Most people are familiar with the idea that they should write a will at some point so that they can pass on any property or assets to family or loved ones. Even though most people know that they probably should write a will, many people pass away without having composed one. There are a variety of reasons for this: some people don’t believe it is necessary because they don’t feel that they own much, others may unfortunately die before it occurs to them to write one, and yet others believe that a verbal communication to a family member may suffice. In any case, when an individual dies with no written will, he or she is said to have died intestate.
In a typical situation, a will names someone as the executor of an estate. In fact, other than to dispense wealth or assets, this is the main purpose of a will. The executor is the person who carries out the instructions of the will and is accountable for property, taxes, and other legal matters. The executor may also yield these responsibilities to a solicitor. In case of intestacy, there is no executor and legal obligations automatically go to certain parties based on the surviving family members. The following is a set of guidelines for how to ascertain the next of kin in case of intestacy.
The most common circumstances surround intestacy are when the deceased dies leaving a spouse or civil partner and children. In this case, and if the net worth of the estate is £250,000 or less, the entire amount passes to the spouse or civil partner, assuming her or she survives the deceased party by at least 28 days. If the estate is worth over £250,000, the first £250,000, in addition to any personal possessions, passes to the spouse or partner. Half of the rest is distributed equally to any children.
Another scenario is when the deceased dies leaving a spouse or civil partner (from here on, simply ‘spouse’ will refer to either), and either parents or siblings. If the net estate is £450,000 or less, the spouse inherits all of it, assuming he or she survives the deceased by at least 28 days. If the estate’s net worth is greater than £450,000, the spouse receives £450,000 and half of the rest of the estate. The other half is distributed equally to the parents, but if there are no surviving parents, it is then equally distributed among the deceased’s whole-blood siblings. However, if the spouse survives the deceased, and there are no parents and no whole-blood siblings, the spouse receives the entire estate– again provided that he or she survives the spouse by a minimum of 28 days.
These rules only apply to spouses to whom the individual was married to or in a civil partnership with at the time of death. A spouse from whom the deceased had already divorced is not considered for next of kin in the case of intestacy. However, partners whose separation was only informal may still stand to inherit under the rules of intestacy.
When the deceased leaves children, but no spouse, the entire estate is divided equally amongst children, which they receive once they are 18 years old or older. Thus, adult children receive inheritance immediately upon the execution of the will, while minors must wait until they reach majority status. It should be noted that it is possible to prevent children from accessing the entirety of an inheritance by establishing a trust (because many parents doubt the financial acumen of newly-adult children). However, that is a matter for another article.
In the case of the deceased leaving neither spouse nor children, the net estate passes to the deceased’s parents in equal shares. If there are no parents that survive the deceased, the estate is split equally between any whole-blood siblings. When there are no living siblings, the next people in the queue are grandparents, who receive equal shares of the estate if there are no spouse, children, parents, or siblings. If the deceased is sans surviving grandparents, whole-blood uncles and aunts are next; they receive equal shares. In the absence of whole-blood aunts or uncles, half-blood uncles or aunts receive equal shares.
To complicate this already complex matter, if any of the aforementioned parties is deceased, but has children, the children receive equal shares of what would have been the share of the original party. For example, if a person dies leaving no spouse, children, parents, grandparents, aunts or uncles, but has two surviving cousins, each cousin would receive half of the estate. This principal operates as a cascade through the generations; perhaps those cousins from the example are no longer alive, but their children are. In this case, the cousin’s children would receive equal shares of the estate.
If it has been determined that the deceased has not been survived by any spouse, parent, child, sibling, grandparent, aunt or uncle, or any of their offspring, if someone has died intestate, the entire estate is then passes to the Crown. So, if you happen to be a single person with no living relatives and you do not want your estate going straight to the government when you die, be sure to leave a will! Once again, verbal instructions to family, friends, or loved ones are not sufficient; a written will is required to establish who receives what and how much of it they receive.
If you find that you are still confused about intestacy (and it is quite a detailed subject), please refer to this concise and informative resource.
Once the next of kin has been identified through the rules outlined above, that person applies for a grant of representation, which grants the person the legal right to manage the property and estate of the deceased. However, this person does not need to apply him or herself directly, which is why IWC Probate Services is happy to manage the task. This person is responsible for paying any inheritance tax (only necessary if the estate is worth £250,000, and then a 40% tax on anything above the so-called ‘nil-rate band’) and taking care of any debts that the deceased may have left.
While these rules are in place for the many people who do not leave a will, it is highly recommended to write a will and name beneficiaries so that your wealth and assets are dispensed with in a way that you find satisfactory. Intestacy can often be a headache for those involved. If you aren’t sure about how to compose a will, check out these resources for some guidance
Angie Picardo is a staff writer for NerdWallet. Her mission is to help consumers stay financially savvy and save money with NerdWallet’s best credit cards.
News last week that the inheritance tax threshold is to be frozen at £325,000 until at least 2019, came as no surprise to most people. This is despite having been told that it would rise in 2015-2016 and would eventually reach £1m.
Unfortunately, it does mean that many more of us will be caught up in the net of inheritance tax (IHT), whilst the government ploughs money into social care reform.
Early figures suggest that around another 5000 middle class individuals will find themselves liable to pay IHT as a result of these recent rulings.
As a result, those who feel IHT may now be applied to their estate are being urged to take steps now in order to protect assets from IHT as much as possible.
Research from Unbiased has revealed that around £448m was wasted by tax payers last year, who failed to plan effectively and whose money therefore went to the tax man.
Don’t wait until it’s too late. Protect your loved ones and make sure you have plans in place so that they will be able to claim as much of your estate as possible.
We are often asked whether it is worth not only leaving the family home to a spouse or partner in a will, but adding them to the deeds, too.
Although whilst you’re alive, your other half may feel more secure by having their name added to your property’s deeds, it makes no difference when it comes to probate.
So long as you have left explicit instructions in your will that you want your partner to inherit your house, this will then be carried out to the letter. If, however, you have not made out a will giving these instructions, then the law of intestacy may reveal other claimants and the property could then be divided among these individuals, even if it has been placed in joint names.
Nor can any inheritance tax advantage be gained by having deeds in joint names, as assets will automatically be transferred to the surviving spouse, in accordance with English probate law.
If your wife, husband or partner have been provided for in your will, and are happy for deeds to remain in your sole name, then why not save yourself the money and effort of changing the property deeds?
If you have inherited land after the death of a loved one, it is vital that you act instantly and appropriately.
By completing an assent document, you are formally requesting that the land that has been left to you is to be legally transferred and documented; in effect making you the new owner.
If you are not the executor of the deceased’s estate, then the executor will need to be a party to the assent after probate has been granted, and they have been given the go-ahead to distribute any remaining assets, as instructed by the will.
You must ensure that these legal formalities take place and are carried out correctly, particularly if it is your intention to sell the plot of land in the future, when ownership must be proven.
A professional probate expert will be able to advise you and the executor if necessary, on how to carry out all aspects of asset distribution in a legal manner.