Dying without a will

If you die without making a will you are said to have died 'intestate'. This means that the law - rather than you - dictates who inherits your estate. This usually means your nearest blood relatives would become the beneficiaries and our flow chart explains how this works. But this can lead to problems, such as:

• If you are unmarried (or not in a civil partnership), you cannot pass your estate to your partner (See the common law myth below right). In the worst case scenario this could even mean they are left homeless (see Tenants in common). Your partner could 'contest' the will, but this would take a considerable amount of time and money for legal fees and could cause a lot of stress and arguments.
• You cannot decide how much money is left to each of your family members.
• You cannot specify who will become the guardian of your children.
• You cannot leave something to charity.
• You cannot give a memento, such as a piece of jewellery, to a treasured friend

Some other facts about inheritance

• In England and Wales, the balance of any joint accounts automatically passes to the surviving account holder and will not be included in your estate (and so will not pass to the beneficiaries of your will).
• If your estate is worth more than £285,000 (for 2006 - 07), your beneficiaries will have to pay 40% inheritance tax (IHT) on the value above that level. It is possible to carry out IHT planning (a service Skipton offers) as part of making a will to help avoid this, but if you don't, your loved ones would have to pay the 40% tax before they've received a penny in inheritance - money which it may be difficult for them to find.
• It is a myth that if you are married and your husband/wife/civil partner dies without a will, their entire estate will automatically pass to you. In fact, depending on the size of the estate and if you have children, you may only inherit personal items and the first £125,000 outright.

Making a will

A will is essential if you want to make sure your estate passes to exactly whom you want and making one can be cheaper and easier than most people think:

• You can get a will writing pack fairly cheaply from most stationers and fill it in yourself.
• You can go to a solicitor and tell them your wishes so they can draw one up for you.
• You can fill in a form yourself but then have a solicitor turn it into a legal document (a service Skipton offers).

Inheritance and pensions

The rules for inheriting your partner's pension differ for people that are married (or have civil partners) and unmarried; the latter cannot automatically claim a widow/widower's pension. It's therefore important that you understand the exact rules of any pension schemes and make any necessary arrangements to put you in the best position.

If you have a personal pension or an occupational scheme through the company you work for, these are usually set up so the scheme decides who would get a lump sum or any pension payments should you die. That way, payments can go directly to the recipient without becoming part of your estate and therefore being taxed. However, if you are not married to your partner or in a civil partnership, check that the pension scheme will pay out to them.

To give you more say in who would benefit, you can also fill out a form to nominate who you would like any money to go to.

With a state pension, a married person or civil partner can claim bereavement benefits based on their spouse's National Insurance payments during their lifetime. However, if you are unmarried, you do not have the same rights.

       The information contained on this website is designed to make you think about your personal situation and does not constitute legal advice

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       © Skipton Building Society 2006 | www.skipton.co.uk.