By Stewart Farr

Where there's a will, there's a way of avoiding financial confusion, costs and complications to loved ones after your death and of minimising the Government's take in inheritance tax. It's really a no-brainer; one can only conclude it is apathy or fear of tempting fate that, according to AXA Sun Life research, results in 55% of us not making a will.

Sensible financial planning demands an up-to-date, correctly written will. A Will Aid survey in November 2006 and figures from Brewin Dolphin in September 2007 (Sunday Telegraph, 09/09/2007)show that 70% of adults do not have such a will, either not written in the first place, or because family / domestic circumstances have changed (e.g. a divorce or more children) and an existing will has not been amended. A survey by Cancer Research UK revealed that 58% of divorced people and 85% of separated couples had not updated their wills.

When there's no will, you die intestate and there is a rigid set of rules determining who gets what of your inheritance. Most important, these rules do not recognise any form of cohabitation other than marriage or a civil partnership. A ‘common law' partnership, no matter how long it has endured, means nothing where inheritance is concerned unless you have written a will.

Marriage isn't as popular as it used to be. The Government Actuaries Department estimates there are now 2.2 million cohabitating couples in the UK, an increase on the 2 million recorded in 2003. One forecast says that by 2031 the number of people living in unmarried relationships could represent almost a third of all partnerships. Until the intestate rules are changed (and there's no guarantee they will be) it is essential for unmarried couples to write wills if they are to benefit from each other's financial assets on death.

The intestacy rules (England, Wales & Northern Ireland)

Die without making a will and without children and this s what happens: your spouse (provided you're a married couple or in a civil partnership) is entitled to the first £200,000 plus personal belongings and 50% of your estate's residue. The other half goes to various relatives in the following order: your parents, siblings, half brothers / sisters, grandparents and aunts / uncles.

If none can be found this residue goes to the Crown; it doesn't go to your unmarried partner.

If you have children the intestacy laws allow your spouse to receive personal effects, the first £125,000 and an income for life based on half of the residue of the estate. Your children inherit half the remaining capital immediately and the other half when your spouse dies.

Do be clear about your status if you are not married. Unless you are in a marriage or a civil partnership you do not have any rights to your partner's estate.

The intestacy rules (Scotland)

Die without leaving a Will in Scotland and your spouse or civil partner will have 'prior rights' to the house. This means that they have a right to the value of the house but only up to the value of £300,000. If the property is worth more than this, it may need to be sold.You have some automatic rights if:

• you are married to or in a civil partnership with the person who has died
• the person who has died was one of your parents

You don't have any automatic rights if you were living ('cohabiting') with your partner. As a 'cohabitant' under Scottish family law you may apply to the courts to make an order giving you a share of your partner's estate. You have no automatic legal right to inherit the house. The rules get very complicated if your cohabitee was married to someone else and not yet divorced.

If the person who died intestate, is not married, in a civil partnership or living with their partner and has no children, then you will not inherit the house even if you were their closest friend. The house will probably be sold and the money will go to the Holyrood government.

Do it right

Everyone with assets, family and friends should make a will. If you have children, for instance, a will allows you to nominate guardians to care for them. It is important, though, that your will is clear and concise and updated when necessary. A botched or vague will is open to interpretation, can delay the probate process and could be challenged by disaffected parties.

It makes sense to use a solicitor or a professional will writer rather than rely on a DIY kit. A small mistake while completing online will instructions or a high street stationer's pack could make your will inappropriate or invalid. Seek professional advice (the average cost is around £300) and go armed with a list of all your assets and debts, including values of property, investments, savings, pensions and insurance policies.

Provide details of individual bequests and legacies to charities you wish to make. Make sure your tax affairs are up to date and keep records of any financial gifts made (gifts within seven years of death form part of your estate for inheritance tax (IHT) purposes), including exact figures and dates.

Don't make life difficult for the executor of your will (whom you have chosen carefully, whether an unpaid friend or family member, or a paid professional.). Assessing an estate can be a complex process and, before cash and assets are distributed following grant of probate, an IHT return must be filed. Unless done accurately this procedure is liable to financial penalties.

There could be complications where foreign assets are concerned. If you own property overseas, you also need advice on inheritance law in the relevant country. In Britain there is ‘freedom of testamentary' (i.e. within reason you can leave your assets and money to whomever you like); in other countries this doesn't necessarily apply.

A contested will

The Inheritance Act of 1975 allows for a will to be contested if you fail to make reasonable provision for spouses and dependent children. A recent high profile example was the successful challenge by the son of Branislav Kostic whose will had left an £8 million fortune to the Conservative Party. The judge agreed the father was not of sound mind and ruled the estate should be settled according to an earlier will which left everything to the son.

The Act, according to the Association of Contentious Trust and Probate Specialists, "provides for a large number of potential claimants to contest a deceased's will," including civil partners, former spouses and possibly cohabitees of more than two years' duration. The judge decides what is reasonable after looking at the merits of each case.

It is also possible to apply for a court to set aside a will completely, most obviously when it has not been properly executed in the first place. To be valid a will has to be drawn up correctly and signed by the testator in the presence of two witnesses who must also sign the document. The person who drafts the will should be independent of the beneficiaries.

Even if the deceased was of sound mind a will can also be challenged if it is thought that ‘undue influence' was brought to bear on the leaving of certain assets to particular beneficiaries. However, this can be difficult to prove and is rarely a successful way of contesting a will.

The information in this article is intended only for information purposes and not as advice on your own situation because it may not be appropriate for you. If you are unsure whether something is suitable for you then you should seek advice from a relevant professional.

 

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