Where do your assets go if you pass away before making a Will?
If you pass away without leaving a valid will your estate will pass in accordance with the law, known as the intestacy rules. The laws surrounding intestate estates are designed to pass your estate to members of your family in the fairest way possible. However, the rules are strict and inflexible, failing to suit personal circumstances and wishes. Issues commonly arise where there are dynamic family structures and tensions in the family. Furthermore, the rules don’t allow for further protection of assets for minors, they will inherit at 18.
The intestacy rules are not particularly tax efficient as they do not allow you to make use of the tax-free allowances provided by the government. Particularly for large estates, there could be considerable tax to pay.
The simple flowchart below shows how your estate will pass in the event that you have no valid will at the date of death.
Definitions
Residue: (sometimes referred to the succession estate) is the remainder off the assets following the removal of any joint property, gifts, legacies and trusts.
Statutory Trusts: the personal representatives hold the child’s share until the child reaches the age of 18 or marries under that age. The Personal Representatives can use the share for the child’s maintenance at their discretion.
It is possible, even when you have a Will in place that a partial intestacy can occur. This happens when a person does not dispose of their entire estate in their Will. The part which has not been disposed of maybe considered a partial intestacy and that part will pass in accordance with the above rules.
If you are interested in making a Will or wish to update your current Will please don’t hesitate to contact our Private Client department or Anna Lochhead direct on 0330 0947 390 or at anna@jamiesonalexander.co.uk