If you find yourself left dealing with an intestacy our expert advisors are here to help.
The intestacy rules do not generally create tax efficient solutions for families and, as well as assisting you with the legal process of intestacy, we have the specialist knowledge to advise you whether any inheritance tax that might be due on the estate can be mitigated.
When might an intestacy arise?
Intestacy most commonly arises if you die without having made a Will. Many people fail to make a Will erroneously believing that their money and possessions will automatically pass to their nearest and dearest. If you do not make a Will the statutory rules of intestacy will apply and your estate will be distributed according to those rules.
Intestacy could also arise where there is a Will but there are serious failings with it. For example, the Will is so badly drafted that it fails to pass through probate and by default the matter becomes an intestacy.
In circumstances where the Will only disposes of part of the estate, a partial intestacy will be created with assets ‘outside’ of the Will falling to be distributed under the intestacy rules.
Intestacy myths and facts
The intestacy rules do not apply to unmarried couples. You may have been cohabiting for many years but the partner who survives you has no automatic entitlement to your estate and will be left having to make an application under the Inheritance (Provision for Family & Dependents Act) 1975.
Even if you are married your spouse will not necessarily inherit the whole of your estate and the entitlement he/she receives will be according to what is stipulated under the intestacy rules.
For the avoidance of doubt a spouse includes a civil partner where the relationship has been registered as a civil partnership, and a spouse from a same sex marriage. There is no such thing as a common law spouse – you are either married or not - and therefore no entitlement exists for it under an intestacy.
Harsh effects of the intestacy rules
The intestacy rules were revised in 2014 and the estate of anyone who dies after 1 October 2014 will be distributed according to the revised rules:
If you die intestate leaving a spouse or civil partner and no issue* your wife will receive your whole estate.
Remember a long standing cohabitee has no automatic entitlement. And there is no provision for any other family members you might have liked to have benefitted from your estate or for anyone else for that matter.
If you die intestate leaving a spouse and issue your spouse will receive all your personal belongings, a sum of £250,000 capital if there are sufficient funds to meet that sum in your estate, and half of any remaining capital above that sum – after payment of any debts and expenses – with the other half going to your issue equally.
But what if this is your second marriage and you have children from your first marriage? Only the children of your second marriage will benefit.
Do you have step-children? They are not included in the definition of issue for intestacy purposes.
And consider the scenario where the property your spouse is living in is worth more than £250,000? Since the intestacy rules state that any capital above that sum will be divided between your spouse and issue, will your spouse be able to keep the home?
If you have no spouse, then your estate will pass to your issue if you have any. Failing that it will pass to other categories of blood relatives in the order stipulated under the intestacy rules. If, having exhausted the list of blood relatives, there are none then your estate will pass to the Crown.
*Issue includes your direct descendants, that is, children, grandchildren and great-grandchildren and also includes adopted, legitimated and illegitimate children.
How Universal Wealth Preservation can assist you
More than 60% of people in the UK die intestate. Do not leave the distribution of your assets to chance.
If you are seeking to review your existing estate planning arrangements or to make a Will, our team of experts are here to assist you. Contact us now to arrange a FREE no-obligation home consultation with one of our advisers. We would be happy to discuss your requirements.
Or to find out more about the wealth protections solutions we provide click here to book your place on one of our forthcoming Keep it in the Family seminars.