Make a will or risk consequences

If you do not make a will, on your death your property and assets will be dealt with under the laws of intestacy. It is estimated that about seven out of ten people in England and Wales die without making a will.

The order of distribution
It is often wrongly assumed that if you do not make a will, your property and assets will automatically pass to your surviving spouse (i.e. your husband or wife) or civil partner but this is not necessarily the case. Your property and assets (also known as your estate) will be distributed according to the table below.

You will note from the table that your estate can only pass to your relatives. The only way you can define to whom it passes, and in what proportions it is given, is through a will.

The matrimonial home
If you own your matrimonial home with your spouse/civil partner and hold it as joint tenants at the time of your death, your spouse/civil partner will automatically become the sole owner of the property. Therefore, property held as joint tenants will pass outside the rules of intestacy. Details of how you own your property can be obtained from the Land Registry.

If your matrimonial home is held by you and your spouse/civil partner as tenants in common at the time of death, your spouse/civil partner will only be entitled to their share of the property (usually 50%). Your share will form part of the estate. Therefore, depending on the value of the property, there is a risk that your spouse/civil partner may not be able to continue to live in the property after your death.

If the matrimonial home is held by you alone at the time of death, the entire property will form part of the estate and will be distributed according to the rules. Again, there is no guarantee that your spouse/civil partner will be able to continue to live in the property, or indeed that they will even inherit a share of the property.

Beneficiaries
If surviving relatives are not easily identifiable, it may be necessary to employ the services of a professional tracing company. The expense for this will be borne by the estate and can cost many thousands of pounds. The amount of money available for distribution to the beneficiaries will be reduced and the money that is left may be distributed to distant relatives not known to you.

Inheritance Tax
A will may substantially reduce the level of Inheritance Tax that is paid from your estate.

Intestacy may arise in other ways. The most common of these are where the will fails to deal with all the estate; or the will was not validly made (e.g. you lacked mental capacity when you made it); or the will has been inadvertently revoked by a subsequent event (e.g. on marriage, a will is automatically revoked, unless it specifically contains provisions to the contrary).
It is therefore important that you review your will regularly (at least every five years) and if you have any concerns about your will, you should consult a solicitor.

For further information see the full article on our website at www.morrlaw.com or contact David Kingham on 01737 854529, or email david.kingham@morrlaw.com

Surviving relatives	Where surviving spouse or civil partner	Where no surviving spouse or civil partner
Children or remoter descendants	Spouse/civil partner will take: 1. your personal possessions 2. £125,000 cash or equivalent 3. a right to use and enjoy half of the remaining estate for their lifetime. On their death, this half share in the estate will pass to your children equally The children will take: 1. the remaining half of the estate equally If a child dies before you, the share that he/she would have taken will pass to any children that he/she may have	All your estate will pass to your children equally, with any share of a child who has died before you passing to his/her children equally
Parent(s), and you have no children or remoter descendants	Spouse/civil partner will take: 1. your personal possessions 2. £200,000 cash or equivalent 3. half of the remainder of the estate entirely Parent(s) will take: 1. the remaining half of the estate entirely (equally if both of them survive you)	All your estate will pass to your parents, equally if both of them survive you
Full brothers and sisters (including their children)	Spouse/civil partner will take: 1. your personal possessions 2. £200,000 cash or equivalent 3. half of the remainder of the estate entirely Brothers and sisters will take: 1. the other half of the remainder of the estate entirely and equally If a brother or sister dies before you, the share that would have passed to that individual will go to their children instead (i.e. to your niece or nephew)	All to your brothers and sisters in equal shares (or to the children of the brother or sister if they have died before you)
Half brothers and sisters (including their children)	All to your surviving spouse/civil partner	All to your half brothers and sisters in equal shares (or to their children as above)
Grandparents	All to your surviving spouse/civil partner	All to your grandparents (equally if both survive you)
Full uncles or aunts (i.e. the brothers and sisters of a parent, including their children)	All to your surviving spouse/civil partner	All to your uncles and aunts equally (or to their children as above)
Half uncles and aunts (i.e. the half-brothers and half-sisters of a parent, including their children)	All to your surviving spouse/civil partner	All to your half uncles and aunts equally (or to their children as above)
No surviving relatives	All to your surviving spouse/civil partner	All to the Crown (i.e. to the Government)

Commercial leases – know the deal

Commercial leases, just like properties, come in all shapes and sizes and are prepared and taken by all sorts of people and businesses and for all kinds of reasons.

Commercia leases, just like properties, come in all shapes and sizes and are prepared and taken by all sorts of people and businesses and for all kinds of reasons.

It is important to ensure, whether you are a landlord or a tenant that you have the right format of lease to suit your requirements and that the essential ingredients have been incorporated.

The Code for Leasing Business Premises in England and Wales 2007 which was launched earlier this year has been endorsed by The Law Society, RICS and many landlord and tenant representative bodies. It was published with the stated aim of helping the property industry in its quest to promote efficiency and fairness in landlord and tenant relationships.

That being the case it is interesting to note the key areas of the Code.

They are the areas which are crucial to the way a lease can work for landlord and tenant; areas which have often caused difficulty or have been seen as unfairly dealt with in the past. Unfortunately the message of the Code still seems to be taking a long time to filter through to people and organisations.

What are these key areas?

• Lease negotiations. Here the emphasis is on the need for clarity and flexibility when lease terms are being negotiated. As part of the Code’s suite of documents there are even model heads of terms. If all agents used these or even used them as a checklist the parties to leases and their advisers would save an awful lot of time and trouble once the detailed wording of the lease comes to be worked out. Time is money!
• Rent deposits and guarantees
• Length of lease term, break clauses and renewal rights. We have featured break clauses in earlier editions of this publication. The code states that the only pre-conditions to tenants exercising any break clauses should be that they are up to date with the main rent, give up occupation and leave behind no continuing subleases. This is a heavily litigated area and tenants can find it virtually impossible to exercise break rights where more conditions are imposed. There are traps for landlords who have the right to break a lease as well.
• Rent Review. Some of the issues here are of a highly technical nature. It is not surprising perhaps that this is one of the most heavily litigated areas of property law. Landlords should be aware that being too hard or restrictive in relation to other lease provisions can backfire come the time for a rent review. The Code suggests that tenants should be offered priced alternatives based on whether they want to go for a traditional upwards only review or an upwards only review. I have to say there is little evidence of this happening. This might change if the market turns down.
• Assignment and subletting. There is plenty of scope here for unduly restrictive terms to be incorporated. The Code advocates as few restrictions as possible. At one time an original tenant might remain liable under its lease covenants many years after it has assigned its lease. There are still plenty of ‘old’ (pre January 1996} leases still around. A tenant can still in new leases be asked to guarantee the obligations of its immediate successor. Even a tenant’s guarantor might be called on to guarantee the tenant’s immediate successor although whether this is legal is still not known. Better rather to negotiate alternatives if possible.
• Service charges. This is another complex subject but the RICS issued a Code of Practice on Service Charges in Commercial Property in 2006. Again the emphasis is on clarity, fairness and protection for tenants.
• Repairs. I would be a wealthy man if I had a pound for every three or five year lease where in the first draft at least, or in the ‘agreed’ heads of terms a landlord has sought to impose full repairing terms on tenants. The Code states that repairing obligations should be appropriate to the length of the lease term and the condition of the premises. Did you know that an obligation to ‘keep’ property in repair is tantamount to an obligation to first of all put and then keep the property in repair? This is yet another trap for the unwary. A lease does not always mean what a lay person thinks it says!
• Alterations and Changes of Use. The problem with provisions dealing with alterations is that they often give landlord’s the upper hand by providing that at the end of the lease the premises have to be put back into the state they were in before the change. There are plenty of situations where this would be reasonable from a landlord’s perspective. In other cases however it might be unreasonable.
• Insurance. With terrorism having been in the news for so many years now people may be aware that terrorism cover under insurance policies for commercial premises is limited to £100,000 unless additional cover is specially taken out. The problem for landlords is that if they take out this additional cover for one property they have to take it out on all their properties. There is no ability to cherry pick. There may be other risks which are not covered such as heave and subsidence. The Code states that if damage or destruction is caused by an uninsured risk the tenant should have the benefit of rent suspension, just as they should if damage is caused by an insured risk. Tenants should also have the right to terminate the lease unless the landlord elects to rebuild at the landlord’s own cost.
• Ongoing management. If the tenant has not repaired premises to the standard required by the lease the landlord can serve what is known as a schedule of dilapidations. Often these are served at the last minute, or even after the lease has come to an end. The Code encourages landlords to serve terminal schedules at least six months before the end of the lease term. The problem for tenants is that if the lease is coming to an end (or has come to an end) they will not have the time or ability to carry out the works themselves at reasonable cost. After the lease has ended they are not entitled to enter the property. There is some statutory protection for tenants, which Morrisons can advise on and it might be worthwhile for a tenant when faced with a schedule to engage the services of a building surveyor.

If you are thinking of granting or taking a lease of commercial property, renewing a lease or if you have a problem with an existing leasing arrangement why not have a word with me to see how I or another member of the Morrisons commercial property team can help. Commercial landlord and tenant work is an area in which we have a strong reputation.

For further information contact Chris Webb on 01737 854556 or email chris.webb@morrlaw.com