The Effect on Wills of Marriage and Divorce

Marriage

Many people do not realise that a Will is automatically revoked if they marry or enter into a civil partnership.

This will result in them dying ‘intestate’ unless they sign a new Will immediately afterwards. At what is obviously a busy and stressed time, this can be often overlooked. Under current intestacy rules, only the first £250,000 and personal effects will pass to the deceased’s surviving spouse or civil partner outright. What happens to the rest of the estate will depend on value and which other relatives survive, but can mean that trusts arise so the position is far from straightforward.

There is an exception to the automatic revocation of a Will by marriage or entering into a civil partnership. If the Will is re-signed in advance ‘in contemplation’ of the marriage or civil partnership, then it will not be revoked, but it is vital to ensure it is correctly worded.

Divorce

Divorce does not completely revoke a Will, but it will mean that a gift left to a former spouse or civil partner in the Will fails. Whilst this is often the desired intention, it is essential that a divorcing spouse reviews their Will during divorce proceedings to ensure that they address any other changes that should be made; e.g. to the appointment of guardians and to remove the gift to the spouse or civil partner altogether if they wish. The appointment of a former spouse or civil partner as an Executor is automatically revoked by divorce and so replacement Executors may also be required.

The unexpected death of a party to divorce proceedings is not as uncommon as you may think and can cause undesirable outcomes. It is important to note that until the divorce decree is made absolute, a spouse or civil partner remains as such. Therefore, if you die before the divorce is finalised and have made a Will making provision for your spouse or civil partner, he or she will still inherit your estate. If you die mid-divorce leaving no Will, the rules of intestacy will still stand to make provision for the spouse or civil partner.

Inheritance Tax on First and Second Death

First Death

Since 9th October 2007, it has been possible to transfer the inheritance tax nil rate band (currently £325,000) between spouses or civil partners - broadly on the death of the surviving spouse (or civil partner). Assuming that the nil rate band was available in part or in full from the first spouse to die, then two sets of nil rate bands apply on the second death; up to £650,000 (based on current figures).

In order to make a claim to transfer the unused nil rate band, on the second death, a marriage certificate will have to be produced as evidence to the Inland Revenue. Divorce will sever the ability to transfer the nil rate band.

Second Death

Where there is a second marriage it is important to distinguish between tax considerations and the interest of the family overall. It is likely that each party to the new marriage has assets derived from, and obligations to the children of former marriages. In such situations, it is crucial that Wills are updated to take account of changing circumstances and to offer some protection for children from early marriages / relationships if required.

In these instances, careful planning is required to ensure that the effect of marriage and divorce does not adversely impact on personal intentions. For further advice regarding Wills, inheritance tax planning, powers of attorney and divorce please contact a member or our Private Wealth Department on 01242 224433 or email us at wills@bpe.co.uk

These notes have been prepared for the purpose of an article only. They should not be regarded as a substitute for taking legal advice.