You may be surprised to learn that marriage, divorce and separation have different impacts on your Will. Flavia Mongiello from our Private Wealth team, and Siân McKernon from our Family team, provide insights on how these significant life events can impact your Will, and why it is so important to review your Will regularly.
I am not married and not in a civil partnership, can I make a Will leaving my estate to my partner and what are the consequences?
Cohabiting partners form around 20% of couples within the UK, and marriage is on the decline. Couples often do not realise they are vulnerable as there is no such thing as the ‘common law spouse.’ Cohabitation agreements can help with documenting what will happen in the event of a relationship breakdown but it cannot cover what is to happen if one of you passes away.
You are free to leave your property and any other assets to whoever you wish under your Will, including your partner. Please note that without a Will your partner will not be entitled to anything in your estate, as your assets will be distributed according to the intestacy rules. Therefore it is extremely important to have a valid Will in place if you are unmarried/not in a civil partnership to make sure that your estate goes to your loved ones in the proportions you choose.
If you are not married/in a civil partnership and you leave your estate to your partner, unfortunately on your death it will not be possible to claim spouse exemption from the estate given to your partner. Spouse exemption means that whatever passes between spouses or civil partners on death is free from Inheritance Tax. Unmarried partners do not benefit from this exemption, therefore your executors may only be able to claim the available Nil Rate Band on your death, and the rest of the estate will be subject to inheritance tax (the current rate being 40%)
What happens to my Will when I marry/enter a civil partnership?
If you get married and you have a Will, the Will is automatically revoked by the marriage. It is essential that you and your spouse/civil partner make new Wills to protect your estate from intestacy.
However, if you are planning to get married and are considering updating your Will, it is possible to make a Will in anticipation of marriage, where you declare that you are intending to marry and that you do not wish your Will to be revoked on marriage. This will save you and your partner having to redo your Wills.
The same rules will apply if you enter a civil partnership.
Before tying the knot, it may also be beneficial to consider whether a pre-nuptial agreement is appropriate. This will allow you to consider your current wealth and make provisions for if you and your partner were to divorce in the future. Pre-nuptial agreements are particularly beneficial for those who have significant wealth, expect to inherit significant wealth, or wish to consider protecting assets with the intention of passing these to children.
What happens to my Will when I divorce?
During the divorce process, your finances also need to be dealt with and unmingled. If you have a pre-nuptial agreement, this will be reviewed to consider if there is any reason why it may not be upheld. As part of the division of assets, the entirety of the assets are reviewed and then, usually, the starting point is a 50/50 split of these, unless ‘needs’ dictate otherwise. Once an agreement is reached on how the assets will be divided, legal documentation is drafted to effect this. As a result, following a divorce you may have a different asset landscape than when you drafted your Will, for example, you may no longer be in possession of specific legacies.
If you divorce, your current Will will still be valid and enforceable, but your ex-spouse/civil partner will not be able to benefit from it, as they will be treated (for inheritance tax and probate purposes) as if they had predeceased you when you divorced.
It is always recommended to review your Will when your personal circumstances change substantially, including in case of a divorce, because if your ex-spouse is the only beneficiary of your Will, and you have not appointed any substitute beneficiaries, then the intestacy rules will dictate who is to inherit your assets. Additionally, it will give you a chance to reflect on how your assets have changed and if you therefore have different wishes on how you wish for these to be divided.
What happens if I do not have a Will?
If you die without a Will, the intestacy rules will apply and what will happen depends on your family situation. The intestacy rules strictly determine who will benefit from your estate, and it may be that the people you would like to inherit your estate will be excluded.
As explained above, if you are unmarried or have not entered a civil partnership, your partner will not inherit any of your estate if you die intestate. This could leave your partner vulnerable if, for example, you live together but do not own the property together.
If you die without a Will but you are married/in a civil partnership with no children, your spouse/civil partner will inherit the entire estate.
If instead you are married with children, your spouse will receive your personal possessions (the “chattels”), a statutory legacy, currently £322,000 and the rest of the estate will be divided between your spouse/civil partner, inheriting 50%, and your children sharing the other 50%. This may create problems if your spouse/civil partner is in need of more funds on your death, but only has an allocated amount they can inherit.
What happens with my Will if I separate from my partner?
Separation, unlike a divorce, does not affect in any way your Will, which remails fully effective, and if you die while separated from your spouse, civil partner or partner, they will still inherit the percentage you left them in your Will, although this may not be what you would have wanted.
Also, if you are still married on your death, anything passing to your spouse, civil partner or partner will be exempt from Inheritance Tax due to spouse exemption.
Families can be fluid, and it is not uncommon for spouses/civil partners to separate, but remain legally married or civil partnered. Equally, during this time, a spouse or civil partner may begin a new relationship. In either of these situations, you may not wish for your spouse or civil partner to inherit as explained above, or if you have a Will, your wishes may have changed and so it is important to take legal advice on the best way forward. Under the Inheritance (Provision for Family and Dependants) Act 1975, if you do not make adequate provisions for those listed with the act (which includes a spouse or civil partner, and a person who as being maintained by you, for example a new partner) then an application can be made to the court for reasonable financial provision from your estate. This can lead to expensive and lengthy litigation, and leave your loved ones in a state of limbo.
What if my spouse/civil partner and I initiate a divorce and one of us dies?
Often, when you see a family lawyer for the first time, they will advise you to consider if you wish to update your Will. The reason for this is that as your family situation changes, you may not wish for your former partner, who will still be your spouse or civil partner, to inherit in the way you had when you made your Will. Equally, if you do not have a Will, you may not wish for them to inherit under the intestacy rules as explained above.
Unfortunately, if either spouse or civil partner dies while the divorce is not finalised, for inheritance tax and probate purposes, you will be treated as still married. Until you receive your Final Order of divorce you remain married, and any provision to your spouse or civil partner in your Will will stand, in the event you die before this is received.
Are there any key considerations?
This article shows that having your Will and affairs in order can save future complications, especially where your family and personal circumstances change. We recommend that clients review their Wills every five years, or whenever a big change in their life occurs, including marriage, divorce and inheriting wealth.
We would also recommend reviewing your pre-nuptial agreement or post-nuptial agreement when your circumstances change, and to keep your letter of wishes up to date.
How Moore Barlow can help?
At Moore Barlow we have professionals that can assist you during the important stages of your life, and we work together ensuring you receive the best services across multiple departments.
Please feel free to contact Siân McKernon from the Family team or Flavia Mongiello at from the Private Wealth team if you wish to discuss your family circumstances or your will, trusts and estate planning.
