Dying Without a Will – The Rules of Intestacy

Anyone who dies without leaving a will, allows the law to dictate how their estate is divided. A person who dies without leaving a will is referred to as an intestate person. This may result in property or possessions being inherited by those that would not have been chosen by the owner and moreover, those who would have been chosen to inherit, may receive nothing. The following guide explains the legalities of the rules of intestacy, when they may apply and how this may affect the division of a person's estate.

How Will the Estate of an Intestate Person Be Divided?

The way in which an estate will be divided in cases of an intestate person varies depending on their status at the time of their death. The following rules apply:

Married/Civil Partnership With Children: A person who dies intestate but is married with children leaves all of their estate to be inherited by their spouse up to £250,000. Anything above £250,000 is then divided by two, with half going to the widowed spouse and the other half being inherited by the children when they reach age 18.

Married/Civil Partnership Without Children: The spouse of an intestate person without children inherits all possessions and proceeds of the estate.

Unmarried With Children: An unmarried intestate person leaves the full proceeds of their estate to their children at age 18.

Unmarried Without Children: An intestate person who is unmarried and has no children leaves their estate to relatives, in the following order:

• Parents
• If parents are deceased, the estate goes to siblings
• If the intestate person has no siblings, the estate is inherited by grandparents
• If there are no living grandparents, the estate will be inherited by uncles and aunts.
• The estate will go to the crown if there are no relatives from the above list. This is referred to as bona vacantia. The crown can make grants from the estate but is not legally obliged to.

Property

The impact on property following the death of a person who has not made a will varies depending on the ownership status. The following rules apply:

Beneficial Joint Tenancy - If a couple are beneficial joint tenants at the time of the death, the surviving partner automatically inherits the other partner's share of the property.

Tenants in Common - If at the time of death, the couple were partners in common, the surviving person does not automatically inherit the other share of the property upon death.

Further to this, any joint bank accounts and joint building society accounts will become the sole property of any surviving partner in the event of the death of the other.

Who Can Not Inherit When There is no Will?

Some people have no legal right to inherit in case of intestacy. They include:

• Unmarried people
• Gay or lesbian partners
• Relations by marriage (in-laws)
• Close friends
• Caring staff or support workers.

It may be possible to apply for financial provision from a court. This is particularly prevalent in cases where a couple lived together but were unmarried. A court may offer financial provisions if the couple had lived together for a minimum of 2 years directly before the death. The court will also consider applications from individuals who had been treated as a child of the person who had passed away. In cases of intestate and where finances are requested, the court may grant:

• Regular payments from the estate
• A lump sum payment from the estate
• A transfer of property from the estate

Any person who looks to seek the above financial provisions will need to seek legal advice in order to pursue their application to the court.

Deed of Family Arrangement

It is possible to rearrange the way in which a property is shared out, so long as alterations are made within two years of the death, and all those who are due inheritance agree on the new arrangement.

If all of those due to inherit can agree, the sharing out of the estate can be arranged to benefit those who would otherwise not inherit. Furthermore, they could agree that varying amounts might be inherited by some people who were due to receive differing values under the rules of intestate.

To complete a Deed of Family Arrangement, legal advice will be needed.

Inheritance Tax

The current inheritance tax threshold is £325,000. That is to say that any amount over £325,000 on a person's estate is liable for inheritance tax. The current rate of inheritance tax above the threshold is 40%. The rate reduces to 36% if at least 10% is donated to charity.

The inheritance tax due on an estate may be be higher if a will has not been written. Over £8 million was given to the government last year because of estates that were left without a will. There are some ways to avoid or reduce inheritance tax bills post death. They include:

• Gifting to a spouse or civil partner, as long as they are domiciled in the UK.
• Money can be gifted to charities tax-free. There will be reduced inheritance tax liability if at least 10% of your estate is left to charity.

The inheritance tax bill is usually paid by the administrator or executor of the estate, using funds from the estate.