Legal experts are claiming that more money should be given to parents who still care for their children if their spouse dies early without making a Will.

Many parents are being forced to sell their family home when their spouse dies, just so they can pay the huge Inheritance Tax bill. The ‘intestacy’ laws in England and Wales state that, when someone dies without a Will, their spouse (or civil partner) will receive £125,000 (called the ’statutory legacy’) from their spouse’s estate. They will also get interest on half of the remainder of the estate.

If there are children over 18, then they will get the other half of the estate, but if they are minors, then this half will be put into trust. If there are no children but other surviving relatives, the surviving spouse receives the first £200,000.

These rates haven’t been changed since 1993 and, as a result, surviving parents are urging for an update in the law. They say that they are being forced to sell the family home when their spouse dies without a Will as they cannot afford to pay the hefty inheritance tax bill.

Only spouses and civil partners are exempt from Inheritance Tax. If the dependent children inherit directly from a deceased parent, they may have to pay tax of 40 per cent and the surviving parent may have to sell the family home to pay the bill.

Research by the Department for Constitutional Affairs has found that there could be up to 9,000 estates where the statutory legacy prevents the surviving spouse from receiving the whole estate, and out of this number, around 4,000 where the surviving spouse may be at risk of losing their home.

If someone dies without a Will, the surviving spouse can claim for more than the intestacy laws give them but, to do so, they have to make a claim from the court. And this means they could face a potential legal battle with their own children.

A consultation paper, drawn up by the Department for Constitutional Affairs in 2005, recommended that the statutory legacy should be increased to £350,000 where the deceased has children and up to £650,000 if they don’t.

The Ministry of Justice said that it will publish responses to the consultation “in due course”. The Law Commission for England and Wales also intends to start reviewing the intestacy laws in the autumn and it will publish its findings by 2011.

Roy Young of Clarke & Son LLP says, “These laws show just how important it is to make a Will to protect yourself financially.” He adds, “If you want to make sure that your spouse inherits all your assets on your death, then make a Will now. If you leave everything to your spouse in your Will then they can remain in the family home and they won’t have to pay any Inheritance Tax.”

If you’re looking for some help or advice on any aspect of Wills or Inheritance Tax, either e-mail Roy Young direct or telephone Clarke & Son on 01256 320 555.

For more information, read our information sheet on Making A Will (PDF).

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