The festive period is primarily a time to spend with family and loved ones, and most people don’t want to be accused of being a Grinch and putting a dampener on the festivities by discussing death. However, with this Christmas being the first time in a long time that many families will be together post-pandemic, it may ‘present’ the perfect opportunity to discuss your affairs and wishes with your nearest and dearest.
Many people assume that on death their estate will pass to their intended beneficiaries such as their spouse, civil partner, cohabitant, or their children. However, this may not always be the case. This misconception leads many to the conclusion that they do not need to go to the expense of having a professionally prepared Will to document their wishes. A Will, however, is the only way to control inheritance to your estate. Having no Will in place means an estate is dealt with by the rules contained in legislation which is almost 60 years old. It is these rules of intestacy which will determine who will manage and benefit from your estate.
Where a person dies without a Will in Scotland, the law makes certain provision for a surviving spouse or civil partner, but by no means does this guarantee that the survivor will inherit your whole estate. Children (and surviving spouses and civil partners) also have a protection against disinheritance in the form of Legal Rights.
In larger estates, or those which are cash, rather than property heavy, it is likely that a share of your estate will pass to your children, or in the absence of children, to any grandchildren, your parents, siblings, and even nieces or nephews, in that order, all who have a greater entitlement to this portion of your estate, ahead of a spouse or civil partner.
Not only can this cause practical difficulties if young, or vulnerable beneficiaries, are entitled to a share of your estate, with the default position being that young beneficiaries would be absolutely entitled to their inheritance at the age of 16, it can also result in the loss of important Inheritance Tax exemptions with unintended and costly consequences for your estate. A Will, however, could provide that any shares falling to young, or vulnerable, beneficiaries be held in trust and managed on their behalf, whilst ensuring your estate was not exposed to Inheritance Tax unnecessarily, providing certainty and peace of mind for you, and your loved ones.
This cautionary tale is even more stark where unmarried couples are concerned. Where couples cohabit, and are not married, the survivor is not entitled to anything automatically. The surviving cohabitant needs to apply to the court and any award is discretionary. There is a strict time limit of 6 months from date of death for a cohabitee to raise this claim, adding unnecessary pressure to your partner during an already distressing time.
Likewise, the law does not provide for stepchildren, who have no legal rights in the estate of a stepparent, with no equivalent claim to the court available. However, bequeathing a share of your estate to a stepchild under your Will can not only ensure your estate passes to who you wish, but may allow additional Inheritance Tax allowances to be claimed.
Whilst no one wants to think about these things at the best of times, let alone during the festivities, this time of year could present the perfect opportunity to have the difficult conversations we too often put off. Discuss your wishes with your nearest and dearest, and ensure your Will reflects these wishes. If you don’t currently have a Will in place - make it one of your New Year’s Resolutions.
