Craig and Donna
For Better or for Worse
Back by popular demand! Well, if 3 people* counts as “popular” and if saying they “quite liked it” constitutes “demand”. As you’ll see, I don’t do fake news about my crowds. But I am delusional so, yes, that’s my popular mandate right there! Let’s slide some more doors…
*Many thanks to Christine K., Morag M. and Claire W. for your enthusiastic support.
By David C Murray, Senior Partner at Gebbie & Wilson.
A representative reader survey (based on 1 response – thanks Donald C) reveals you are bored with the same photo of David in every blog. So here is one of his alter ego, @etseparatim
Craig and Donna – For Worse
So Craig and Donna never married. Craig had the bad grace to die without leaving a Will and his sister, Janice, jetted in to claim his whole £409,000 estate. This includes Craig’s house, which was (emphasis on the past tense) – was also Donna’s home. It is now Janice’s house and she can turf Donna out if she chooses. This is painting Janice as the Wicked Witch of the West and maybe she won’t prove to be as cold hearted as that – maybe she’ll allow Donna a few months to find a flat to rent! This is the stark reality of the position Donna finds herself in because Craig didn’t provide for her in a Will.
“Surely this is unjust: surely there is something I can do?” entreats Donna, now more in alarm than indignation. And, yes, there is: either try to negotiate an agreement with Janice or else raise a Court Action, effectively against Janice, seeking provision from Craig’s estate. In practice, it may be a combination of the two: raise the Action (which has to be done within 6 months of Craig’s death) and, at the same time, try to reach an out-of-court settlement with Janice. This is all rather ugly, expensive and emotionally draining but Donna really has no choice.
Since Court judgements are always unpredictable, it is going to be in both parties’ interest to agree terms. The most a Sheriff could award Donna here is £351,000 (which would have been her entitlement had she been married to Craig). So Janice will get a minimum of £60,000 come what may. She may well get much more than that in Court and it will be a fine judgement to be made by both women and their lawyers as to whether to stick or twist: to settle or to take their chances in Court. Would Donna take a £200,000 offer from Janice? Would Janice agree Donna’s counter-offer that she’d settle for £300,000? Risk and reward. Fear and greed. And then there’s the curve ball of Craig’s NHS pension!
Nominate, nominate, nominate
Craig automatically joined the NHS pension scheme on his first day as a GP. This was before he’d even met Donna and he completed a form, nominating his parents to get half his pension benefits on his death and Janice to get the other half. If Craig had subsequently married Donna, then in terms of the pension scheme’s rules, this would have superseded Craig’s earlier nomination and Donna would have been entitled to all Craig’s pension death benefits (which, between his lump sum and death-in-service benefit, amount to £532,000).
But Craig and Donna didn’t marry. Nor did Craig complete a “Non Legal Partner” Nomination form in Donna’s favour. The thought never even occurred to him. So Craig’s original nomination, of his now deceased parents and his still very much alive sister, stands. That means Janice gets half of Craig’s pension death benefits (free from any inheritance tax “IHT” – but we’ll come back to that). And the other half of these benefits? Well since Craig’s nominees for that (his parents) are both deceased, that half falls into Craig’s estate and is up for grabs in Donna v. Janice, coming soon to a Sheriff Court near you.
And there’s more bad news …
What else? Ah yes – IHT. Craig’s estate now totals £675,000 (including the unnominated half of his pension death benefits). No IHT is payable on estate passing to a spouse. With that exception – which doesn’t apply here of course – only the first £325,000 of an estate is free from IHT, with the remainder being taxed at 40%. Arithmetic time: £675,000-£325,000 = £350,000 x 40% = a tax bill of £140,000. The taxman doesn’t care who gets what in Donna v. Janice. He only cares about his £140,000 and he’ll take that up front and off the top, thank you very much.
Next time: Craig and Donna – For Better.
The doors slide again and this time – surely, surely – a happy ever after ending for C & D? Well actually no. I’m not going to lie to you. But perhaps the least worst of outcomes could be arranged, just to cheer us all up. I’ll work on it.
For advice or more information on this topic – or to make that Will writing appointment, please call me on 01357 520082 or
email me at firstname.lastname@example.org
Or you can simply drop in to Gebbie & Wilson in the Common Green to arrange your free initial consultation.
I’ve also prepared a Wills Worksheet to help you think through the provisions you’d like to make in your Will. I’ll be pleased to email this to you on request.
A few “Likes” of the Gebbie & Wilson Facebook Page would be greatly appreciated – and for more from me, you can follow me on Twitter @etseparatim