When families fall out and what it means on death…
Rifts between family members are all too common these days and can occur for numerous reasons. Although cries of "I am writing you out of my Will" or " you shall be disinherited if you marry that man" are regularly heard in the likes of Downton Abbey and Poldark, the reality is that people regularly forget to update their Will in light of a breakdown in relations. This can result in your assets being passed on to the very people you have fallen out with.
If you have not made a Will:
If you don't have a Will, the Intestacy Rules will govern how your estate is passed on. These rules vary as to whether you are married and if you have children but in general terms they apply as follows:
- If you are married or in a civil partnership and your estate is not worth more than £250,000, then everything will pass to your spouse/civil partner and this money is then theirs to use as they see fit;
- If the estate exceeds £250,000, then the above applies to the first £250,000 and anything over and above this amount will be divided equally between the spouse/civil partner and your children. Your spouse/civil partner may have had a life interest in their share of the excess funds meaning that these will revert back to your children on the death of your spouse/civil partner depending on when the death occurred;
- If you have a spouse or civil partner but no children and your estate is worth more than £450,000, your spouse with receive the first £450,000 but anything over and above this will pass back to your parents or, if they have predeceased you, onto your siblings; or
- If you are unmarried, and do not have children, your estate will pass to your parents, brothers and sisters or nieces and nephews in that order, depending on who survives you.
As you can see, your assets can quickly end up in the hands of relatives that you may not be closely connected to or even know exist. Just because you have not had a relationship with these people during your lifetime, does not mean that they will not inherit from your estate.
Also the fact that you intend to marry or form a civil partnership does not count as being married so even if you are engaged, your fiancé could end up with nothing if the intestacy rules apply to your estate. Instead, they might have to make a claim on your estate under the Inheritance (Provision for Family and Dependents) Act 1975 which can be a costly and traumatic experience for those you leave behind.
To avoid the intestacy rules applying to your estate, you need to make a valid Will.
If you have a Will already:
If you have already made a Will, this will govern how your estate is distributed on your death. However, you need to review your Will regularly because whilst life moves on, your Will remains the same and breakdowns in relationships may mean that your wishes have changed since your Will was written.
If you have a discretionary trust in your Will, it is also important to review your letter of wishes so that your trustees have some guidance as to where the funds should be paid.
In addition to updating your Will, you should also review your pension and life assurance policies as it is likely that you will have nominated your family members as beneficiaries under these and you need to notify your provider if there has been a change in circumstances.
If you own property abroad, the situation may be even more complicated because under many European laws, property has to be left to your children in at least some part, in accordance with their "forced heirship" rules.
If you have any questions about the issues raised above, then please contact Laura Harper in the Succession and tax team.