Rik Mayall’s
Inheritance tax bill could be
NO JOKE
I was truly upset to hear the news that one of my favourite ever
comedians, The Rik Mayall (as he liked to be styled) had died
in June 2014 aged only 56. Star of such shows as The Young
Ones, Bottom, Blackadder and The New Statesman, Rik was
well-loved but, it seems, not so well-advised – he died without
leaving a valid Will. Given that he had already looked death in the
face in 1998 having suffered a major accident on a quad bike,
with injuries including a fractured skull, that Rik did not have
a valid Will is quite surprising, and could create some serious
financial problems for his family because he had not taken steps
to reduce the possible inheritance tax due on his estate.
The lack of a Will means his estate will
have to be dealt with under the intestacy
rules and there may be a hefty inheritance
bill to pay, as although the rules were
updated slightly in October 2014, the new
rules won’t apply to Rik’s estate.
Rik was married to Barbara and had
three adult children. If he had made a Will
it could reasonably have been expected
to say that he left everything to Barbara
if he died before her, and then on her
death, she will probably divide the estate
(what she owns in her own right and
what she inherited from Rik) between the
children. For inheritance tax purposes,
because gifts between spouses are free
of tax, there would have been no tax
payable on whatever Rik left to Barbara
when he died. Barbara’s Executors could
then apply on her death to bring forward
his tax free allowance, or nil rate band, of
(currently and at Rik’s death) £325,000 so
that there was a threshold of £650,000
before tax was due. Barbara could also
take other tax planning steps before she
died to reduce the potential inheritance
tax liability on her death, possibly
meaning there will be no tax due at all.
However, the intestacy rules as applied
to Rik’s estate (estimated as being worth
£1.2 million) will mean that apart from
assets owned jointly with Barbara as
joint tenants and which will pass to her
automatically as surviving co-owner, all
she can initially expect to receive will be
£250,000 and his personal possessions.
Everything over £250,000 will be split in
two – half goes straight to the children
and the other half is invested so that
Barbara will only receive the interest
or income earned on that share (a “life
interest”), with the capital then also
passing to the children on her own death.
Had Rik died after the intestacy
provisions changed in October 2014,
the situation is almost the same, except
there is no life interest so Barbara would
receive all of her half share straightaway.
The part of the estate passing to Barbara
will be free of inheritance tax because
she and Rik were married. But if the
share going to the children is worth
more than £325,000 then there will be
a tax bill – inheritance tax is charged
at 40% and quickly adds up. It may be
possible for the family to vary the Will to
redirect assets and reduce the potential
tax liability (it worked for the Milibands)
but this must be done with expert legal
advice and it seems that the use of such
Deeds is intended to be reviewed by the
government in the future.
Not having a Will also means that Rik did
not have the chance to leave anything
from his estate to his friends, more
distant family members or charity, which
many people like to do. Effectively,
intestacy is the Government deciding
who inherits your estate. If you don’t like
the idea of that then the answer is clear
– take professional advice and have a
proper legal Will prepared. If you already
have a Will, review it every now and then
to make sure it is still up to date and valid
and take action to make changes with
the advice of your lawyer – it is not clear
whether Rik didn’t write a Will or whether
he left something that was invalid.
Had he not been married to Barbara
then the position would potentially
be even worse for her as under the
intestacy rules, she would not have been
automatically entitled to anything they
didn’t own jointly and may have had to
go to Court against her own children
for a share of his estate. Everything
would have gone to the children and this
would also have increased the potential
inheritance tax bill even further.
You may not be a world-famous
comedian, your estate may no