| WHAT HAPPENS IF I DON’T HAVE A WILL?
The first thing to know is that you lose control. Upon dying you enter intestacy, a legal state where the Courts take control of your estate and distribute it via a strict pre-determined process. You have no say and this can result in a costly, time consuming and unfavourable result for those you leave behind.
EXAMPLE:
If a typical successful landlord, married with 2 children aged 15 and 19 and a estate including home and portfolio of £4m were to die without a will the following would happen:
- The surviving spouse receives the first £250,000 of the estate tax free
- The spouse also receive 50% of the remainder – £1.875m tax free, while the children split the other 50%
- The elder child receives £937,500 in value immediately, albeit subject to inheritance tax
- The younger child receives £937,500 on their 18th birthday, subject to inheritance tax
This triggers IHT of £620,000 immediately, which has to be paid before the administration process can start.
It is also likely that lenders will require properties to be re-mortgaged, although they may give a period of grace. However, the portfolio is now owned almost half by teenagers, one of whom is under 18, which may make that process much more difficult.
This also doesn’t take into account the fact that if both parents were to die, the estate would pass immediately to the children (in statutory trust for the younger until the age of 18 when they are legally entitled). |
