The Coronavirus : What happens when there is no Will?
The global pandemic, Covid-19, has led to an increased focus on Wills and estate planning as more people take time to consider what would happen to their estate if they passed away.
At MLP Law, we have already adopted measures to offer alternative arrangements for our Will writing service such as video-conferencing and telephone-based service to ensure you can create a Will or update an existing Will during this unprecedented time. However, it may not be possible in all circumstances for a new Will to be prepared, so we need to understand what happens to the estate where someone dies without making a Will.
In these circumstances, the estate is distributed in accordance with the intestacy rules (a flowchart of the intestacy rules can be found at the end of this blog). The rules determine who should inherit from the estate of the deceased based on the surviving family members. The rules do not take into account personal relationships and who is at need but simply look at the family connections and bloodline.
The rules will enforce the division of your estate in a fixed order depending on your surviving relatives. In the scenario where the deceased leaves a surviving spouse or civil partner and has children, the surviving partner will receive the statutory legacy of £270,000 plus all personal possessions of the deceased. Anything above the statutory legacy is divided in two, half of the remainder passes to the spouse absolutely and the other half is split equally between any surviving children at age 18.
Unmarried partners and step-children have no automatic right to benefit from a deceased’s estate and this can cause numerous issues following death, particularly given the increase in cohabitees and blended families. However, these rules can be overridden if all of the rightful beneficiaries under the intestacy rules agree to making a post-death variation.
What is a post death-variation?
A post-death variation is created by deed, commonly known as a ‘deed of variation’. This deed enables beneficiaries of an estate to alter a Will or the Intestacy rules, when all entitled beneficiaries agree to vary the distribution.
The deed allows them to redirect their entitlement to another person or organisation, without suffering tax consequences. The effect of the deed is that the terms of the document are regarded as being written back, as if the gift had been made by the deceased themselves.
To be effective for inheritance tax, the deed must be made within two years of the death and signed by all beneficiaries relinquishing or altering their benefit.
There are several reasons why variations are made and used as an effective form of estate planning, post-death. They allow for making distributions equal between beneficiaries, providing for someone who would otherwise have been left out (cohabitees), settling disputes and reducing the amount of inheritance tax payable.
Given the unprecedented circumstances we find ourselves within and the increase in concern regarding Wills and estate planning, this may be the only option available where a individual is unable to update their wishes prior to death.
How can MLP help me?
If you’re thinking about making or updating your will or require assistance with post-death variations, please get in touch with our Wills, Trust and Probate team who would be happy to have a chat with you to discuss the best way to do this, whilst following all the guidance and protocol on staying safe during the coronavirus.
The Intestacy Rules explained