Effects of Intestacy
Mr & Mrs Williams were both aged 55. They had a son aged 23 and a married daughter of 27. Mr Williams had recently inherited a house from his mother and had sold this for
£80,000; he had invested half this money in shares and the other half was on deposit in the Building Society.
Mr Williams died unexpectedly without leaving a Will. He had been expecting to retire within the next few years and had built up £93,000 in his share portfolio he also had
£96,000 in bonds & cash. Fortunately Mr & Mrs Williams had paid off their mortgage and their house was in joint names.
Excluding the house and personal chattels, Mr Williams left an estate of £269,000. Because there was no Will, Mrs Williams was allowed £125,000 absolutely. Of the remaining £144,000 Mrs Williams was entitled to £72,000 to provide an income but she was not allowed to spend any of this capital she had to pass this on to her son and daughter.
The other £72,000 should be divided between the son and daughter. Mrs Williams's daughter and son-in-law were running their own business; within 15 months of Mr Williams's death, their business ran into trouble accumulating large debts. The daughter's inheritance of £36,000 was counted among their assets and she had no option but to take this sum out of the family funds.
The story above is fairly typical. Probably, Mr Williams would have wanted his wife to have full unrestricted access to his estate. Mrs Williams is now much less comfortably provided for than she would have been if Mr Williams had written a professional Last Will
& Testament. However, there are more alarming examples. If the house is not in joint names, or if the estate is not passing between husband and wife then it frequently occurs that the family home has to be sold to meet the requirements of the Intestacy Rules.
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The Importance of Succession Planning
By Lee Allan
Head of CBN Financial Services |
Lee is a Life Member of MDRT the premier international association of financial professionals and speaks internationally as an Ambassador for MDRT with Articles published in the Manchester Messenger, the monthly journal of the Manchester Law Society (December 2008) and in the Newcastle News, the monthly journal of the Newcastle upon Tyne Law Society (June 2009).
Most business owners would, if asked be willing to implement a
Business Continuity plan and avoid the disastrous consequences and hardship that they, their families and their employees may face on the death and or disability of a shareholder/Key person.
It’s just that no one has ever discussed it with them!
How long do you think a businesswould survive if it lost a Shareholder/Key Person? Not as long as you might think as
the failure rate is frightening,
17% collapse in month one, 6% one to three month, 15% four to six month, a further 15% six month to one year and only 47% survive longer than one year. (Source: Legal & General Protection Survey 2003).
Succession planning has recently been formalised in the new British Standard, Business Continuity BS25999.The need for Shareholder Protection arrangements along with the relevantdouble option agreements, Key Person loss of profit insurance and loan protection cover etc, are all features of this latest standard.
Business owners don’t often consider how they would cope financially if a shareholder or a key worker in their business fell ill ordied unexpectedly. Over 100,000 UK businesses fail each year because the owners haven’t adequately planned for the future or protected against the unexpected and thousands more face realfinancial hardship. (MORI Succession Survey November 2006)
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