You will recall that Roger Lloyd-Pack (Trigger from Only Fools and Horses) sadly passed away in January last year, leaving an estimated £1.4 million estate.
However, it has recently come to light in the press that Roger did not have a Will in place and as a result, his estate will pass under the Intestacy Rules. The Intestacy Rules are a legal set of rules that dictate what happens to a person’s estate when dying without a will.
What this essentially means for Roger’s family is that his wife will get to keep assets up to a value of £250,000 and all of his personal belongings. The remaining estate then gets split and Roger’s wife will inherit one half and his children will inherit the other half equally.
Any assets that pass to a husband, wife, or civil partner on death are exempt from Inheritance Tax and so all the assets passing to Roger’s wife will not be taxed. However, Roger’s children will inherit an amount that exceeds his Inheritance Tax allowance (an amount which you can leave before Inheritance Tax is payable), which is currently £325,000. There will therefore be Inheritance Tax to pay at 40% on the children’s share on everything over and above £325,000, which will be quite a substantial amount of tax.
This could have easily been avoided if Roger had a Will in place, as he may have wanted his wife to inherit everything, in which case no Inheritance Tax would have been payable at all following his death.
Another issue that arises is that as Roger’s Inheritance Tax allowance of £325,000 has been used up completely, there is nothing available to transfer to his wife on her death. If Roger had left everything to his wife, on her death her personal representatives would have been able to claim the full amount of unused allowance from Roger, thus giving his wife a double Inheritance Tax allowance on her death.
It is therefore very important to have a Will in place to dispose of your assets effectively and in a tax efficient manner.
Don’t be a fool and leave it too late!