Our new Private Wealth “Myth Busters” series will set you straight on common misconceptions and outdated advice about how to best protect your assets and plan for your family’s long-term security.

Colin Glass, a partner in our Private Wealth Department starts with explaining the truth about who will inherit your estate if you die without making a will (intestate).  There are different rules depending on if you are married, in a civil partnership or are living with your partner or neither married or in a civil partnership.

 “I don’t need a will, my partner will inherit everything”

Sadly, this statement may be untrue and can lead to severe financial or other hardship for your spouse or partner at a very difficult time. If you and your partner own a property jointly, whether your partner inherits is dependent upon how you and you partner own the property.

If it is owned as beneficial joint tenants, then the property will pass to your partner by survivorship and not by will. If it is owned as tenants in common (whether in equal shares or not) your partner will only be guaranteed to inherit the property if you have specifically stated so in your will.

If you die intestate (without a will) even if it is your first marriage, if the property is owned as tenants in common, your spouse may not inherit the estate or the property. Who will inherits your estate is dependent upon the value of your estate.

What happens if you remarry?

The act of marriage itself revokes any former will that you may have executed so no matter how long you have been in a new relationship or marriage, you will pass away “intestate”. Under the intestacy rules, whether or not your partner inherits the property is dependent upon your circumstances and the value of your estate. Over certain amounts, your estate is split between your spouse and any children including children of a former marriage.

Both above examples can not only have disastrous tax consequences for the whole family but can also lead to your spouse or partner having to sell the property to pay your children’s inheritance.

The unintended consequences of dying intestate

During his professional career, Colin recalls several cases where a spouse or partner has been forced to sell his or her property to satisfy the statutory legacy. This has occurred not only in cases of children of a previous marriage or relationship but also in cases of children of a first marriage.

The sad case of Mr and Mrs X

Mr X passed away unexpectedly, leaving a widow and three children, two of whom  had very little contact with their parents. His widow had begged her husband for several years to see a lawyer about his will, but he steadfastly refused do so, on the grounds that he was planning to do so when he was older.

When the children found out about their father’s demise they reappeared on the scene, demanding that they receive their statutory legacy, even though this meant that inheritance tax was payable on the estate. Unfortunately for his widow, there were insufficient cash assets in the estate to settle both the inheritance tax and the statutory legacy.

Despite the third sibling pleading with her brother and sister to “see reason” and help their mother stay in the home on the basis that their mother had promised to leave it to them equally, they refused to do so. The result was that the estate had to settle the inheritance tax, and the widow had to sell the property to pay off her children.

This tragic chain of events could have been easily prevented. His widow could have remained in her home and inheritance tax would noy have been payable upon his death if a simple will had been drawn up.

Money does strange things to people and even in cases where the children may not have been estranged, when they find out they are entitled to the statutory legacy, common sense sometimes flies out the window and sensible people lose sight of reality.

If you wish to discuss any of the above, please call Child and Child on 020 7235 8000 and ask to speak to a member of the Private Wealth Team.