Does cryptocurrency go into the matrimonial pot on divorce?

When couples cannot agree on the division of marital assets on divorce, or even where agreement has been reached but the court is required to approve a draft consent order, consideration must be given as to the nature and value of any assets owned or available to either party. In this way, a court order can be made that’s fair in all the circumstances.

In most cases, this will include all physical assets, such as the marital home, as well as any savings or investments, such as stocks and shares, and occupational pensions. But what about digital assets, such as cryptocurrency? Should this also form part of the matrimonial pot?

What is cryptocurrency?

Cryptocurrency is a form of digital currency based on blockchain technology and secured by cryptography. Bitcoin is the best-known cryptocurrency, and the one for which blockchain technology was invented. It’s essentially a medium of exchange, such as the pound sterling, but is virtual and uses encryption techniques, both to control the creation of monetary units and to verify the transfer of funds. Cryptocurrencies don't have a central issuing or regulating authority, instead using a decentralised system to record transactions and issue new units.

Can cryptocurrency be taken into account?

When making a financial remedy order on divorce, the court is under a duty to have regard to all the circumstances of the case, taking into account a wide range of different factors. These factors include the income, earning capacity, property and any other financial resources which each party to the marriage has or is likely to have in the foreseeable future.

As with any other form of money or investment, this means that cryptocurrency is an asset, albeit a digital asset, that the court will almost certainly put into the matrimonial pot when assessing the parties’ financial worth and considering what’s fair in all the circumstances.

That said, whether or not cryptocurrency will form part of the overall settlement ordered or approved by the court will ultimately depend on the totality of resources available to either party — to be considered in the context of their respective financial needs, obligations and responsibilities. The welfare of any children under 18 will be an overriding factor here, where relevant, although other factors can include the age of the parties, the length of the marriage and the standard of living enjoyed by the family before the breakdown of the marriage.

Does cryptocurrency have to be disclosed?

Given the encrypted nature of cryptocurrency, it can be tempting for any party in possession of this type of digital asset to decide not to disclose to the court either its’ existence or its’ true value. There may even be cases where a spouse may attempt to dissipate more easily traceable physical assets through investment in cryptocurrency in order to defeat their spouses’ claim.

However, when asking the court to make a financial remedy order on divorce, or even when seeking the courts’ approval of a draft settlement agreement, the parties are under an ongoing duty to provide full and frank disclosure, including disclosure of any digital assets.

In cases of non-disclosure, where this comes to light, the court has the power to set aside transactions and order that such assets be added back to the matrimonial pot for distribution upon settlement. If an order has already been made, the court can also overturn such order, with significant costs and other financial consequences for the non-disclosing party.

Legal disclaimer

The matters contained herein are intended to be for general information purposes only. This blog does not constitute legal advice, nor is it a complete or authoritative statement of the law in England and Wales and should not be treated as such. Whilst every effort is made to ensure that the information is correct, no warranty, express or implied, is given as to its’ accuracy, and no liability is accepted for any error or omission. Before acting on any of the information contained herein, expert legal advice should always be sought.

Making a gift and minimising inheritance tax

Gifting money, property or possessions to a loved one during your lifetime can be such a great feeling, although the joy of giving can feel even greater when you also factor in the potential tax benefits on death. In fact, lifetime gifts can be one of the best ways to minimise the amount of inheritance tax that your estate will be liable to pay when you die. But what are the exemptions when it comes to lifetime gifts, and how can you make the most of any tax relief?

What are the inheritance tax rules relating to gifts?

Some lifetime gifts are automatically exempt from inheritance tax, whereas others are known as potentially exempt transfers (PETs) to which a 7-year rule applies.

Gifts that won't count towards the value of your estate include an annual exemption of up to £3,000 during every tax year, as well as the small gift exemption, where you can make an unlimited number of small gifts of up to £250 per person. Wedding or civil ceremony gifts, and payments toward the living costs of a child or elderly relative may also be exempt.

In contrast, PETs are gifts that are not automatically exempt under the rules, but will not be chargeable to inheritance tax if you survive for a period of more than 7 years from when the gift was made. This means that if a gift is made more than 7 years prior to the date of death, regardless of the nature or size of the gift, no inheritance tax will be payable. Accordingly, once you’ve given someone a gift, the inheritance tax clock will start to tick.

In most lifetime gift scenarios, this essentially means that you’ll have to survive for 7 years or more before your gift becomes 100% inheritance tax-free, although taper relief may still be available where the total value of any gifts made within the 7-year period prior to death exceeds the relevant tax-free threshold. Under the taper relief rules, inheritance tax is payable on a sliding scale, from the full rate of 40% for gifts made less than 3 years prior to the date of death, decreasing to as little as 8% for gifts made within 6-7 years.

How can the tax relief from lifetime gifts be maximised?

There are various ways in which the relief from inheritance tax can be maximised. In particular, giving someone a gift early in your lifetime increases the likelihood of you surviving for 7 years thereafter, and that gift becoming inheritance tax-free. You’ll also have the pleasure of seeing a loved one benefit from your generosity during your lifetime.

To understand more about the ways in which you can maximise the relief applicable to lifetime gifts, in this way minimising the inheritance payable by your estate, expert advice should be sought as soon as possible. The sooner you start to plan ahead, and make lifetime gifts, the faster the inheritance tax clock will start to tick in your favour.

Legal disclaimer

The matters contained herein are intended to be for general information purposes only. This blog does not constitute legal advice, nor is it a complete or authoritative statement of the law in England and Wales and should not be treated as such. Whilst every effort is made to ensure that the information is correct, no warranty, express or implied, is given as to its’ accuracy, and no liability is accepted for any error or omission. Before acting on any of the information contained herein, expert legal advice should always be sought.

Blackhurst Budd Celebrate Newly Qualified Solicitor

Blackhurst Budd Solicitors is delighted to announce that Demi Perrin has completed her legal training contract and has qualified as a Solicitor, joining the firm’s family law department as of 1st June 2022.

Within the family department Demi will assist clients with a wide range of services including divorce, financial settlements, arrangements for children and cohabitation matters.

Demi joined Blackhurst Budd in August 2019 after completing a Masters in Law from UCLAN. Her training contract started in September 2020.

Sharon Emslie, Head of Family Law commented:

“Congratulations to Demi on qualifying as a Solicitor. Her success is well deserved and is the result of many years of hard work. We’re delighted she has qualified with the firm I wish her the best of luck as she moves forward in the next stage of her career.”

Demi Perrin added:

“Undertaking my training contract during the coronavirus pandemic has been challenging to say the least, but I am thrilled to have now qualified as a Solicitor and would like to thank the firm for their support.”

How are trust assets treated on divorce?

Following a break-up, trusts are one way in which the economically stronger spouse may seek to ring-fence property to protect this from going into the matrimonial pot on divorce. Solely owned assets may have even been placed in trust prior to getting married, in addition to or in lieu of a pre-nuptial agreement. However, it’s a common misconception that trusts assets cannot be taken into account by the court when assessing the parties’ financial worth, and considering what’s fair in all the circumstances when it comes to the division of marital assets.

Below we look at how any trust interest will be treated on divorce, where separated spouses are unable to agree on a financial settlement and the court is asked to intervene. 

What are trusts and trust assets?

There are various different types of trusts that can contain a whole host of trust assets. In broad terms, a trust can contain both money and property given to it by a ‘settlor’.  These assets will then be legally owned by appointed ‘trustees’ who hold the assets for the benefit of those specified within the terms of the trust, known as the ‘beneficiaries’.

For instance, a residential property placed in a lifetime trust may allow the beneficiary of that trust to reside in the property for the duration of their lifetime, or a beneficiary may benefit from interest on savings placed in a discretionary trust, albeit at the trustees’ discretion.

Trusts can be set up for various legitimate and non-marital reasons, including tax avoidance, to give third parties beneficial interests in property, to provide a discretionary income for a class or classes of beneficiaries, and estate planning for future generations. In some cases, trusts may also be set up specifically to protect the wealth of the settlor-spouse on divorce.

Will trust assets be ring-fenced on divorce?

When it comes to financial remedy proceedings, the court may be called upon to look beyond the complexities of any trust mechanism to examine the reality of the financial situation.

The fact that trustees have legal ownership of any trust assets, or control over the way in which these are managed, doesn’t automatically mean that any benefit derived from the trust should be disregarded when it comes to the matrimonial pot. This is the case, even if the trust was put in place prior to getting married, or otherwise set up with a genuine purpose. There may also be allegations over whether or not a trust has been solely created as a means of defeating the financial claim of the economically weaker spouse in anticipation of divorce.

Either way, under section 25 of the Matrimonial Causes Act 1973, the court has a duty to consider all financial resources available to both parties, either now or in the foreseeable future, including any trust interest. The court also has wide and varied powers to make orders that achieve a fair outcome in each case, including awarding the non-beneficiary party a greater share of non-trust assets. This means that trust assets may be treated as either income or capital that can be brought into account, regardless of the reasons behind the trust.

Needless to say, the court is likely to take an even more robust approach when bringing trust assets into account if it considers the trust to be a sham. It’s therefore vital that expert legal advice is sought prior to entering into a trust arrangement, either prior to getting married or following the breakdown of a marriage, or when pursuing or defending trust asset claims in the context of divorce and financial remedy proceedings.

Legal disclaimer

The matters contained herein are intended to be for general information purposes only. This blog does not constitute legal advice, nor is it a complete or authoritative statement of the law in England and Wales and should not be treated as such. Whilst every effort is made to ensure that the information is correct, no warranty, express or implied, is given as to its’ accuracy, and no liability is accepted for any error or omission. Before acting on any of the information contained herein, expert legal advice should always be sought.

Using financial consent orders in divorce

Getting divorced, and deciding upon the division of marital assets, doesn’t need to be contentious. Once the Divorce, Dissolution and Separation Act 2020 comes into force on 6 April 2022, and provided you and your ex agree, a joint application can be made for a divorce order to officially bring your marriage to an end. You can also agree a draft consent order as to how your finances are to be split, to be put before the court for approval.

For thousands of separated couples in England and Wales, this will mean that the entire process of ending their marriage, and dividing any matrimonial property, can be dealt with on both a joint and amicable basis. The mere fact that you no longer want to live together as husband and wife doesn’t mean that this process should be acrimonious. On the contrary, minimising conflict can often be in everyone’s best interests, especially for any children.

Below we look at how financial consent orders work in practice, both for married couples wanting to get divorced, as well as for couples looking to dissolve their civil partnership.

What is a financial consent order?

A financial consent order is an agreement used by parties to a divorce, or dissolution of a civil partnership, who wish to settle their matrimonial or partnership finances amicably.

By agreeing a consent order, the parties are able to retain control over who gets what, typically without any intervention by the court. Still, a draft order will need to be formally approved by a judge, so that the court can satisfy itself that the financial provision made for either party is fair, and that there hasn't been any undue pressure placed on the more disadvantaged spouse.

Having the order signed off by a judge will make your agreement legally binding, ensuring that either party can enforce its’ terms in the event of non-compliance. This will also prevent any further financial claim by you or your former spouse. This means that even where a financial agreement has been reached prior to applying to get divorced, or where there are no matrimonial assets to be divided up, a clean-break order should still be put before the court to ensure that all financial ties are severed between you and your ex once the divorce is finalised.

How is a financial consent order approved?

To obtain a consent order, first and foremost, both you and your ex must reach an agreement as to how your finances will be split. This is often best done with the help of solicitors acting for each party, helping you each to explore what’s fair in all the circumstances. It’s also best to seek expert help when it comes to drafting an order, even where agreement has already been reached, as the order must be carefully phrased in certain legal terms.

The order will need to set out in detail the agreement between the parties as to how the marital home, and any other matrimonial assets, will be dealt with, together with the mechanisms and timings for the order to be implemented. For instance, a financial consent order may specify when the family home will be sold and how the net proceeds will be split.

An application must then be made to the court for the terms of the draft financial consent order to be approved, providing a statement of the parties’ financial information in support. Needless to say, this statement must contain sufficient information upon which the court can make an assessment of what’s fair. It must also contain full and frank disclosure, as any new information that comes to light at a later date could provide any disadvantaged party with a basis upon which to apply to have the order set aside.

Legal disclaimer

The matters contained herein are intended to be for general information purposes only. This blog does not constitute legal advice, nor is it a complete or authoritative statement of the law in England and Wales and should not be treated as such. Whilst every effort is made to ensure that the information is correct, no warranty, express or implied, is given as to its’ accuracy, and no liability is accepted for any error or omission. Before acting on any of the information contained herein, expert legal advice should always be sought.

Using a Will Trust to protect a vulnerable loved one

Planning for your family’s future once you’ve gone can feel daunting. For those of you with a disabled child or grandchild, or other vulnerable loved one, this feeling may be amplified, not least because leaving a substantial inheritance could create all sorts of practical problems.

In particular, a loved one may not have the mental capacity to manage their own finances or live independently. You may also have concerns, regardless of their age, of exposing a loved one to a risk of exploitation — after all, a sizeable legacy could put them in an even more vulnerable position when it comes to opportunists. Equally, being bequeathed money or assets could impact their eligibility for means-tested benefits, leaving a loved one no better off.

By including a Trust in your Will, you can make financial provision for a disabled relative when you’re no longer around, safe in the knowledge that the money will be managed by Trustees for the benefit of that individual during their lifetime. In this way, your loved one will not be forced to look after their own finances, or be exposed to any risk of exploitation from unscrupulous characters, and nor will any inheritance affect their benefits.

What is a Will Trust?

A Will Trust is a legal arrangement, contained within a Last Will and Testament, that places any legacy left to a loved one in the hands of appointed Trustees. Upon your death, the Trustees will be tasked with managing that inheritance on behalf of the beneficiary, for example, by ensuring that your loved ones’ care needs are adequately met.

You can choose who to appoint as Trustees, including family members or even professionals. You can also leave a Letter of Wishes, setting out your preferences on how the Trust assets should be used, helping to guide the Trustees' decisions once the Will Trust comes into effect.

What are the risks of not having a Will Trust?

For some of us, the idea of putting in place a formal trust arrangement to financially protect a vulnerable loved one may seem wholly unnecessary, especially where there are, for example, siblings of a disabled child or grandchild that can be entrusted with their legacy. However, this is a risky strategy, even if you implicitly trust a surviving relative to honour your dying wishes. This is because an outright gift to another family member means that this legally belongs to them, where unforeseen circumstances may arise, such as debts, divorce or death.

For instance, if you have two adult daughters — one with a mental disability and one without — you may choose to leave your entire estate to the mentally able daughter, provided they promise to use half of that inheritance to financially support their sister. However, if the daughter without the disability accumulates debts or gets divorced, this will expose everything she owns, including the money intended for your disabled daughter, to creditors and divorce proceedings. If that daughter then dies a few years later, her estate may be distributed equally between her children, leaving your disabled daughter with nothing.

Why is a Will Trust beneficial?

A Will Trust offers a number of benefits for the parents or grandparents of disabled children, or those otherwise looking to make provision for a vulnerable loved one, including:

•   the beneficiary will be able to benefit from the assets at the Trustees' discretion, without having to personally manage their own finances

•   the beneficiary won’t own the assets contained within the Trust, so they cannot be coerced into using the money for other purposes and it won’t affect their means-tested benefits

•   the Trust assets aren’t owned by anyone else in a personal capacity, so cannot form part of a person’s estate for the purposes of debt, divorce or death.

A Will Trust can be used to effectively ring-fence the inheritance earmarked for a vulnerable loved one. However, specialist advice advice should always be sought, ensuring that any trust mechanism contained within your Will is tailored to your family’s needs after you’re gone.

Legal disclaimer 

The matters contained herein are intended to be for general information purposes only. This blog does not constitute legal advice, nor is it a complete or authoritative statement of the law in England and Wales and should not be treated as such. Whilst every effort is made to ensure that the information is correct, no warranty, express or implied, is given as to its’ accuracy, and no liability is accepted for any error or omission. Before acting on any of the information contained herein, expert legal advice should always be sought.

Using financial consent orders in divorce

Getting divorced, and deciding upon the division of marital assets, doesn’t need to be contentious. Once the Divorce, Dissolution and Separation Act 2020 comes into force on 6 April 2022, and provided you and your ex agree, a joint application can be made for a divorce order to officially bring your marriage to an end. You can also agree a draft consent order as to how your finances are to be split, to be put before the court for approval.

For thousands of separated couples in England and Wales, this will mean that the entire process of ending their marriage, and dividing any matrimonial property, can be dealt with on both a joint and amicable basis. The mere fact that you no longer want to live together as husband and wife doesn’t mean that this process should be acrimonious. On the contrary, minimising conflict can often be in everyone’s best interests, especially for any children.

Below we look at how financial consent orders work in practice, both for married couples wanting to get divorced, as well as for couples looking to dissolve their civil partnership.

What is a financial consent order?

A financial consent order is an agreement used by parties to a divorce, or dissolution of a civil partnership, who wish to settle their matrimonial or partnership finances amicably.

By agreeing a consent order, the parties are able to retain control over who gets what, typically without any intervention by the court. Still, a draft order will need to be formally approved by a judge, so that the court can satisfy itself that the financial provision made for either party is fair, and that there hasn't been any undue pressure placed on the more disadvantaged spouse.

Having the order signed off by a judge will make your agreement legally binding, ensuring that either party can enforce its’ terms in the event of non-compliance. This will also prevent any further financial claim by you or your former spouse. This means that even where a financial agreement has been reached prior to applying to get divorced, or where there are no matrimonial assets to be divided up, a clean-break order should still be put before the court to ensure that all financial ties are severed between you and your ex once the divorce is finalised.

How is a financial consent order approved?

To obtain a consent order, first and foremost, both you and your ex must reach an agreement as to how your finances will be split. This is often best done with the help of solicitors acting for each party, helping you each to explore what’s fair in all the circumstances. It’s also best to seek expert help when it comes to drafting an order, even where agreement has already been reached, as the order must be carefully phrased in certain legal terms.

The order will need to set out in detail the agreement between the parties as to how the marital home, and any other matrimonial assets, will be dealt with, together with the mechanisms and timings for the order to be implemented. For instance, a financial consent order may specify when the family home will be sold and how the net proceeds will be split.

An application must then be made to the court for the terms of the draft financial consent order to be approved, providing a statement of the parties’ financial information in support. Needless to say, this statement must contain sufficient information upon which the court can make an assessment of what’s fair. It must also contain full and frank disclosure, as any new information that comes to light at a later date could provide any disadvantaged party with a basis upon which to apply to have the order set aside.

Legal disclaimer

The matters contained herein are intended to be for general information purposes only. This blog does not constitute legal advice, nor is it a complete or authoritative statement of the law in England and Wales and should not be treated as such. Whilst every effort is made to ensure that the information is correct, no warranty, express or implied, is given as to its’ accuracy, and no liability is accepted for any error or omission. Before acting on any of the information contained herein, expert legal advice should always be sought.

No fault divorce - making it easier for couples to ‘uncouple'

After a lengthy delay, the Divorce, Dissolution and Separation Act 2020 will finally come into force on 6 April 2022. This essentially means that from this date onwards, married couples will be able to get divorced without any legal requirement to attribute blame. The Act will also revise the legal process for civil partners to dissolve their civil partnership.

No fault divorce represents the biggest reform to the divorce laws in England and Wales in almost half a century, and is set to revolutionise the way in which spouses can formally ‘uncouple’ — it’s hoped on much more amicable terms, as there will no longer be any need for one party to make unnecessary allegations about the other.

Under the existing legislative regime, as set out under the Matrimonial Causes Act 1973, either party to a marriage can petition for divorce, but this cannot be done on a joint and mutually agreeable basis. Further, unless they want to endure up to 5 years’ of separation before being granted a divorce, the petitioning party must make accusations about the conduct of their ex.

To prove that the marriage has ‘broken down irretrievably’, the rather unsavoury options under the 1973 Act — and almost certainly likely to exacerbate any existing acrimony — include adultery, desertion or unreasonable behaviour, the specifics of which must be cited, such as verbal or physical abuse, being financially irresponsible or poor sexual relations.

Even in circumstances where a mutual agreement to separate has been reached, and both parties want to officially bring their union to an end, absent proof of one of the three prescribed fault-based facts as set out under the 1973 Act, the couple must still be separated for a period of 2 years before the marriage can be legally dissolved.

Under the new law, ‘irretrievable breakdown’ will remain the sole basis for divorce, although the need to cite any facts will be removed. Couples will also be able to make a joint application where divorce is a mutual decision or, alternatively, one person can apply, in either case by simply filing a statement that the marriage has irretrievably broken down. That statement will then be treated by the court as conclusive evidence that any differences are irreconcilable and, without any further particulars, that an order must be made.

There will be a minimum wait of 6 months between the initial application stage and the grant of a final order to provide the parties with a period of reflection and, of course, the possibility of reconciliation. However, the primary focus of the proposed reforms is on separated couples officially ending their marriage in a more positive and conflict-free way. This is especially so where there are children involved and, therefore, a need to remain on good terms.

Children undoubtedly cope much better with family separation if their parents are able to adopt a collaborative approach to co-parenting. Equally, parents are more likely to work well together if they’re not forced into a pointless blame game. As such, where reconciliation isn’t possible, the mandatory timeframe between issue and final order will provide the parties with the opportunity to agree important practical matters moving forward, from childcare and access arrangements to the division of marital assets.

Legal disclaimer

The matters contained herein are intended to be for general information purposes only. This blog does not constitute legal advice, nor is it a complete or authoritative statement of the law in England and Wales and should not be treated as such. Whilst every effort is made to ensure that the information is correct, no warranty, express or implied, is given as to its’ accuracy, and no liability is accepted for any error or omission. Before acting on any of the information contained herein, expert legal advice should always be sought.

With Inheritance Act claims, is it really worth making a Will?

The potential for a dispute over the provisions of a Will can be concerning for anyone who has taken the time to carefully consider what they’d like to bequeath to those that they leave behind.

The question is, therefore, is it really worth making a Last Will and Testament?

What are Inheritance Act claims?

When insufficient or no financial provision has been made for a particular individual under the terms of a Last Will and Testament, that person may be able to make a claim against the deceased’s estate. This is known as an Inheritance Act claim, or more accurately a claim under the Inheritance (Provision for Family and Dependants) Act 1975.

The 1975 Act gives the court a relatively wide discretion, within certain legislative parameters, to vary the distribution of the deceased’s estate so as to make financial provision — such as a single lump sum, regular payments or transfer of property — for relatives and dependants.

Those eligible to make a claim under the Act include the deceased’s spouse or civil partner, or former spouse or civil partner, provided they’ve not remarried or entered into a subsequent civil partnership; anyone cohabiting with the deceased for a period of at least two years prior to the date of their death; any child of the deceased, including adult children; anyone treated as a child by the deceased during their lifetime, including adopted or stepchildren; and anyone else who was financially dependent on the deceased immediately before they died.

The court can make an order where it's satisfied that reasonable financial provision has not been made under the Will. A spouse or civil partner will usually be entitled to such financial provision as is deemed reasonable in all of the circumstances, regardless of whether or not that provision is actually required for their maintenance, whilst other family members or dependants will be entitled to such reasonable financial provision as is deemed necessary.

Is it still worth making a Will?

The legal starting point is that you can leave your worldly assets to whomever you choose, although the 1975 Act provides a safety net for eligible claimants who can show that they require more financial provision than they’re entitled to receive under the terms of any Will.

That said, Inheritance Act claims are not clear cut, where much will depend on the nature of the relationship between the claimant and deceased during their lifetime. The court will also take into account, for example, the financial resources and needs of the claimant, and of any beneficiaries, and the size and nature of the deceased’s estate. The court can even have regard to the claimant’s conduct. This essentially means that a claim will not automatically succeed.

In short, the possibility of a claim, which must usually be brought within just six months of the grant of probate, combined with the hurdles that a claimant must clear to persuade a court to grant their demands, should not deter you from making a Will. In the majority of cases, family members and dependants will accept a testator's final wishes without protest.

It’s also worth bearing in mind that by failing to leave a Will, under the strict rules of intestacy, those that you would want to benefit from your estate may be left with absolutely nothing — leaving them with the overwhelming burden of bringing an Inheritance Act claim. 

Legal disclaimer

The matters contained herein are intended to be for general information purposes only. This blog does not constitute legal advice, nor is it a complete or authoritative statement of the law in England and Wales and should not be treated as such. Whilst every effort is made to ensure that the information is correct, no warranty, express or implied, is given as to its’ accuracy, and no liability is accepted for any error or omission. Before acting on any of the information contained herein, expert legal advice should always be sought.

The Importance of writing a Will

Many lessons have been learnt as a result of the recent COVID-19 pandemic, not least the importance of putting in place an up-to-date Last Will and Testament before it’s too late. Being forced to face one’s own mortality has already prompted thousands of us to take legal steps to ensure that our loved ones are adequately provided for in the event of our unexpected death.

 Why is having a Will important?

In so many cases, people have no Will at all, or have a Will in place but one that’s out-of-date.

With modern day families, where second marriages and children from previous relationships are commonplace, the provisions of any existing Will can easily fail to reflect your current personal circumstances. Even though for inheritance purposes, your ex-spouse or civil partner will be treated as if they’d died when your marriage or civil partnership was dissolved, nonetheless, some or all of your estate could then be treated as if you don’t have a Will at all.

By failing to leave a Will, or where your estate is treated as if a Will didn’t exist, under the strict rules of intestacy, your loved ones may be left with nothing. The rules provide that any current spouse or civil partner will automatically inherit all your personal possessions, plus any money or assets up to the value of £270,000, together with half of your remaining estate. The other half will be divided between any children, grandchildren or great grandchildren.

The law in England and Wales essentially means that if your estate is valued at £270,000 or less, the whole estate will pass to any surviving spouse or civil partner, without financial provision for your children or any other dependants. The rules also mean that any unmarried partner, even if you currently live together, will miss out altogether on any intended legacy.

What does a Last Will and Testament do?

A Will is a formal written document setting out how your money, possessions and property, ie; your estate, should be distributed after you die, and in accordance with your wishes. Making a Will is especially important if you have children, or any one else who depends on you financially, or if you’d like to leave something to someone outside of your immediate family.

If you die intestate, everything you own may be divided up in a way that doesn’t necessarily reflect what you’d want, without making any financial provision whatsoever for those that you would otherwise have wanted to benefit from your estate. Absent a well-drafted or up-to-date Will, your family may also find themselves facing a significant inheritance tax bill, a liability that potentially could’ve been minimised through the effective use of tax planning tools.

By seeking expert legal advice from a specialist in Wills, trusts and estate planning, together you can carefully consider the contents of your Will — making provision for your family in the context of their financial circumstances —and ensuring that your final wishes are met.