In June 2014 Rik Mayall, aged 56 died suddenly after his regular morning run. His estate was worth £1.2m. Rik didn’t have a valid Will, notwithstanding that in April 1998 he had a quad bike accident that resulted in him suffering a fractured skull. He was in a coma for several days and his family was warned that he could die or have brain damage.
Rik surprised doctors after his accident by making a good recovery and returned to work in 1999, but he developed epilepsy and had to take daily medication; his friends said that he had never been quite the same afterwards.
At the time of his death intestacy rules in the UK for a person married with children provided that their personal effects and the first £250,000 go to their spouse or civil partner. The balance of the estate is split equally between the spouse and the children. However the spouse only takes a “life interest” in the share of the assets above £250,000, and when the spouse dies this share passes to the children (this changed in October 2014).
In the UK inheritance Tax isn’t payable on legacies between spouses. It is worth noting that Rik’s estate would only have been made up of his personal assets, possessions and investments. Any jointly owned possessions or property (including joint bank accounts) Rik held with his wife Barbara are not included as they pass by survivorship on his death to her.
Barbara would have inherited the first £250,000.00, of Rik’s estate with no inheritance tax to pay. Similarly her “Life Interest” of £475,000.00, (one half of the remainder of his estate) did not attract inheritance tax. However the remaining £475,000.00 shared by his three children is treated differently; the first £325,000.00 not attracting tax but a 40% inheritance tax on the balance.
Inheritance tax could have been avoided completely if Rik had a will leaving the bulk of his estate to his wife.
In making a Will you control what happens to your estate, it allows your wishes with regard to your savings, assets and investments to be stated. Intestacy rules are applied regardless of your circumstances meaning your assets and personal belongings go to people as directed which is not necessarily the people you might have wanted them to go to. In some jurisdictions not making a Will can create a potential inheritance tax liability, which could be avoided with a proper estate planning.