Wills for Marriage & Families
When do I need a Will & when should I be updating my Will?
Considering what will happen to your estate when you pass away is not necessarily a topic at the forefront of your mind - results from a YouGov survey conducted in 2015 estimated that two thirds of British adults currently do not have a Will - but by writing a Will you can help ensure that your property is protected for your loved ones and your assets are distributed as you wish them to be.
There are several life events that are considered ‘triggers’ in the need for making and updating a Will, and marriage and the birth of children are two of the most important.
Marriage and your Will
If you pass away without leaving a valid Will your estate will be administered under the rules of intestacy. If applicable, your Estate may pass entirely to your spouse (if under the value of £250k) or the first £250k together with half of the value of your remaining estate may pass to them (if the total value of your estate exceeds £250K).
However, the laws of intestacy are not always straightforward and vary depending on regions across England, Wales, Northern Ireland and Scotland. Therefore without making provisions for your spouse and other beneficiaries within a valid Will, there is the risk that you do not have control over who will inherit and in what share.
If you are married and leave your estate entirely to your spouse you have the option to avoid Inheritance Tax liabilities. This is because transfers between married couples and civil partners are not subject to inheritance tax (IHT), and if your estate is worth less than your IHT threshold (currently 325k), any unused threshold can be added to your partner’s threshold when you die. Therefore this total combined can amount to £650,000 free of Inheritance Tax.
Wills when a spouse dies
Aside from the emotional upheaval of dealing with the death of a spouse there are various financial matters that require consideration and necessary action. Firstly, whether Probate is required - this will be determined by your spouse’s financial situation. A Grant of Probate is a legal document that confirms the named Executor has authority to administer the deceased’s estate (read more about Probate by reading our previous newsletter).
Assets held in joint names - namely property owned and registered as Joint Tenants, and bank accounts - will pass automatically to the surviving spouse under the Right of Survivorship. Any assets held in your spouse’s sole name (and any assets registered as Tenants in Common) require a Grant of Representation before they are distributed to any named beneficiary (unless the Estate is of a lower value and any particular asset does not exceed 5k). You will also need to contact any Life Insurance provider as the terms of conditions of any life insurance policy will take precedence over any provision made in your spouse’s Will.
An increasing proportion of the UK public are choosing not to get married to their partner. However, this trend pattern is not yet reflected in English Law, and therefore if you pass away without a valid Will your unmarried partner is not by default legally entitled to any of your assets. This can be regardless of the amount of years you may have been cohabiting or even if you have had children together. Divorced partners or partners whereby a civil partnership has been legally ended similarly do not automatically inherit under the rules of intestacy. By specifically naming your partner within your Will, you are avoiding the risk of leaving nothing to them upon your death. It is also important to consider that any future marriage to your partner would automatically revoke any Will you previously had in place, and this can be avoided by having your Will drafted to specify that you are in contemplation of marriage.
In summary, it is equally important for both married and unmarried couples to ensure they have valid Wills in place.
Making provision for your children within your Will is paramount to ensure they are provided for upon your death.
Referring back to intestacy, if you pass away leaving no spouse, then your children will inherit your estate in equal shares upon attaining 18 years of age. If a child has passed away, their share will automatically pass to any children (your grandchildren) they left in their place. This applies to your children from all relationships, and also to any adopted children you have. If you are married at the date of your death leaving children, your spouse will inherit everything to the value of £250k together with ‘an absolute interest in half of the remainder’. The remaining half is then equally divided between any surviving children (or failing this, grandchildren of the deceased as mentioned above).
Therefore, if you wish for your children to inherit a larger portion of your Estate, or you wish to gift particular items or assets to them upon your death, then this will need to be incorporated within your Will.
Aside from making financial provisions within your Will for your children, you also need to consider appointing Guardians for any children under the age of 18. In law this is referred to as ‘Parental Responsibility’, and you will need to consider who you would like to look after your children in the event that you pass away leaving no surviving parent.
Stepchildren and blended families
The UK has an increasing number of ‘stepfamilies’ formed of remarried individuals and children from past marriages. The 2011 report from the Office for National Statistics published 544,000 stepfamilies (which tend to be larger than non-stepfamilies) with dependent children residing in England and Wales, with approximately 1 in 10 dependent children being part of a stepfamily.
However, under current English Law your stepchildren will not automatically inherit any part of your Estate, and therefore it is paramount that you make provision for them specifically within your Will if you wish to do so. This is because for inheritance purposes the definition of ‘children’ differs from that of ‘stepchildren’. Therefore, any Will that provides for children specifically will interpret this as your biological children only.
You may wish to consider including Trust provisions within your will, for example a Life Interest Trust whereby you make provision for a partner or spouse to continue living in your home upon your death without them actually inheriting it – upon their death (or remarriage, or a time period of your choosing) your property can then pass to your chosen beneficiaries to inherit; for example, your children. The obvious benefit of this provision is that your partner or spouse cannot inherit your Estate entirely and redirect the assets to their own chosen beneficiaries upon their death, thus risking your beneficiaries being disinherited. For Trusts such as these, it is essential that you own any property as Tenants in Common, and not as Joint Tenants whereby your share would pass to the remaining spouse by survivorship.
You and your spouse can also consider having Mirror Wills written to make provision for all of your children and stepchildren. Regardless of the option that you may choose, ensuring an up to date and legally valid Will is in place can safeguard against any possible difficulties or hostilities over a disputed estate upon your death, which can potentially be more acute in blended families.
As previously mentioned, your grandchildren may potentially inherit under the rules of intestacy, but only in certain circumstances and if you wish to make concrete provision for them it is vital that you include this within a valid Will.
Making provisions for grandchildren within your Will is not always straightforward. For example, if you leave part of your estate to your two children, is each child’s portion to be divided equally between the number of children they have, or is each grandchild to inherit an equal amount?
Obviously in the latter scenario, your child with a higher number of children will have an advantage. You may also need to consider what would happen if a grandchild were to predecease you - whether you would like their share to pass to their children (your great grandchildren), your surviving grandchildren, or to another family member.
You can also make provision for current and future grandchildren alive at the date of your death by leaving them pecuniary legacies within your Will - gifts of money – which they will receive immediately upon your death. These gifts can be made exempt from Inheritance Tax or subject to.
As discussed previously in regards to stepchildren, step grandchildren will also need to be specifically named (as individuals or as a class) as a separate bequest within your Will if you wish to make provision for them.
Along with making provision within your Will for your grandchildren upon your death, you may also wish to consider lifetime provisions. Options include the benefits of the small gifts allowance (for example, you are able to give away £3000 worth of gifts each tax year exempt from Inheritance Tax). This may also apply to potentially exempt transfers of a higher value provided they abide by the 7 year rule (consult Inheritance Tax for more guidance).
Leaving money to other heirs and beneficiaries
We have touched upon spouses, children, stepchildren, grandchildren and step grandchildren. What about leaving your assets to parents, grandparents, brothers and sisters, nieces and nephews, aunts and uncles, cousins and second cousins, etc.? The bottom line - whoever you wish to inherit from your Estate, make sure they are included within your Will to ensure your assets are not distributed in a manner that you do not want them to be. Alternatively, should you wish for your Estate to pass to beneficiaries other than family members and heirs (for example, friends or your chosen choice of charities) ensure that they are specifically mentioned within your Will to avoid them being left out and your Estate being administered under the rules of intestacy.