Intestacy Rules – What are they and why should I care?
A brief overview of the rules which determine who inherits in the absence of a Will.
The government has recently announced a minor update to the intestacy rules, meaning that individuals will now inherit the first £270,000 from their deceased spouse, up from £250,000. While this change is welcome, the intestacy rules often inadequate and regularly create unnecessary issues after death. In this summary, we provide a brief overview of the rules and the unexpected results they create.
What are the intestacy rules?
In short, they are the rules that govern what happens to someone’s estate if they die without a Will. The rules provide a set order as to who inherits in those circumstances.
I thought the Crown received everything if there’s no Will?
Some estates do pass to the Crown (or the Duchy of Cornwall) in a process called Bona Vacantia, but only if the deceased did not have any surviving relatives who qualify under the intestacy rules. As long as there is someone alive who meets the criteria, that person will inherit everything.
So, will I inherit everything if my spouse dies?
No, not necessarily. One of the major issues with the intestacy rules (in our view) is that if an individual who is married with children dies, the spouse does not automatically inherit the entire estate. After joint property and personal possessions, the spouse will receive the first £270,000, (known as the statutory legacy) as mentioned above, and half of the remainder, with the children inheriting the other half of the remainder of the estate. This can result in young children inheriting large sums of money when they reach 18 and, in worse case scenarios, can create an unnecessary inheritance tax liability.
What if I don’t have any direct descendants?
In that case, your spouse will inherit everything, or, if you are not married, your estate will pass to your parents, your siblings or failing that more remote beneficiaries.
I’m not married, will my partner inherit?
No. This is the other major issue with the intestacy rules. Partners/ cohabitants do not have any automatic right under the intestacy rules and if someone’s partner dies without a Will, their only possible options are either to hope that the beneficiaries who have inherited will give up the inheritance or, ultimately, bring a claim against the estate for “reasonable financial provision”.
I should make a Will then?
Yes, absolutely. As you would expect, our advice is that everyone should make a Will as, quite clearly, the intestacy rules are lead to an undesirable outcome. It should also be noted that, even if the intestacy rules achieve your wishes it is much more straightforward, from a legal position, to have named executors in a Will, rather than leaving it to the court to appoint an administrator of your estate in due course.
Please do feel free to contact our Wills, Trusts and Estates Team on 0118 951 6200 if you would like to discuss the intestacy rules further, or would like to find out more about making a Will.