Increase of the Statutory Legacy – what does this mean and do I need a Will?

At present, the Intestacy Rules (which is the framework which dictates who receives an estate where someone passes away without a Will), provide that if a married couple have children, then the spouse only receives the first £270,000 of assets, with the rest passing equally between children. Recent changes to the law provide that from the 26^th of July, this figure will increase to £322,000 that passes to the spouse, with any surplus between children. This change still means that a spouse is not guaranteed to receive the whole estate of their husband/wife/civil partner. Therefore, putting in place a Will is essential to enable you to choose you to receive your estate.

We always recommend that married couples seek formal advice as to the succession of their estate, which is particularly important where families have children. A Will enables you not only to ensure that your spouse’s personal wealth is secure but also enables you to plan for inheritance tax and care home fees.

At present, inheritance tax is payable on all assets over £325,000 (the ‘nil rate band’) at the rate of 40%. An individual may also have an additional allowance of up to £175,000 currently, called the ‘residence nil rate band’ if their residence passes to direct descendants. Any assets passing to a spouse, civil partner or charity are exempt from inheritance tax so, if the first spouse does not use up their whole nil rate band, on the second spouse’s death the first spouse’s unused nil rate band can be transferred. Similarly, the second spouse can transfer the first spouse’s unused residence nil rate band meaning that a married couple may have up to one million pounds free of tax. Due to the complexity of ensuring that the entire million is available on the second spouse’s death, it is important to seek legal advice in tax planning. This advice must go hand in hand with ensuring that your Will is currently drafted to guarantee the maximum of all nil rate bands.

Further, it is possible to appoint guardians in your Will, and accurately reflect whether you wish for any specific items to be passed to chosen individuals.

Contact our experienced Wills and Probate team on 0800 015 0340 to discuss any queries you may have.