Having a Will makes the administration of your estate run more smoothly from the beginning. When you don’t have a Will your estate is distributed according to the law, the Laws of Intestacy. When you don’t have a Will you have not appointed any executors, so administrators have to be appointed to the task. They may not necessarily be the people you wanted to act for you. The people who could act as your administrators are determined by rules and there is a distinct pecking order. For example, if you were married it would be your surviving wife or husband who has first choice. If you were unmarried with no children, it would be your surviving mother or father. You may note already these rules, although set out in 1987, take no account of unmarried couples or couples not in a civil partnership.
Then we come to the way your estate is distributed under the Laws of Intestacy. Situations may occur that are simply not what you would want.
Let’s look at a married couple where neither person had a Will :
Sarah’s husband Ben sadly died overnight from a brain aneurism. They had two young children.
Their home was owned as joint tenants with a large mortgage of £480,000.
Ben had savings of £100,000 & had taken out life insurance of £500,000 to cover the mortgage, but it was not written in trust, and therefore paid out to his Estate not Sarah.
Sarah inherited the home automatically as the joint owner, but then discovered that under the Laws of Intestacy she is only entitled to the first £270,000 and half of Ben’s remaining estate, £165,000, totalling £435,000.
The remaining half of the Estate £165,000 had to be held in trust for the children until 18 and the mortgage could not be fully cleared as intended.
If Ben had made a Will in favour of Sarah and/or put his life cover in trust, this would not have happened.
Let’s look at an unmarried couple:
Tom’s partner Sophie died from cancer. They have a 20 month old daughter and no Will in place.
Their home was worth £900,000 owned as joint tenants with a mortgage of £180,000.
Sophie had cash savings of £50,000 but had not taken out life insurance.
Tom inherits the home automatically as the joint owner, but Sophie’s half (£360,000 net of mortgage) is subject to Inheritance Tax as they were unmarried.
Sophie's savings of £50,000 must be held in trust for their daughter to inherit at 18!
Tom now has an Inheritance Tax bill of £34,000, no cash, no insurance and a mortgage to pay as well as childcare costs for their daughter.
If Sophie had made a Will in favour of Tom, this would not have happened, and Sophie's savings could have been used to pay the Inheritance Tax.