A rule change means that a surviving spouse could now get up to £270,000, but experts warn that the best way to avoid arguments over inheritance is to make a will.
The government is increasing the amount that automatically goes to a spouse if their partner dies without leaving a will.
The amount of money a spouse receives when their partner dies is rising by £20,000 on 6 February to £270,000.
The intestacy rules – what happens to your estate if you die without leaving a will – were updated in 2014.
Currently, the surviving spouse gets the first £250,000 of the estate, all of the personal property and belongings of the person that died and half of the remaining estate.
However, if you have children the remainder is split between them or their descendants.
The figure is updated every five years to account for inflation, which is why the figure is going up now.
Many couples mistakenly believe that all assets will be handed to their other half if they pass away without a will.
This can lead to conflicts between family members over the inheritance and expensive court battles. Experts are warning that the best way to avoid any family fights over inheritance is to make a will.
Myron Jobson, personal finance campaigner, interactive investor, says: “There is no substitute to writing a will for those concerned about how their assets are divided when they shuffle off this mortal coil, yet our Great British Retirement Survey of 10,000 consumers found that a quarter (25%) of people haven’t already done so. Unsurprisingly, retired people are more organised – 61% have an up-to-date will compared with 35% of pre-retirees, according to the study.
“If you die without having written a will, you relinquish control of what happens to your home, savings and other possessions. Things get more complicated for unmarried couples as the surviving partner has no automatic right to inheritance. Your assets will be split in a standard way defined by law – which may not align to your wishes.”
Tom Selby, senior analyst at AJ Bell, says: “Many more couples are living together but not getting married or entering into a civil partnership, and are leaving themselves in a precarious position if they have not drawn up a will. If an unmarried person dies, regardless of how long they have been with their partner, all their estate will go to their parents, or their brothers and sisters if their parents are no longer alive. If they have children, the estate will automatically go to them.
“While family members may be sympathetic to any surviving partner and redirect money to them, that’s by no means guaranteed. Writing a will is the last thing anyone wants to tackle, particularly as no one wants to think about the prospect of them dying, but it could be the most valuable thing you and your partner do.”
Sarah Coles, personal finance analyst, Hargreaves Lansdown, says: “Relying on these rules could leave your spouse with a nightmare – especially if you are holding money you both intended to use. You could find a big chunk of it is automatically shared out between your kids instead. And while they may agree to help your spouse out, it’s a pointlessly messy situation you didn’t need to land yourself in. It also creates a potential unnecessary inheritance tax bill.
“If you’re not married, the problems multiply if you die without a will. It doesn’t matter how long you’ve been together - aside from any jointly owned property or accounts, your estate will go to your children. If you have no children, it will pass to other family members, so if your property is in your name alone, your partner could lose their home.
“Making a will is the only way to ensure you give money to the people you want to benefit, at the right time, and in the way that suits you best.”
Reasons for making a will
Research from insurance company Royal London shows that 54% of UK adults don’t have a will, while 5.4 million adults have no idea where to begin when writing a will.
More worryingly, the research found that 59% of parents do not have a valid will or one that is out of date.
Having an up-to-date will written by a solicitor ensures that your wishes are respected when you die. It also avoids difficult decisions and legal complications for your loved ones.
This article was first written by our sister magazine Moneywise.