There are 8.1 million adults in the UK over the age of 50 who have not made a will, according to research by insurance provider RIAS. This staggering number could be because there is some confusion as to what happens to your estate if you die without a will.
Of course, some people may simply have put it off, perhaps because they are too busy, while others may believe that it’s something they don’t need to do until they’re much older.
However, it could also be due to a mistaken belief that their estate will pass to their surviving spouse or partner as a matter of course. While this may occur, there are strict rules which set out who can administer your estate, who will inherit your estate and how much they will receive.
If you die without a will, known as dying ‘intestate’, your estate is distributed in accordance with the Rules of Intestacy. The estate is made up of assets owned solely by the person who has died. Any assets owned in joint names will pass automatically to the surviving joint owner, unless there is an agreement between the owners that they own the asset in specified shares.
The Rules of Intestacy were updated on 1 October 2014 and so we focus here on deaths occurring on or after this date.
If you’re married
Where a person dies intestate, survived by a spouse or civil partner and direct descendants (children, grandchildren or great grandchildren), the spouse receives the personal possessions, the first £250,000 of the estate and half of anything that remains.
The children or other descendants receive the other half of anything that remains. Where there are no direct descendants, the spouse or civil partner receives the whole estate.
If you have no partner
Should you die without leaving a surviving spouse or civil partner or direct descendants, the Rules of Intestacy give a strict order of priority setting out who inherits the estate. If there are no surviving relatives who can inherit under the Rules, the estate passes to the Crown.
If you have a partner but aren’t married
Although the Rules of Intestacy were updated in October 2014 (and prior to that, were last reviewed in the 1970s), they do not make any provision for unmarried couples or those who have not had a civil partnership ceremony, even if the couple have been together for years and have children together.
In this situation, the surviving partner won’t receive any of the deceased’s estate. It would all pass to the children or, if there are no children, would go to other family members in a set order of priority.
Your children (natural, adopted or stepchildren)
The Rules also only acknowledge natural and adopted children when setting out who would inherit. In other words, stepchildren would not benefit, nor would step-parents or step-brothers and sisters.
Further, many people are keen to leave gifts to friends or charities and other organisations in their wills, who would not benefit in the circumstances mentioned here as they are not acknowledged by the Rules of Intestacy.
Rising property prices and inheritance tax
An estate which passes in accordance with the Rules of Intestacy could be reduced by inheritance tax, which will reduce the level of assets that your family receive at the end of the administration process.
With property prices rising around the country, more and more of us are likely to be affected by inheritance tax. This could be mitigated by some careful planning and legal advice in advance.
The confusion of dying without a will
It is important to make a will, whether you’re married or not, but particularly so if you are cohabiting or have significant assets in your sole name. Making a will is not a time-consuming exercise, nor is it costly or challenging.
Dealing with a loved one’s death is difficult in any circumstance but even more so when those left behind have to deal with the effects that intestacy and its rules may have on the deceased’s estate.
By making a will, you can ensure that the most important people in your life will be provided for in accordance with your wishes after your death.
Written by Jacqueline Almond, Partner, and Catherine O’Reilly, Solicitor, at IBB Solicitors