are both married with young families, but she is concerned about tax implications.

We advised our Client that she can give her son and daughter money provided that is comes out of her excess income so that such gifts do not affect her lifestyle and standard of living. Effectively she is giving away what she does not need. Such gifts should be recorded and of a regular nature if possible.

Provided the gifts meet these requirements then the gifts will not be subject to Inheritance Tax.

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