Carter Jonas
Carter Jonas

Where there’s no will there’s a way to confusion

Inheritance Tax (IHT) planning is familiar to many in the agricultural and rural communities. The rules are complex and need specialist advice to be implemented proficiently.

Despite this, there are still many people who fail to make a will at all and when they die life begins to get complicated for those left behind.  

With effect from October 1, the rules regarding intestacy (people who die without making a will have died “intestate”) have changed but there are still certain classes of people who remain with no right to inherit while others have enhanced rights.

Those remaining without rights are live-in partners. Where there is no marriage or civil partnership, the surviving party in the relationship has no entitlement to inherit any of the deceased person’s property without specific legacies in a properly-made will. There is no such thing as a “common law” wife or husband and that by merely believing that you are a common law partner will become a route to allow you to inherit.

In these circumstances, the whole of the deceased’s estate will go to his or her children or nearest living relative, maybe a parent if they are still alive or a brother / sister / nephew / niece who possibly has not been in contact for years.

Spouses or civil partners of those who died intestate with no offspring before October 1 were entitled to the statutory legacy of £450,000 with the remainder of the estate then divided equally between the spouse and parents, or siblings if there are no surviving parents. From October 1, the whole estate passes to the spouse with no other relatives having any entitlement.

Similarly, if someone died before October 1 leaving a spouse and children then the spouse received a statutory legacy of £250,000 with the remainder of the estate divided in half. Of this portion, the surviving spouse would receive the income from one half with the capital passing after his or her death to the children, with the other half passing directly to the children at the age of 18. This has now changed – while the spouse still receives the statutory legacy, one half of the remainder goes outright to the spouse and the other half passes to the children at 18. The ongoing trust arrangement has ceased.

As before, personal effects pass to the surviving spouse but the definition for these has been changed to exclude items solely or mainly used for business purposes.

There are other changes with regard to step children, or the children of the other partner where there was no marriage, but life may already be complicated enough without going there!

The essential is to ensure that a will is made to record your wishes and possibly protect business and other assets from falling into the wrong hands.

“I’ve been meaning to make a will but never got round to it” doesn’t have any effect after the event!

Within farming, it’s important that proper plans are made with regards to Inheritance Tax, for which professional advice from your lawyer, accountant, and surveyor is vital. It is never too late, if you would like to discuss your situation in confidence please get in touch..

Tim Jones

Tim JonesFRICS

Partner - Head of Rural Division

Tim is head of the firm's Rural Division and of the Cambridge office, although he spends a considerable amount of time in London.  He has over 20 years experience in advising institutional and pri...

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