Once in every lifetime: why a valid will matters
Have you ever considered what would happen if you died without a will? According to a well-known tabloid newspaper, Rik Mayall, the famous comedian and actor who passed away in 2014, died without a valid will. “Family face huge tax bill” the headlines screamed. But why?
You might assume that in such circumstances, all of your wealth would go to your spouse or civil partner and there would be no Inheritance Tax. Unfortunately that may not be the case.
When someone dies without a valid will, their estate is distributed according to the laws of intestacy, and these are not always what you would expect. For instance, if a person has a spouse and two children, all the chattels and belongings of the deceased, the first £250,000, and half of the remaining estate would go to the surviving spouse. The balance of the monies would go to the children.
This could lead to a significant Inheritance Tax liability, as only a maximum of the first £325,000 and the residential nil rate band of any bequest to children would be exempt. Children cannot be party to a variation.
It is not just those who died before their time, such as Michael Jackson and Amy Winehouse, who can be caught out. Howard Hughes (70) and Pablo Picasso (91) both died intestate. The moral of the story is to ensure that you have an up-to-date will in place, so that your wealth can go to whoever you wish as tax efficiently as possible.
BKL can help you with this. Not only can our tax specialists advise on tax planning, write your will, and act as an executor. Thanks to a recent change in the law, we can also help extract the probate.
For more information, please get in touch with your usual contact or use our enquiry form.
We also recommend our previous article on the importance of a valid will.