Article by

Ross Brown

Dealing with the death of a loved one, particularly at this time of year, is never easy. Although we’re all aware of the inevitability of the end, in my experience often people are unfamiliar with the legal process or the legal rights of certain family members after someone has passed away.

Recently I spoke to a widowed spouse whose husband had two adult children from a previous marriage. Since his Will stated that his estate be left to her, she assumed that she would inherit everything. In this instance, however, the law allows the deceased’s children to have a claim on the estate.

While this does not include the house, it does include one third, if the individual was married, or one half, if not, of what’s referred to as the “net moveable estate” which includes cash, shares and investments. The claim must be paid before the remainder of the estate in distributed in accordance with the Will.

If family relations are good, it’s common for children not to claim, but where the children are estranged from a parent, things can be very tricky.

Similarly, if a spouse is not provided for in a Will, they can also claim their legal rights, even if they are separated but not divorced.

Another common area of confusion is Inheritance Tax. There is nothing to pay below a certain threshold and there are other exemptions if, for instance, the house has been left to children or if the deceased had business interests. Certain exemptions apply automatically but others need to be claimed within a strict timeframe.

The way the Will has been drafted can also have an impact on Inheritance Tax and amending the Will using a Deed of Variation after death can, on occasion, help reduce the tax liability, especially if the Will predates some of the changes which have been made to the tax rules in recent years.

When it comes to ISAs, which do have certain tax advantages, it’s sometimes thought that they are not subject to Inheritance Tax after death. However, this is not the case and their value will be included and taxed as part of an estate.

Those who are owed money by the deceased have six months to make the Executors aware of this. If the Executors pay out the estate before the end of this period, they can become personally liable for the debt.

One thing that is clear, given all of the above, is that winding up of an estate takes time, and usually more than anticipated. There can be a lot of work involved initially calculating the assets and liabilities someone had, especially if those dealing with the estate – the Executors – don’t have a good handle on the deceased’s affairs.

Broadly speaking, it takes at least six months to complete the administration process and often it takes a good deal longer. Being clear about the legalities involved can not only shorten the timescales involved but also make it easier for those left behind.