If you die without leaving a valid Will, your property must be shared out according to the rules of intestacy. Intestacy rules are set out in law and ultimately decide who benefits from your estate rather than who you would like your estate to be passed to.
When it comes to Wills for unmarried couples, it is a common misconception that an unmarried partner has similar inheritance rights to those of a wife/husband/civil partner, should their partner die without leaving a Will. However, this is not the case and the death of one partner may leave the other with nothing.
Not only will your partner lose the right to any inheritance, so will any children they may have from a previous relationship, even if you have brought them up as your own. If you have children together, the children will then inherit your estate.
If your children are under the age of 18, whatever they inherit will be held for them in a trust until they reach adulthood. While this money can be used for their benefit and education, your surviving partner will not have direct access to the trust. This can cause problems if your partner is financially dependent on you and may even threaten the security of their home.
In some cases where there has been no Will, bereaved partners have been forced to bring a claim against their own children and other members of the family for financial provision. This is a terribly sad situation, and one which no one wants to find themselves in.
What will happen to your assets?
This will depend on how the property is held. For example, if it is as Tenants in Common, your share of the property will pass to your estate i.e., not your surviving partner, if you die without a Will. If the property is held as Joint Tenants, then the share belonging to whoever dies will automatically pass to the surviving owner.
If you die, any cash in the bank under your own name will become property of your estate leaving your partner with no access to it. With respect to a joint account, the surviving partner will retain access and be entitled to the money within it. However, a proportion of it will be considered when calculating the estate of the deceased partner.
Any debts that are held jointly by you and your partner may become the sole responsibility of the surviving partner.
When deciding what will happen to your assets in the event of your passing, a particularly important factor for unmarried couples to consider is with regards to inheritance tax (IHT). Couples who are not married or in civil partnerships get especially penalised by IHT. This means that there is no ‘spousal-exemption’ on first death, which could leave the surviving partner with a potentially large tax bill in the event of the other partner’s death. In addition, the total IHT bill is usually much larger for unmarried couples than it is for those that are married or civil partners.
Benefits of Wills for cohabiting couples
While making a Will may seem like a daunting and overwhelming task, the benefits far outweigh this. Having a Will in place:
- Ensures that the surviving partner is entitled to cash or assets that the deceased would wish them to have.
- Provides security where property is concerned
- Gives you peace of mind where children are concerned, both with respect to inheritance shares, how they will be cared for and who by, up to the age of 18.
- Avoids a situation where your partner is forced to go through the process of making a legal claim on your estate.
- Minimises the potential for further issues with relatives who have inherited – because of the intestacy rules – what you may have wished for your partner to have.
- Provides effective estate planning to help minimise the impact of inheritance tax, where applicable.
When a cohabiting couple plans to marry
It is important to understand that a Will you made as an unmarried couple will be automatically revoked by a later marriage or civil partnership. The only exception is if that Will was made ‘in contemplation of marriage’. A Will writer can explain exactly what this means, but in simple terms it involves inserting a clause into the Will, stating that the current Will should not become invalid after the marriage has taken place.