As our panellists Hugh James Solicitors have already noted, from Thursday (6 February), the statutory legacy amount your spouse or civil partner is entitled to inherit if you pass away without leaving a will is set to increase from £250,000 to £270,000. They will also still be entitled to 50% of the estate above this sum, with the remaining 50% being split equally among your children.
If you have no children, your spouse or civil partner will inherit your entire estate.
This is because, if you die without leaving a will, your estate will be dealt with under the rules of intestacy. On this point, it is important to remember that, if you have a partner you are not married to or in a civil partnership with, they will not be entitled to inherit anything at all under the rules of intestacy.
In a situation where you have no children but do have a partner you are not married to or in a civil partnership with, the rules of intestacy state that the estate would go to your legally-recognised next of kin. Normally, this would be your parents if they are still alive. Alternatively, if you have any siblings, they would be next in line to inherit your estate. Otherwise, your estate would pass to increasingly more distant relatives, such as your cousins, nieces or nephews.
On a related note, it is also worth noting that a proposal is currently going through the House of Lords that would change the rules governing inheritance tax for cohabiting siblings. Under the proposals, cohabiting siblings in all parts of Great Britain would be able to leave their estates to each other without incurring any inheritance tax regardless of the size of the estate. To qualify, the siblings would have needed to have lived together for at least seven years and the surviving sibling would have to be over the age of 30.
We highlight this as, while it is a long-overdue step in the right direction that acknowledges that many people are now unable to buy a home on their own, and so, are having to combine resources with someone else, such as a sibling, in order to be able to afford it, it arguably doesn’t go far enough.
In particular, these proposals would not change the inheritance tax rules governing cohabiting couples. Therefore, even if you did leave a will that left your estate to your cohabiting partner, they would still pay inheritance tax at a rate of 40% on the value of the estate above £325,000. We now live in a society where now choosing to live together without getting married or entering into a civil partnership. We would argue that the law is not keeping up with and reflecting society. It should do.
Therefore, it is important to ensure you draw up a will to make sure that your estate is divided how you would like it to be following your death. This is particularly important if you and your partner live together and the home is in your name, as your partner may then have no legal right to continue living there.
This would still be the case, even if your partner had contributed to the paying of the bills and the mortgage on the property, as the law would only be concerned with the name on the deeds of the property. In addition, the rules on statutory legacy would also mean that your partner would have no right to claim any items of sentimental value either.
To avoid what would likely be a lengthy legal wrangle where your partner would need to provide extensive proof that they had contributed towards the paying the mortgage and the upkeep of the property in order to simply recoup the amount they put into the estate’s value, it is important then to draw up a will that details exactly who you want to have the different parts that make up your estate. You can even specify that certain people can certain individual possessions. Otherwise, your surviving family members and your spouse or civil partner may end up in a legal dispute over who gets what.
If your partner has died intestate or you feel that you have grounds to dispute how an estate has been divided, do not hesitate to contact The Inheritance Experts by filling in the contact form on our website or by calling 0161 413 8763.