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What happens if someone dies without leaving a will?

21st November 2022

Deb Haynes considers the consequences of not leaving a will in terms of the rules of intestacy, and the loss of valuable Inheritance Tax allowances and reliefs.

In August 2022, the family of the late musician Prince reached agreement over the distribution of his $125 million estate after a costly six-year legal battle. He had died without making a will.

For the vast majority of us, the estate to be distributed on our deaths will not be in that league but most of us will still want our assets to go to particular people in our lives – or in some cases, not go to certain individuals. 

There are a number of consequences when someone dies without leaving a will:

  • The assets of the deceased are distributed according to the laws of intestacy – this means that they may not go to the people that the deceased wanted them to be left to.
  • There may be a higher inheritance tax (IHT) liability than may otherwise arise and 
  • Valuable IHT reliefs may be wasted

The rules of intestacy

The rules of intestacy depend on where in the UK the deceased lived and what their personal circumstances were  

The rules are different in England, Scotland, Wales and Northern Ireland, but in England they provide as follows:

If there is a surviving married or civil partner and there are surviving children, grandchildren or great grandchildren of the person who died and the estate is valued at more than £270,000, their partner (by marriage or civil partnership) will inherit:

  • all the personal property and belongings of the person who has died, and
  • the first £270,000 of the estate, and
  • half of the remaining estate.

The remaining half of the estate will be divided equally between the surviving children.

If there are no surviving children, grandchildren or great-grandchildren, the partner will inherit:

  • all the personal property and belongings of the person who has died and
  • the whole of the estate with interest from the date of death.

If there is no surviving married or civil partner, the children of the deceased will inherit the whole estate.

Parents, siblings and nieces and nephews may also inherit under the rules of intestacy, but this will depend upon the particular circumstances.

If there are no surviving relatives who can inherit under the rules of intestacy, the estate passes to the Crown.  This is known as ‘bona vacantia’ which means vacant goods.

Partners

It is important to note that all references to partners mean those who are married partners or civil partners.  

Long term partners who were neither married nor in a civil partnership have no automatic rights under the laws of intestacy – although they can make a claim to the Crown for a grant if there are no other surviving relatives.

Conversely, individuals who have separated but are still married or in a civil partnership could inherit under these rules.

Please also note that for these purposes, children include legally adopted sons and daughters but not stepchildren.

An invalid will

The rules of intestacy will also apply if the deceased leaves a will, but this is found to be invalid – for example, there is only one witness to the will (rather than the two that are required by law), the individual has got married since making the will, or it is found that the deceased was not of sound mind when the will was made.

Detailed rules of intestacy

The detailed rules of intestacy can be found here: Intestacy - who inherits if someone dies without a will? - GOV.UK (www.gov.uk)

Deed of variation

In the same way as for someone who leaves a will, it is possible to rearrange the way an estate is shared out even if the individual has died without leaving a will.  This is known as a deed of variation, but this has to be agreed by all those who would inherit under the rules of intestacy.

Inheritance tax planning

The process of making a will provides a good opportunity to review your estate and identify the people we want to inherit from us, any reliefs that may be available, and records that need to be kept.  For example:

  • Every individual has a nil rate band (currently £325,000) on which no inheritance tax is paid, so consideration should be given to the best way to utilise this relief.

  • The transferable nil rate band from a deceased spouse may be available and it is important to have records available of the estate at the first death and how this was distributed.

  • To maximise claims for the residence nil rate band, it is important to keep records of any previous property sale so that downsizing relief can be calculated and claimed as appropriate.

  • As noted above, if we do not leave a will the rules of intestacy come into play. So, by making a will, individuals are able to identify family members or friends and leave them specific gifts of assets or cash.

  • Business property relief is a valuable relief for those with their own business or with shares in a family company, but there are conditions to be met for the relief to be available and this must be met at the date of death.

  • The inheritance tax rate can be reduced by making charitable gifts, which may be appealing to some.  Calculations can be prepared to demonstrate the impact of such gifts on the overall estate.

You may also identify actions you can take during your lifetime to reduce your exposure to inheritance tax and the review the impact of gifts made during your lifetime on your estate.

In conclusion

To be certain that your estate is shared by those who you would want to benefit, and that you are making the most of available reliefs and allowances, it is important to leave a valid will which you regularly review to ensure it remains up to date and reflects any changes in your personal circumstances.

Bishop Fleming’s Estate and Probate team are well equipped to review your personal circumstances, provide you with an estimate of your exposure to inheritance tax and provide advice on mitigating that exposure.

Further information

You can find more information on our Estate Planning and Probate Services page.

If you would like to discuss how taxation of the family can impact your decisions, please contact a member of our Estate Planning & Probate team who will be pleased to talk to you.

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