What kind of legacy do you want to leave? More than half of all adults have not made a will, yet it means they cannot choose their heirs, writes Maria Scott.

The Daily Telegraph  -   01/09/2007

If you die without leaving a will you have died "intestate''. The law dictates who your money will be passed to and this may not match your wishes. The only exception is where assets are owned jointly. This is the case with many homes owned by married couples - the legal definition is joint tenants rather than tenants in common - and also joint bank and savings accounts.

According to research by the Joseph Rowntree Foundation, more than half the adult population has not made a will. Among people aged 80 and over, the figure rises to 84pc. More homeowners than non-owners have wills but, even among those with property, one in four has not yet made a will. Husbands and wives may assume that if one of them dies their estate passes automatically to the other. They would be wrong.

In England and Wales, if the estate is worth more than £125,000 it will be shared between the spouse and children, if there are any, or the spouse and other relatives if there are no children. The rules are different in Scotland and Northern Ireland, but here also, where there are children, the estate must be shared between them and the spouse. Same-sex couples who have registered their relationships as civil partnerships have rights to inherit from their partners if they die intestate.

In June, 2005, the Government began a review of the rules governing intestacy in England and Wales. It was estimated that there were up to 9,000 cases each year where a surviving spouse did not receive all of the husband's or wife's estate, and in 4,000 of these cases the family home may have had to be sold to release money to pass on to children.

Dying intestate could also leave your family with an unexpected inheritance tax bill. In the past, the distribution of an estate under the intestacy laws probably landed relatively few families with unexpected tax bills. But now that the rising value of so many homes has catapulted ordinary families into the inheritance tax bracket, it is becoming more important for families to be aware of the consequences of intestacy. The average house price is far higher than the £125,000 that goes automatically to a spouse under the intestacy laws in England and Wales. Just over a decade ago, when the current intestacy limits were set, 90pc of estates were worth less than £125,000 and 98pc were worth less than £200,000, but the proportions now are less than 60pc and 80pc respectively.

If a couple own assets worth more than £125,000 (in England and Wales) and they have children, the spouse will receive the first £125,000 and a life interest in half of the remainder, which means they can receive income from the asset but not the asset itself; that is left in trust for children. The surviving spouse also gets the dead husband's or wife's personal effects but the rest of the estate goes to the children.

© 2007 Associated Newspapers. All rights reserved
Date: 01/09/2007
Publication: The Daily Telegraph