Inheritance tax: testamentary rules explained for cohabiting couples, divorced and blended families | Personal Finances | Finance


Inheritance tax is usually levied on a deceased person’s estate and passes on their assets, as long as their estate is valued at over £ 325,000. When the IHT is due, it is charged at 40% on the parts of the estate whose value exceeds the threshold of £ 325,000.

To help manage estate planning, wills are often created because they can help decide what happens to a person’s money, property, and possessions after death.

Wills can also help ensure that IHT costs are not higher than they should be.

Charlotte Isherwood, Wills & Probate Solicitor at ZEDRA, commented on these complications which have been made more difficult by the pandemic.

“If the past year and a half has taught us anything, it’s that life is unpredictable,” she said.

READ MORE: Inheritance Tax: Young Savers ‘Rely’ On Inherited Wealth – Act Now

Make a will then divorce

Ms Isherwood said: “If you make a will during your marriage, naming your spouse as executor and / or as beneficiary of your will, but you divorce later, your will remains valid.” However, if you don’t put it down. not update your will after the divorce and die afterwards, your ex-spouse is treated as if they had died before you.

“Therefore, they would no longer be appointed executor and receive no assets as beneficiary.”

Make a will and then get married

Ms. Isherwood also touched on what happens to wills when a new marriage is formed: “If you make a will and get married later, your will is automatically revoked and you will have to make a new one. The only exception to this rule would be a will. made in anticipation of this particular wedding. “

Cohabit and die without a will

Many modern relationships do not involve marriage at all, and Ms. Isherwood cautioned that this makes the need for a will even more important.

Ms Isherwood continued: “If you don’t have a will and live with your partner but are not yet married or have no plans to get married, you need to write a will to make sure that your partner benefits from your estate upon your death.

“Wills for cohabiting couples are extremely important. In the UK, when a person dies without a will, their estate is passed according to the rules of the intestate.

“These rules establish a precise order of the beneficiaries of the succession. Unfortunately, they do not include a provision for an unmarried partner. A will should be drafted to ensure that your partner benefits as you intended. “

Stepchildren and blended families

Ms Isherwood concluded: “Likewise, while the intestate rules include adopted children, they do not provide for stepchildren or the children of your unmarried partner. Therefore, given the growing number of stepfamilies, this has become a recurring problem for the courts that consider claims made against the estate of a deceased person. This is costly, time consuming and extremely upsetting for an already grieving family.

“Unfortunately, many people assume that all of their children will be provided for when they die, but in the absence of a valid will, this is simply not the case.

“If you have not yet made a will and are living as a couple, or if you are concerned that your will may not be suitable for your situation, please contact us to speak to one of our lawyers.”

Impartial advice on Wills and IHT can also be sought from Citizens Advice and Money Helper.

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