There are many common misconceptions about what happens to your assets when you pass away without a Will. Francesca Rigby, Senior Associate Solicitor and Head of Private Client here at Bromleys Solicitors, explores what would happen to your estate if you do not have a Will in place at the date of your death.
A Will is a vitally important document that allows you to choose where your assets pass in the event of your death. A well-drafted Will can also help to reduce your inheritance tax liability and make the process of administering your estate easier for your loved ones. However, over 50% of adults in the UK do not have a Will, and therefore their estate would be subject to the intestacy rules when they die.
When you die without a valid Will, your estate is governed by the Intestacy Rules which seek to find your closest relatives who would then inherit your assets, regardless of whether you had contact with those people or not.
The most common presumption is that without a Will, everything would pass to your spouse. This is only correct if you die leaving a surviving spouse or civil partner, and no biological children. If you have a spouse and children, then your spouse is only entitled to the first £322,000 worth of assets, and half of the residue of the estate. The remaining half would pass equally to your children.
This can cause problems regarding distribution as it may result in assets, in particular the main residence of the spouse, having to be sold to give the children their share of the estate. The split of assets may also be problematic for inheritance tax, as the assets inherited by the children would not be eligible for the spousal exemption, and can mean that the estate misses out on other tax allowances such as the Residence Nil Rate Band.
Further issues arise where the deceased had no close family, as a full family tree report would have to be produced by a genealogist which can be very costly to the estate as well as this taking a long time to complete, as the report requires all birth, death and marriage records to be searched. This can tie up distribution of estates for potentially years.
The order of entitlement for intestacy is as follows, and clearly highlights how quickly an estate can become very complicated when trying to locate the more distant relatives:
- Spouse/Civil Partner (and children)
- Parents
- Siblings of whole blood
- Siblings of half-blood
- Grandparents
- Aunts and uncles of whole blood (or their children if they have predeceased)
- Aunts of uncles of half-blood (or their children if they have predeceased)
Ultimately, if someone dies leaving no surviving relatives, then the estate passes to The Crown, Duchy of Lancaster or Duke of Cornwall and is dealt with by the Government Legal Department.
One of the main issues with Intestacy is that it does not account for the modern family structure. Unmarried partners are not entitled to anything, regardless of the length of the relationship. The definition of children is limited to biological children or children who have been formally adopted, meaning that step-children or foster children would receive nothing if their parental figure died.
These oversights can lead to costly litigation if a dependent of the deceased wished to make a claim against the estate.
As a Will is such an important part in planning for your future it is important that you seek professional guidance and legal advice from a solicitor when doing so. Our team of Private Client experts are able to take you through the process to guarantee you the service is tailored specifically to your needs and advise on all suitable areas. If you would like to discuss preparing a Will, please contact one of our team on 0161 768 15961.