Any lawyer will tell you that it is always sensible to have a will, whatever your circumstances may be. So you might want to start considering one now. If you don’t have one, a set of one-size-fits-all rules (dying intestate) will apply to anything you have when you die and these may not be right for you.
What do the rules do?
Your assets (money and possessions) will usually go to your parents or, if they are no longer around, to your siblings.
If you are married or in a civil partnership it will go to your husband, wife or civil partner.
If you are married or in a civil partnership and have children, it will be split between the children and your husband, wife or civil partner.
If you have children but no husband, wife or civil partner (including if you are divorced) it will go to the children.
If you have none of the above, it will go to your nearest relatives.
How will my spouse/civil partner and children split my stuff?
The default is that your husband, wife or civil partner takes the first £250,000 worth of assets, and all of your personal possessions. Anything left is then split 50:50 between them and your children. So for most people in their 20s everything will go to the husband, wife or civil partner.
That sounds ok to me?
Yes. In most cases your assets will go where you would expect them to. It might cost more in inheritance tax overall if your assets go to your parents and then to your siblings when your parents die (instead of direct to your siblings). However, there is no inheritance tax on the first £325,000 anyway so this will rarely be a problem for 20-somethings.
What is inheritance tax?
When you die, the people who inherit your assets will have to pay tax on everything you own, everywhere in the world. The first £325,000 is tax free with the rest taxed at a rate of 40%.
There is no tax on anything you leave to a husband, wife, civil partner or charity. There is also a tax free amount (currently £125,000) if you leave your home to your children.
So when should I consider a will?
People in their 20s should definitely think about a will when they own a large asset (such as a home) which might cause an Inheritance Tax bill on death. Use the £325,000 figure as a benchmark and remember that your home might go up in value.
It is also worth thinking about a will if you want to do something unusual with your assets when you die, or if you have complicated family circumstances. For example, you might want to leave something to charity or prevent your estranged family member from receiving anything.
And when should I definitely have a will?
If you own a valuable asset which someone else has a stake in - for example a business or a house.
Would you want your business partner to have to go into business with your parents if you died? If not, but you want your stake returned to your family when you die, you should think about how they will buy your partner out. A lawyer can tell you about your options.
If you are married but have children from different partners.
As we saw above, your husband, wife or civil partner will usually get everything. Would they definitely leave something to a child who is not their own? They can change their mind until they die and they may be pressurised, perhaps by a new partner. If you want to be sure all of your children are looked after, you need a will.
If you have a partner but are not married or in a civil partnership - especially when you live together or have children.
The law ignores your partner and so they could be left homeless, unless your family takes pity on them.
If you own your home together you might want to think about leaving it to them. If you own the home and let him/her live there it is even more important to think about what rights you want him/her to have. For example, do you want to let him/her live there for a while, but pass the equity back to your family? This might be very important if they helped you buy in the first place. Or do you want to give him/her a place to live for life? What if he/she forms another relationship? A well put together will can deal with all of this.
If you have children, they will receive your assets at 18. The assets will be under the control of an adult appointed by the court. The controlling adult can use the assets for your children’s benefit until they reach 18, but your surviving partner could be frozen out, which can be particularly difficult if they were relying on you for income. If you are not married or in a civil partnership, your surviving partner is not entitled to any of your assets.
Its okay: we've been together for ages so we're in a common law marriage
There is no such thing. If you are not married or in a civil partnership your partner has no entitlement to your assets when you die.
Right. But I don't need a will once i'm married?
A will allows you to decide exactly who gets your assets and in what circumstances. It also allows you to do things like appoint guardians so that any future children will be looked after if you should both die. Basically, it will help ensure that, whatever the future brings, you are as prepared as you can be.
Getting married will automatically revoke an existing will. So remember to make a new one. This can be as simple as signing a new copy of the old one.