Women's Finance

[ March 1, 2000 ]

Will You -- Won't You?

By Jane Mack (TMFJane)

As this column has touched on Births and Marriages in recent weeks, it seems logical to tackle the really big one that most people like to ignore -- Death!

Unfortunately it comes to us all, but I wonder how many of you have thought about the mess of pottage you might leave behind for your loved ones if you don't make a Will. There are quite an extraordinary number of people who really don't think about this and it isn't something that costs a lot of money -- yet the problems that dying intestate can cause are vast.

Apart from anything else, and if you're that way inclined, it is the one time in your life when you can truly exact sweet revenge on the people you can't stand without any personal consequences! I've often wondered what Shakespeare was thinking when he gave unto his wife his 'second-best bed', and what her reaction was. And then there's the American who left his wife nothing but her lover "and the knowledge I wasn't the fool she thought I was"! Others like to try and exert control from beyond the grave -- witness one Bing Crosby who tied up his estate in such a way that his surviving wife and children have virtually no control and have to rely on hand-outs from the Trustees.

So what happens if you don't make a Will?

Essentially, if you die without making a Will, the State makes one for you. So it decides who will get what. And if you don't have any dependants or relatives to leave your money to at all then it's the State who gets all the dosh! I'm sure if you had your druthers you'd want it to go to the local cat's home at least.

Many people think, if they're married, that everything will automatically go to their spouse when they die, and this simply isn't so. It's true that couples often hold their main asset -- their home -- in joint names, so when one dies the other automatically inherits the half share. But if this isn't the case then it can lead to difficulties for your partner when you die.

If you die intestate, your spouse will only be entitled to a few personal things, the first £125,000 and a lifetime's interest in half of the remainder. The children get the rest when they reach 18 so, if most of the estate is tied up in the family home, the children could force the spouse out of it in order to realise their own inheritance, though spouses do now have some rights of occupation. And if you think your children wouldn't do something like that then consider what a contributor to The Motley Fool boards has recently encountered. He's been trying to help a friend who has just been widowed and has been left with nothing but debts. The only thing of any value is the family car -- which the children have decided they want (nice kids, eh?).

If there are no children, then the spouse gets the first £200,000 plus half the remainder and the rest goes to either the surviving parents or siblings or other relatives.

If you die unmarried, but with a partner and children, then the children will get everything and your partner may get nothing at all.

One thing to get clear is the thorny issue of Inheritance Tax. At present, you are allowed to leave £234,000 before your estate is subject to Inheritance Tax, which is at a flat rate of 40% on the remainder. The exemption may seem like a great deal but with house prices as they are in this day and age the exemption limit can easily be exceeded.

You can get around the problem by giving away bits of your property before you die. As long as you live for at least seven years after making the gift then it doesn't form part of the estate at all and even if you die rather more quickly than you'd hoped, the liability diminishes on a sliding scale. Leaving everything to your spouse is also an option, as there is no Inheritance Tax payable between spouses. And if you're not married then you can always do what 90-year-old Ian Patey did: in December he married the 41-year-old daughter of his former car mechanic just because he didn't want the State to get any of his £500,000 estate. His new wife merely has to nurse him through his remaining years and drive him around a bit -- and then she gets the lot!

Although it is possible to draw up your own Will it is advisable to get one drawn up by a professional. Simple Wills where partners just want to leave everything to each other or, in the event of their deaths, to any children, cost only between £50 -- £100 and, if you and you partner want Wills that are reciprocal, then you only need to bother with having one drawn up. Just type it out again substituting your partner's name for yours. If this seems too pricey then you can buy them online these days from sites like Lawrights and Freeserve for only £10 or £20, although, since everyone's circumstances are different, a professional's advice is advisable.

The bottom line is Never Ever Die Without A Will -- and make sure you review it frequently!

Related Links
• Women's Finance Discussion Board
• http://www.lawrights.co.uk/
• http://www.desktoplawyer.freeserve.net/law/
• http://www.willwrite.co.uk/faq.htm

Women's Finance is published every Wednesday.