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Protect your child’s inheritance money by making a will

Tags: writing a will, inheritance tax, inheritance money, child’s inheritance, tax breaks

Making a will ensures that your money and possessions will be distributed according to your wishes. When a person dies without having made a will, it is called ‘dying intestate’. Without a will, your money and possessions could be distributed in a way you may not have wanted.

By making a will, you can ensure that your estate (your money, property and possessions) is passed on in the way you want. You can nominate someone to be responsible for dealing with your will and passing on your estate.

It’s important to review your will from time to time and keep it up to date, especially if your circumstances change. After getting married or registering a civil partnership, you will need to make a new will, as any existing wills become void.

Not married or not civil partnered

Couples who are not married or not civil partnered can only inherit from each other if there is a will. And, unless your partner has specifically named you in a will, you will not be automatically nominated as their personal representative to sort out what is left behind.

Without a will, the only option for a surviving partner who feels they have not received reasonable financial provision is to make a claim under the Inheritance (Provision for Family and Dependants) Act 1975.

Married or civil partnered - when survived by a spouse or civil partner and children:

If your estate is worth up to £250,000, everything goes to your surviving spouse or civil partner.

If your estate is valued at more than £250,000, the first £250,000 plus personal possessions go to your spouse or civil partner.

Half of the rest is shared equally among your children and the income or interest on the remainder goes to your spouse or civil partner until they die. At this stage, the capital is shared equally between your children.

Married or civil partnered - when survived by a spouse or civil partner, and either the parents or siblings (but no children):

If your estate is worth up to £450,000, everything goes to your surviving spouse or civil partner.

If your estate is valued at more than £450,000, the first £450,000, plus half of the rest and all personal possessions, goes to your spouse or civil partner.

The other half is shared equally between parents, or shared between siblings if there are no surviving parents.

Note: These rules only apply to ‘whole blood’ siblings, which means brother or sisters who share both parents with you.

If you have children, your will should say what you would want to happen to them if you or your partner die, whatever your marital status.

Inheritance tax - not married and not civil partnered

Inheritance tax is applied to the value of an estate when the owner dies. Assets below £325,000 fall into something called the nil-rate band and are charged 0% tax. Assets above £325,000 are taxed at 40%, so it’s quite a big jump.

If your family home is worth more than £325,000, this could cause a problem. There have been cases where surviving partners have had to sell off their shared home just to cover the inheritance tax. In areas where property prices have risen, it may be too expensive to buy another home nearby.

Inheritance tax - married or civil partnered

Married and civil partnered people are offered special circumstances that allow them to transfer their nil-rate band to a partner after they die. Any of the £325,000 allowance that hasn’t been used can be transferred to the surviving spouse or civil partner’s estate, effectively doubling the threshold to £650,000.

Later, when the surviving spouse or civil partner dies, inheritance tax kicks in only when the value of their estate exceeds their own nil-rate band and the partner’s unused nil-rate band. However, inheritance tax does apply to anything left to any children.

Further information

You can find more information and advice on making a will at Citizens Advice.

The legal information on this page was checked by Langleys Solicitors.

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