Have you thought about your own mortality? According to a new study, we start thinking about death - and our own, in particular - from the age of 26. However, too few of us take the necessary steps to ensure that when the inevitable does happen, our loved ones get what’s rightfully theirs.
As many as 42% of people surveyed as part of the Co-op’s largest-ever survey into death, dying and bereavement, haven’t yet put any later life plans in place or been involved in sorting out arrangements following a death. If they die without a Will, their loved ones could be left in financial limbo at a time when they already have more than enough to deal with.
In order to ensure that your loved ones get what’s yours when you die, you need to have a Will in place that clearly states your wishes. Otherwise many people, who you might want to leave something to, could be left out.
That’s because if you die intestate. i.e. without a Will, you have no say over what happens. Instead intestacy laws determine how your property is distributed upon your death and any bank accounts, securities, property and any other assets you own at the time of death, are effectively put in limbo, until the court has decided what should be done with them.
Only married or civil partners and some other close relatives can inherit under the rules of intestacy. So, fail to leave clear instructions in a Will and relations by marriage, close friends and carers and even unmarried partners – often misleadingly referred to as common-law spouses - could be left with nothing, as they have no right to inherit under intestacy laws.
Dividing the assets
In the case of intestacy, if you have surviving children, grandchildren or great grandchildren and your estate is valued at more than £250,000, your spouse/civil partner will inherit:
- all your personal property and belongings, plus
- the first £250,000 of your estate, and
- half of your remaining estate
Even your home can be in dispute if you die without a Will and even being married does not give you any protection here. It all comes down to how you hold the property. If you owned your home as beneficial joint tenants, when one of you dies, the surviving partner will automatically inherit the other partner's share of the property. However, if you own it as tenants in common, the surviving partner does not automatically inherit the other person's share. So be careful when choosing how you hold the property.
Your finances are also affected. Couples may also have joint bank or building society accounts. If one dies, the other partner will automatically inherit the whole of the money. If, say, you have children from another relationship, they could miss out on money that you would want to go to them.
That’s because children of the intestate person will inherit if there is no surviving married or civil partner. If there is a surviving partner, they will inherit only if the estate is worth more than a certain amount.
If there is a surviving partner, a child only inherits from the estate if the estate is valued at over £250,000. If there are two or more children, the children will inherit in equal shares. And it’s important to note that all the children of the parent who has died intestate inherit equally from the estate; this also applies where a parent has children from different relationships.
Even if you are happy for your assets to be divided equally, intestacy is still not necessarily ideal as your children will not receive their inheritance immediately. Intestacy rules mean that they get it when they either reach the age of 18, or marry or form a civil partnership before then. Until then, trustees manage the inheritance on their behalf.
Legally, it is possible to rearrange the way property is shared out when someone dies without leaving a Will, provided this is done within two years of the death. This is called making a deed of family arrangement or variation. All the people who would inherit under the rules of intestacy must agree. And as many high profile intestacy cases have shown, that’s not always a straight-forward matter. A lot of it comes down to how ‘friendly’ your friends and family are with one another. Nor is it one that comes without costs involved.
It’s far better to set out your wishes in advance of your death, so loved ones and others who you wish to leave something to, aren’t left to squabble over their entitlement to what was once yours, when you die.
The value of investments and the income from them can go down as well as up and investors may not get back the amount invested. This information does not constitute investment advice and should not be used as the basis for any investment decision nor should it be treated as a recommendation for any investment. Fidelity Personal Investing does not give personal recommendations. If you are unsure about the suitability of an investment, you should speak to an authorised financial adviser.
Live the life you want
When it comes to the big things in life, preparation matters – and we’re not just talking savings. We’ve pulled together lots of ideas to help you get ready.