30 Day Survivorship clause - needed?

Sea_Shell

Hi All. Question.

If a married couple (no kids) both have wills that leave everything to each other initially, and also both wills then leave all to siblings 50/50 (one from each side of family) on second death....is there any need or benefit in having a 30 day survivorship clause??

If the clause was included, does that mean that a surviving spouse can't begin to sort out the estate during the first 30 days....just in case.

Obviously I understand that there is nothing to stop a surviving spouse from re-writing their will in the future, but just interested in the now.

Cheers folks.

Keep_pedalling

Any clause like that is not going to prevent any executor getting the process of probate underway.

The main issue with wills that leaves everything to beneficiaries who all belong to a single generation is that if you are the last man standing then unless your will contains a plan C, it fails.

You really need to get your wills drawn up by a solicitor, who will make sure all the what if situations are covered.

Mojisola

Sea_Shell wrote: »

If a married couple (no kids) both have wills that leave everything to each other initially, and also both wills then leave all to siblings 50/50 (one from each side of family) on second death....is there any need or benefit in having a 30 day survivorship clause??

Without a survivorship clause, if A and B died in the same accident it would have to be decided which of them died first (if not possible, then the elder would be deemed to have died first) and then their estate would have to be transferred to the deceased spouse.

The will of the second to die would then be passed on to the named beneficiaries.

With a survivorship clause, both wills can be taken to probate immediately.

MichelleUK

Sea_Shell wrote: »

Hi All. Question.

If a married couple (no kids) both have wills that leave everything to each other initially, and also both wills then leave all to siblings 50/50 (one from each side of family) on second death....is there any need or benefit in having a 30 day survivorship clause??

Great care needs to be taken with these clauses if one of the spouses' assets exceed the nil rate band and the other does not.

An example...
Husband has assets of £550k and wife has assets of £100k. Husband dies first, wife dies 14 days later. Husband and wife leave 100% to spouse, then to siblings if predeceased.

Result with 30 day survivorship clause - husbands estate does not pass to wife, so the estate will suffer IHT tax on (£550k - £325k) £225k i.e. £90k IHT paid. The wife's estate will pay no IHT as it is under the nil rate band.

Result with no 30 day survivorship clause - husbands estate passes fully to wife with no IHT. Wife dies 14 days later and estate is now worth £650k but as she also has her husbands nil rate band, no IHT is due.

So, in this example, that one little clause cost £90k through bad planning.

As an aside, the clause will make no difference to the application for probate. The probate/HMRC forms ask if the estate has an interest in another estate. If this can be quantified, that is fine, if not, HMRC will stipluate that they must be informed when the value is known if it effects whether the estate will become subject to IHT.

Sea_Shell

Thanks Michelle

I am right in thinking that the marital home owned under Joint Tenants, would fall outside of Estate. So that it would only be an issue if total assets of either party exceed £325k excluding the house?

Sea_Shell

Keep_pedalling wrote: »

The main issue with wills that leaves everything to beneficiaries who all belong to a single generation is that if you are the last man standing then unless your will contains a plan C, it fails.

.

Yes, very aware of this. Plan is to re-do wills as "life-events" occur as we all get older. We've seen the mess "un-re-written" wills can cause!!

Yorkshireman99

Sea_Shell wrote: »

Thanks Michelle

I am right in thinking that the marital home owned under Joint Tenants, would fall outside of Estate. So that it would only be an issue if total assets of either party exceed £325k excluding the house?

The bottom line is to get the wills drawn up by a specialist solicitor with experience in IHT planning. No DIY or using a will company. It may cost a little more but the advice can save much more.

Keep_pedalling

Sea_Shell wrote: »

Yes, very aware of this. Plan is to re-do wills as "life-events" occur as we all get older. We've seen the mess "un-re-written" wills can cause!!

Be warned that it is perfectly possible that you may no longer have the capacity to make changes later in life, so better to cover that possibility now.

da_rule

Sea_Shell wrote: »

I am right in thinking that the marital home owned under Joint Tenants, would fall outside of Estate. So that it would only be an issue if total assets of either party exceed £325k excluding the house?

Their share in the house still counts for IHT, it just passes outside of the will. As will certain other jointly owned property, such as the contents of a joint bank account.

da_rule

Something else to consider is that if, as a married couple, they leave everything to each other, they will benefit from the spousal exemption. This means that the value of any property that transfers between them is excluded from the IHT calculation. Therefore, if the husband dies and leaves everything to the wife then there will be no IHT to pay (assuming there aren't certain trusts and that no considerable gifts were made to others before death). When the wife then dies she will also benefit from all of her late husbands nil rate band, as well as her own. This means that she could have an estate of £650,000 before paying IHT.

MichelleUK

Sea_Shell wrote: »

Thanks Michelle

I am right in thinking that the marital home owned under Joint Tenants, would fall outside of Estate. So that it would only be an issue if total assets of either party exceed £325k excluding the house?

Sort of.....this is another area than is often misunderstood on this forum.

If a house is held as a joint tenancy, the part owned by the deceased is still part of the estate for IHT purposes. In the case of a home owned by a married couple or civil partners, no IHT will be payable on the house part, as it automatically becomes fully owned by the spouse and is not over-ridden by any clauses in the will.

If the joint owners were not married, the share is subject to IHT even though the house is now totally owned by the joint tenant. If there are no funds in the estate, the other owner could end up having to sell the house to settle the IHT.

A home held as tenants in common is part of the estate for IHT purposes and passes as per the deceaseds instructions in the will.