By way of an example, husband dies leaving a wife and two children under 18. He owns a house in his own name worth £375,000 and has savings worth £100,000. The mortgage on the house is covered by an insurance policy and so the total estate is £475,000. He had been thinking about making a Will and had expressed the wish that the whole of his estate should pass to his wife but if she had died before him, a trust for the children with capital passing to them at age 30. Unfortunately he never got around to doing a Will and on his death the Intestacy Rules were applied:
- The wife gets a legacy of £250,000 which is less than the value of the house. She also gets the contents of the house and any car which her husband owned.
- What is left is divided in half. The wife gets the income from one half and the other half will be invested and paid to the children when they reach 18.
- On the wife’s death the money held for her goes to the children. For as long as the children are under 18, the rules cannot be varied without a Court Order.
On the figures given in the example, the wife does not get the whole of the value of the house. This is all very different to what the husband intended – namely that everything went to his wife. He was also thinking of putting the house into joint names with his wife, but did not get around to doing it. Had he done so, this would have made life easier for the wife as his widow.
So how could life have been made easier for the wife?
The husband died without a Will and the intestacy rules applied. The house was in the husband’s sole name and in such a situation his wife would receive £250,000 and a life interest in £112,500, to be held on trust (based on the figures in the last scenario).
The position would be very different had the house been held in joint names as tenants in common (i.e. both husband and wife each owning a divisible 50% share). In which case, only half of the house would be subject to the intestacy rules (the husband’s share). Using the same figures, the wife would be left with £437,500 and a life interest in £18,750 (held on trust).
Alternatively, and perhaps the most favoured position (dependant on personal circumstances) would be if the husband made a Will. In which case, the husband could leave all property he owned to his wife. In this case, the wife would receive £475,000 outright (no trust). The house could also have been held in joint names as joint tenants.
If you have any queries relating to Wills or the way in which property can be owned, do contact us.