As of 26 July 2023, the Government is increasing the ‘statutory legacy’ sum, underlining once again the importance of making a will. The upcoming changes highlight why creating a will has become even more critical for safeguarding your loved ones and ensuring your wishes are followed.
The Impact of Statutory Legacy
If an individual passes away without a will, the new statutory legacy of £322,000, up from £270,000, will automatically be allocated to a spouse or civil partner, along with 50% of the remaining estate. The remaining 50% will go to any children and if no children, it will go to the surviving spouse. Importantly however, this benefit is not extended to cohabiting couples, highlighting the potential vulnerability of unmarried partners, who often think of themselves as common law partners, which has no legal status and who could therefore end up with nothing.
For those with an estate of less than £322,000, the surviving spouse or civil partner will inherit it all. For estates over the new threshold, problems could be encountered.
How could this affect families?
A split in inheritance could leave issues for those left behind. One big concern could involve a surviving spouse or civil partner having to sell a property to release sums due to their children, or including children on the deeds, which could potentially limit what the surviving partner can do with the property down the line.
Why is having a will so important?
Without a will, the distribution of an estate may be subject to arbitrary rules and lead to unintended consequences. The strict rules of intestacy may not account for step-children or other dependents or take into account specific provision or other wishes.
Family structures have changed enormously with people now part of blended families, involved in second marriages with stepchildren or cohabiting. These situations can face unique challenges when the rules of intestacy are applied. Disputes and claims from dependents seeking a share of an estate can become commonplace and can lead to further and unnecessary stress, friction and cost.
How can disputes be mitigated
Communication is key. Families should ideally have advance open discussions to avoid confusion and financial misunderstandings after their death. Clear communication can prevent disputes and ensure that dependents receive the support they were relying on.
Marriage or a civil partnership might not be right for everyone, but making a will is. It is an essential step towards protecting your loved ones and preserving your legacy. By preparing a will, you can make informed decisions, prevent disputes, and ensure your estate is distributed according to your wishes.
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