Last week, various news agencies reported that the One Direction singer, Liam Payne, had died without making a Will, and that a limited grant had been issued to Cheryl Tweedy, mother of Liam’s only child, and a music lawyer, to deal with his estate. This article explores the implications of the situation and discusses why it would have been better for Liam to have made a Will.
Liam didn't make a Will so he died ‘intestate’. His estate, estimated to be approximately £24.3 million will, therefore, pass according to intestacy rules. As Liam also never married, his whole estate passes to his any surviving children. This means that Liam’s son, Bear Payne, should inherit the entirety of his father’s estate once he turns 18. Had Liam prepared a Will in his lifetime, he may have considered providing for other family members, friends and loved ones, as well as considering how best to provide for Bear at his young age. This highlights the importance of preparing a Will and carrying out appropriate estate planning in your lifetime in order to ensure your wishes are implemented on your death.
We have no knowledge of Liam’s personal tax position or the location of his assets, but if Liam was subject to UK inheritance tax, a significant amount of inheritance tax will be payable.
Estate administration
When an individual dies ‘intestate’, this also means that they've not elected executors to carry out the administration of their estate. Instead, individuals must apply for Letters of Administration which enables them to administer the deceased’s estate.
Cheryl Tweedy and Liam’s music lawyer, Richard Bray, have been granted limited authority to preserve the assets. We presume that Cheryl’s appointment relates to her position as Bear’s mother, and therefore his legal representative. As yet, the administrators can't distribute the assets and are still required to apply for a full grant of letters of administration. Dealing with probate can be very complex and becomes increasingly so in cases of intestacy; if you make a Will, then you decide who to appoint as your executors.
How will Bear inherit?
As Bear is a minor, we assume that his inheritance will be held in a Bereaved Minors Trust (BMT) until he turns 18. Often, individuals may prepare their Wills to increase the age upon which their children can inherit to ensure that they're sufficiently mature enough to do so.
Until Bear reaches the age of 18, his estate will be managed by trustees who must use the income and property for Bear’s benefit. A BMT is a special trust structure in that there's no additional inheritance tax charge when Bear inherits the estate absolutely on his 18th birthday.
The age of 18 is very young for someone to inherit such significant wealth, and had Liam established a Will it's likely he would've been advised to set up a longer-term trust for Bear, either until he reached 25, or a trust which gave specific trustees flexibility to provide for Bear at the right time.
It may be that the trustees of the trust for Bear will take steps to defer when he inherits, which is possible by an application to court under the Variation of Trusts Act 1958.
Could there be claims against Liam’s estate?
Intestacy can often lead to disputes as other individuals may feel that they should have inherited. Under the intestacy rules, Liam’s partner, Kate Cassidy, will not inherit from Liam’s estate as they weren't married. If they owned any joint property as joint tenants, then Kate would automatically inherit this by survivorship.
It's possible, however, that Kate may have a claim under the Inheritance (Provision for Family and Dependants) Act 1975. This act provides a basis for individuals who were financially dependent on the deceased to claim that they should be in receipt of reasonable financial provision from their estate. Such a claim must be submitted within six months of the Grant of Letters of Administration and, therefore, gathering the evidence and filing the claim within this time frame is essential. Claims against estates are often very difficult to deal with, cost significant amounts of money in legal fees, and are very upsetting for everyone involved. If Liam had made a Will, it’s possible that some of these issues could have been avoided.
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