The intestacy rules – who inherits if someone dies without a Will?
Who is the next of kin when there is no Will? What is the order of inheritance without a Will? What happens when someone dies without a family?
This article outlines who will inherit someone’s property when they have not left a Will or where their Will has not disposed of all of their property.
With over half of the UK adult population still without a Will, it is important to consider the impact of dying without a valid Will in place.
Many believe that, even without a Will, their loved ones will still benefit or be looked after.
Some even believe that their common law spouse or partner, to whom they are not married but with whom they have children, certain property and lived for many years, will be covered, if they do not write a Will.
However, the shock on my clients’ face is a common feature of being a Will writer when I inform them that these are not true, there is no such thing as a ‘common law’ husband or wife and that their loved ones will not be effectively looked after, unless they write a Will.
What are the intestacy rules?If you die without having made a valid Will, you are said to have died intestate. The decisions on how your property is distributed is taken out of your hands and is instead divided according to the intestacy rules. The intestacy rules first provide that payment of any debts, funeral, testamentary and administration expenses are settled. Any balance remaining (after paying any money legacies in the Will if it was a partial intestacy) is called the ‘residuary estate’. There are two types of intestacy:
Total IntestacyA total intestacy is when a person dies without leaving a valid Will. This could be for a number of reasons. They may have made an invalid Will. They may have revoked a Will they had previously made through physical destruction with the intention of revoking it or marrying or entering into a civil partnership. Or, they may have simply just not made a Will.
Partial intestacyA partial intestacy is when someone dies leaving a valid Will but the Will fails to dispose of their whole estate. This could be through a restriction on physical descriptions of property; such as disposing of their money and other personal property, but not their house (which is real property and not personal property). Or, the testator may have not disposed of all interests relating to certain property; such as making provision for a disposition of capital but not the intermediate income in certain assets. Or, the testator may have not made provision for interests arising in certain situations; such as making a gift provided certain conditions are met, but not providing what is to happen if those conditions are not satisfied. The intestacy rules apply to the part of the estate that the Will fails to cover.
What property can the intestacy rules cover?The intestacy rules only apply to property that the deceased could have left by Will. Therefore, the rules do not apply to the following:
• Assets which the deceased owned jointly with another where the right of survivorship applies.
○ The assets would pass automatically to the surviving co-owners and includes a joint bank account or a house held as joint tenants.
• Assets held on trust for the deceased that pass to another party on their death, as per the terms of the trust.
• Nominated assets which are specifically provided to pass to another person following the deceased’s death.
○ This may include a pension policy which states that proceeds will pass to a nominated person on death.
○ Any account you hold with a friendly society could also be subject to a nomination and therefore bypass a Will or the intestacy rules.
• Life assurance policies taken out for the benefit of named individuals, such as your spouse and/or children.
• Pension benefits paid by the pension fund’s trustees to members of the deceased’s family.
• Any assets which are regulated by foreign law jurisdiction.
Who can inherit under the intestacy rules?The order of entitlement under the intestacy rules depends on:
• The value of the intestate’s estate, and
• Which members of the intestate’s family survive the intestate.
Flowchart for updated intestacy rules 2020The intestacy rules operate on the basis that the estate is shared by the relatives in the highest category, to the exclusion of relatives in lower categories. The spouse or civil partner has priority over all other family members but may have to share the residuary estate in certain circumstances.
Children’s inheritance if there is no surviving spouse or civil partnerThe intestate’s children inherit the whole estate regardless of the size of the estate. If there are two or more children, the estate will be divided equally between them.
Children’s inheritance if there is a surviving spouse or civil partnerExample: Intestate (Homer) survived by spouse or civil partner (Marge) and children (Bart) This is a very common situation. Marge receives any ‘personal chattels’ absolutely. This includes personal and household items, but not cash or any items used for business purposes. Marge would also receive a ‘statutory legacy’ of £270,000 free of inheritance tax and costs plus interest valued at the Bank of England rate at the time of Homer’s death. If the residuary estate, excluding the personal chattels, is worth less than £270,000, Marge takes it all (and Bart receives nothing). If there is anything left of the residuary estate, it is divided into two equal Funds. Fund A is held on trust for Marge for life who will be entitled to receive income from it. The remainder of Fund A and all of the other Fund B are held on statutory trusts for Bart. If there are two or more children, the children will inherit Fund B in equal shares. A child whose parents are not married or have not registered a civil partnership can still inherit under the intestacy rules. These children can also inherit from grandparents or great-grandparents who have died intestate. Other than adopted children (including step-children who have been adopted by their step-parent) who can inherit under the intestacy rules, only biological children can inherit. Children do not receive their inheritance immediately. They only receive once they reach 18 years of age or marry or form a civil partnership under this age. Until then, the trustees manage the inheritance on their behalf.
Grandchildren’s inheritanceA grandchild or great grandchild cannot inherit unless:
• their parent or grandparent has died before the intestate person, or
• their parent is alive when the intestate person dies but dies before reaching the age of 18 without having married or formed a civil partnershipThe grandchildren and great grandchildren will then inherit equal shares of the share to which their parent or grandparent would have been entitled.
Who cannot inherit under the intestacy rules?A main reason why people make Wills is because they learn that certain people close to them will not be able to inherit under the intestacy rules. These include:
• Unmarried, cohabiting partners (sometimes wrongly called ‘common-law’ partners)
• Lesbian or gay partners who are not in a civil partnership
• Relations by marriage (such as step-children (unless adopted) and step-parents)
• Close friends
• Children if they have been adopted by another family.
What happens if there are no surviving relatives?If there is no single relative in any class who survives the deceased, the estate is described as bona vacantia (which means ‘vacant goods’ or ‘ownerless property’). The property would accordingly pass to the Crown. The Treasury Solicitor acts for the Crown to administer the estates of people who die intestate and without any known kin. The Crown has discretion to provide for dependents, or for anyone the intestate might reasonably have been expected to make provision. It is rare for a deceased’s estate to truly be bona vacantia as genealogists can normally locate some relatives, provided the estate is substantial enough to meet the cost. The Bona Vacantia Division (‘BVD’) publishes a list of unclaimed estates which have been recently referred, but not yet administered, as well as historic cases which have been administered but not yet claimed within the time limits for doing so. Estates where the BVD no longer has an interest will be removed as well as historic ones which expire after the 30-year time limit to make a claim, from the date of death. The list can be found here.
Can someone reject their inheritance under the intestacy rules?
In some cases, someone may want to reject their inheritance.
This may be for a number of reasons: they may have fallen out with the deceased before their death or feel that others are more in need or deserving of the inheritance.
You can refuse your inheritance through a variation or disclaimers.
There are special provisions about who receives the inheritance you wish to reject, so legal advice should always be sought on this before rejecting your inheritance.
How we can help you
The restrictive nature of the intestacy rules and the fact that they do not apply to unmarried cohabiting couples are often unknown.
Even when a Will is in place, it may not be drafted effectively so as to properly distribute all your property or the interests related to them.
The inflexible impact of the intestacy rules and their restrictive nature are often reasons to seek professional help when writing your Will.
No one ever dies intending the outcomes achieved by the intestacy rules.
If you would like to avoid the intestacy rules and take control over who gets what, please contact us on 01865 507174 or at firstname.lastname@example.org to get started and finished on leaving your legacy your way.