Survivorship  Clause – Is this kind of clause redundant in a Will? It is an interesting question. In her latest article, Laura Richardson looks to provide you with the answers that you need to know . . .

A survivorship clause states that a beneficiary must live for a specific amount of time in order that they can inherit from a Will. The standard time period for a survivorship clause is 28 days.  The original purpose of the clause was to avoid an Estate being doubly liable for Inheritance Tax within a short period of time should a beneficiary die shortly after inheriting.

Spousal relief

Inheriting from your spouse or civil partner does not normally attract an Inheritance Tax liability so if the first spouse to die leaves their entire Estate to the remaining spouse there will be no Inheritance Tax liability. Therefore, if you intend to leave your estate to your spouse, regardless of when they die there will be no inheritance tax liability (until the event of their death) so the effect of a survivorship clause in relation to your spouse would be rendered redundant.

Transferable nil-rate allowance

Inheritance tax is payable on Estate value over £325,000 meaning that if your Estate is worth less than £325,000 then there will be no Inheritance Tax due. This £325,000 nil-rate amount actually forms a personal allowance and due to changes in the Inheritance Tax law, some Estates will be eligible for further tax relief beyond the £325,000 figure. For example, if you leave all of your estate to your spouse, then the Estate is not liable for Inheritance Tax and none of your £325,000 nil-rate personal allowances will have been used. This unused personal nil-rate allowance can be transferred over to your surviving spouse to be applied alongside their own personal nil-rate allowance upon their death which effectively doubles the nil-rate allowance which will be applied to the Estate! In terms of the use of a survivorship clause, if you die and your spouse does not survive beyond the allotted time stated in the survivorship clause then the ‘gift’ to your spouse will be deemed to have failed so as to mean that your personal nil-rate allowance would die with you leaving your beneficiaries with a potentially larger inheritance tax bill.

As with all Inheritance Tax reliefs, there are some exceptions and qualifications that must be met in order for them to be applicable. As such it is always advisable to discuss your personal situation with a specialist will writing solicitor such as at Andrew Douglas Wills & Legal Services. At Andrew Douglas Wills & Legal Services we offer expert advice in a professional yet ‘down to earth’ manner in order to guide you through this complex area of the law and ensure that your Will best reflects your wishes and provides the maximum inheritance for your loved ones. We remain fully operational during the Covid-19 pandemic via our popular ‘Wills through a Window’ service. Call today to book your free initial consultation!

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