Winning with a will—the importance of creating a valid will

If a person dies without making a will, the law deems that they have died intestate and their estate will be distributed according to the rules of intestacy, governed by the Administration of Estates Act 1925 (as amended). 

The intestacy rules establish a priority order of inheritance, starting with a spouse or civil partner, followed by children, parents, siblings, and then other blood relatives. If no blood relatives are found, the entire estate passes to the Crown.

It is important to note that enter a marriage or civil partnership automatically revokes an existing will and the estate will be distributed with under the intestacy rules.

Many married couples mistakenly believe that if one spouse dies without a will, the surviving spouse automatically inherits the entire estate. This is not the case if the deceased has surviving children. Under the rules of intestacy, the surviving spouse receives a statutory legacy of £322,000 and 50% of the remainder of the estate. The remaining 50% is divided equally among the children.

Assets passing to spouses are exempt from Inheritance Tax. Crucially, assets passing to children are not eligible for the spouse exemption under the Inheritance Tax Act 1984. The value of assets not passing to a spouse may fall within the nil-rate band (currently £325,000) which is charged to tax at 0%. On the death of the second spouse, the unused nil rate band can be transferred to the estate of the second spouse. This effectively doubles the tax-free allowance on the second death. However, the share of the estate which passes to the children on intestacy is immediately subject to Inheritance Tax at a rate of 40% on the amount exceeding the nil-rate band, (unless specific reliefs apply), potentially creating a significant tax burden.

In such circumstances the surviving spouse may find themselves in a difficult financial position and may be required to bring a claim under the Inheritance (Provision for Family and Dependants) Act 1975 (the Inheritance Act) against the estate. 

Such claims require the court to determine whether reasonable financial provision has been made and the court has wide powers to decide what order to make. Litigation under the Inheritance Act is inherently uncertain and can be a lengthy, emotional and costly process.

For unmarried couples, the consequences of dying without a will can be particularly devastating. It is a common misconception that the law recognises a ‘common law spouse’ after a certain period of cohabitation. However, no such legal status exists in England. Under the rules of intestacy, regardless of how long a couple have cohabited, the surviving partner has no automatic entitlement to the estate.

In this scenario, if the deceased has children, then they will inherit the entirety of the estate. If the deceased has no children, the intestacy rules determine which relatives will benefit. This will not include cohabiting partners or unadopted step-children.

The surviving partner may therefore receive nothing from the estate unless assets were jointly owned, for example joint bank accounts or property held as joint tenants. This could result in financial hardship, especially if they relied on the deceased for financial support or housing. In certain circumstances, the surviving partner may be forced to vacate the home they both lived in.

While the partner may bring a claim under the Inheritance Act, a non-spousal claim under the Inheritance Act is limited to the provision of maintenance, and providing evidence of financial dependency can be challenging and intrusive. 

Additionally, the process is adversarial and may lead to conflict with other beneficiaries, such as the deceased’s children or other relatives.

If a couple own property as joint tenants, the surviving partner automatically receives the deceased partner’s share on their death, under the rule of survivorship. 

If both partners die simultaneously, the law assumes the younger partner dies last, so the older partner’s share goes to the younger partner’s estate. Therefore, if a person wishes for their interest in a property to form part of their estate and to gift it to someone in their will, they must ensure that the property is owned as tenants in common. It is possible to sever a joint tenancy, to ensure that half the property passes under the terms of the will, not automatically by survivorship.

It is possible to adjust the distribution of assets post-death, through a Deed of Variation. This allows beneficiaries to alter how the estate is divided, provided that all those affected agree. 

However, complications arise if the beneficiaries include minors (aged under 18 years), as any variation would require court approval under the Variation of Trusts Act 1958. This process involves the appointment of a litigation friend for the minor and an application to the court, making the process more complex, expensive and time consuming.