By Rachel Scott
The National Consumer Council has announced the startling results of its research.
This reveals that over 27 million people in England and Wales do not have a will and, more worryingly, that those who need one the most are the least likely to have one.
If you do not leave a valid will, there are statutory rules under the law of England and Wales (called the "intestacy rules") that determine who gets what.
The intestacy rules are viewed by many in the legal profession as outdated and few are aware of their capricious effect (Scots law differs from the English rules, although it is similarly capricious).
Many married couples or civil partners assume that if one of them dies, all their assets will automatically pass to the surviving spouse or partner.
However, that is not always the case.
Automatic inheritance will occur only if the couple hold their assets in joint names.
With the rise in house prices, often a couple's largest asset is the family home.
Unless it is owned by the couple jointly as "joint tenants" (a legal term which has no relevance to "tenancy" in the usual sense), the intestacy rules will apply, in the absence of a complete and valid will.
Unmarried couples who die without valid wills are even more at risk, as the surviving partner may be cut out entirely under the intestacy rules, as highlighted by the recent Law Commission Report on cohabitation (published on 31 July 2007).
If a husband/wife/civil partner dies leaving a surviving spouse and children, the intestacy rules state that the surviving spouse is entitled to:
- all the deceased spouse's personal chattels (paintings, cars, jewellery etc)
- a cash legacy of £125,000
- a "life interest" (i.e. the right to income only) from half of the residue of the estate - which might include the family home.
Children and other relatives
The children would receive half the residue outright at the age of 18 and the other half after the end of the spouse's life interest (i.e. on his or her death).
If there are no children, the intestacy rules state that the surviving spouse/civil partner is entitled (in addition to the personal chattels) to a cash legacy of £200,000 and half the residue outright.
The deceased spouse's parents (or if none, brothers and sisters) are entitled to the other half of the residue outright.
In my experience of drafting wills, this is never what a married couple wants and unless the other beneficiaries are over the age of 18 and agree to vary the intestacy rules, there is little that can be done to alter them.
The only recourse for the surviving spouse/civil partner is to make a court application for financial provision under the Inheritance (Provision for Family and Dependants Act) 1975.
However, there is no guarantee of success and the court will look primarily at financial needs - the wishes of the deceased (no matter how well evidenced) are not given much weight.
Even worse, an unmarried partner would receive nothing under the intestacy rules and unless the beneficiaries of the estate agree to vary these rules, a court application is the only recourse.
This often results in a heavy financial and emotional toll on the family.
In addition to ensuring that your wishes are fulfilled, a properly drafted will can also contain useful provisions for mitigating inheritance tax, particularly for married couples and civil partners.
This has become even more important following the changes introduced by the government in the Finance Act 2006.
These changes to inheritance tax have affected not only the rich who leave assets in trust for their families during their lifetime, but also those who wish to leave assets in trust for young children under their wills.
The moral of the story is to make sure you make a valid will, prepared by a suitably qualified lawyer, and keep it under regular review as your circumstances change.
Do it yourself?
"DIY" wills are to be avoided, as they can (through ambiguous language or poor drafting) cause more problems than they solve.
It is particularly important to review your will in the following circumstances:
- if you get married or enter into a civil partnership, as this will revokes an earlier will - unless it is expressly made in contemplation of your marriage/partnership and certain requirements are met
- if you separate, as this would not automatically revoke your will
- on divorce
- when you have children
- when your financial circumstances change
- periodically, to make sure your will keeps pace with any changes in the law.
It is also important to choose sensible executors - the people you wish to administer your estate and to give effect to your wishes.
Do let them know where you keep your will. Once you have gone to the trouble of making a careful, valid will, it would be a pity for it to be forgotten or lost!
The opinions expressed are those of the author and are not held by the BBC unless specifically stated. The material is for general information only and does not constitute investment, tax, legal or other form of advice. You should not rely on this information to make (or refrain from making) any decisions. Always obtain independent, professional advice for your own particular situation.