Rules of Intestacy after October 2014 (England and Wales) Dying With No Valid Will

What happens if there is no Will?

The Inheritance and Trustee Powers Act makes substantial changes to the rules of intestacy, the Inheritance (Provision for Family and Dependants) Act 1975, and trustees powers. Sadly, a good proportion of the population die with a Will in the UK, and in England and Wales that can be unfortunate for some of those left behind, and a disaster for couples who are no legally married or Civil Registered. Please remember that this is a laymans’ guide to the rules, with a link to the Government guide to who will inherit in these circumstances.  That said, the Courts may have different ideas once the individual claims have been examined at vast expense if anyone makes a claim under the 1975 Act.

The Rules of Intestacy (no valid Last Will.)

When a person dies “intestate”, that is without leaving a valid will disposing of all of his or her property, the distribution of the deceased’s estate among surviving family members is governed by a set of legal rules. Bear in mind that a person can leave a valid Last Will which does not deal with the whole of his or her estate so a person can be partly “intestate.”

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  • Rules of Intestacy for Deaths before October 2014 Where a person died without a valid Last Will leaving a spouse or civil partner the intestate estate passes straight to the surviving spouse or civil partner as long as there children (or grandchildren, great-grandchildren to take a dead parents share) and as long as no parent, or full brother or sister or child of one.

  • Rules for Deaths from 1st October 2014

    The surviving spouse or civil partner inherits everything on intestacy where there are no issue (children, grandchildren etc.)

What happens if there is no Will?The new Inheritance and Trustees Powers Act also simplifies the sharing of assets where there is no valid Last Will covering all relevant assets if the deceased is survived by a spouse or civil partner and children or grandchildren. As long as there are no challenges under the 1975 Act abive,

The surviving spouse or civil partner is entitled to the personal chattels and the first £250,000 (now £270,00). Then they received half of the balance of the estate absolutely plus all personal possessions. The rest still goes to the children in equal shares on statutory trusts until they are 18. The difference in the new rules is that the surviving spouse owns their share absolutely, rather than only having a right to the income which is much more restrictive.

The surviving spouse or civil partner gets to all of the ‘personal chattels’. The new Act does not change this but it changes the definition of personal chattels.

  • New Inheritance Rights For Parents named on the Birth Certificate.

    The Act is also making changes that will affect unmarried parents.

    Before October 2014, where a child whose parents are unmarried dies, the child’s estate is distributed as if the child’s father and his family died before the child – so that the mother would be the sole beneficiary.

    As a result of the Act, this rule will not apply if the child’s other parents name appears on the birth certificate – so that the child’s estate would be divided between the parents named on the birth certificate. This would include same-sex parents.

  • The new definition of personal chattels.

    It expands on the current definition and includes all tangible movable property but it does not include assets which –

    • Consisted of money or securities for money (this is not a change).
    • Were used at the time of death solely or mainly for business purposes (not new, but there is a change of emphasis with words ‘solely or mainly’).
    • At the death if the asset was solely an investment (this is wholly new). Property which had some personal use but which the deceased also hoped might maintain or increase in value, such as jewellery worn only occasionally will not fall within this exception.

The following table is a comparison of the rules before and after the changes introduced by the Inheritance and Trustees Powers Act 2014 for married and unmarried couples:

  Before 1 October 2014 After 1 October 2014
Married/Civil Partners – With Children The first £250,000 to spouse with half of the rest going to children and the remainder on death of spouse. While alive, the spouse keeps a ‘life interest’ in half the money above £250,000, which lets them spend the income, but not touch the capital. The first (now uprated to) £270,000 plus all personal possessions to spouse plus half of the rest. The remaining estate goes to children and the ‘life interest’ rule disappears.
Married/Civil Partners – Without Children or grandchildren The first £450,000 plus half of the rest goes to spouse. The remaining half goes to blood relatives. Entire estate goes to spouse.
Unmarried Couple – With Children Partner receives nothing. The person is treated as though they are single. The estate will be distributed to the children.  Grandchildren sahre the share of a deceased child of the deaceased. No change.
Unmarried Couple – Without Children Partner receives nothing. The estate goes to blood relatives. No change. There is currently no such thing as common law protection, regardless of how long the partners have lived together. Court action would be needed to attempt to establish dependency.

In order to work out who should inherit, check out THIS PAGE on the Government website.

Rules of Intestacy from October 2014.

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No Will? Leave it to the Taxman & Social Services?

Amazingly, research has discovered that more people have failed to take the simple precaution of making a Last Will and Testament than those who have done the right thing.

Over 70% folk under 55 year don’t have a will, say The Law Society. But 64% of older folk say they have an up to date Will.   We would dispute that fact, as the majority of folk have no idea when their Will needs to be updated, or even if they have accidentally cancelled it! That is why we recommend the Will Custodian Ltd Peace of Mind Service to our clients. It is relatively cheap especially compared with the potential disaster of having a lost, cancelled or outdated Last Will.

Who inherits when there is no valid Will?
Who inherits will no Will?

Not having a valid Last Will may mean that Inheritance Tax allowances may be lost or (worse) IHT may have to be paid when a proper Will may have saved all of it.

However, at least half of us have complicated lives these days – being in a “common law marriage” (they don’t exist in legal terms – the spouse has to sue for a share as a single person!) Or perhaps you are remarried and want to ensure your new partner is protected, but your previous children still get something. These things are not easy, and if you run a business, you should most definitely contact our Estate Planning associates.

In 2013, around £8 million is thought to have been gifted to the Government accidentally by people who had no valid Last Will which was found. And losing Wills is another story – we wonder how many are found and destroyed by people who don’t like them. Home storage is hazardous!

Those whose assets might be subject to Inheritance Tax often try to save tax with arrangements which never had a chance of working – please talk to our professional Estate Planning team before attempting homespun IHT planning! £6bn or so is paid to the Taxman in unnecessary Inheritance Tax because people either didn’t realise they had a problem, or didn’t take professional advice.

Apparently, nearly 25% claimed that no Will was necessary, as the right people would benefit automatically!!!

What about under age children?  Most people would rather chose who should look after them if both parents should die, and not leave it to Social Services.  But many have no idea this is what happens.

The moral of this tale is to take Estate Planning seriously, it is NOT just for the wealthy, if is for every adult. And it needs to be reviewed on a regular basis as life, tax and the Law are constantly changing – hence the reference to the Peace of Mind Service. You might care to look at the information on the Rules of Intestacy in England and Wales before you contact us.

Main Inheritance Tax page,   Back to no Will.

If someone dies Intestate – without a Will.

Thanks for your last tip re getting someone who ‘alleges’ to ownership of something, loaned to the person who has just died, supplying proof.

Can you email me –as indicated in your “what to do when someone dies” your brief guide to the Rules or ‘pecking order’ as I believe you call Intestacy. The reason I ask is my brother has raised a question I am not able definitely to answer. The brother in question (i.e not the one who has died intestate) is a bachelor- no wife or offspring, dependants of any kind -no parents, Grandparents nor Uncles and Aunts. He is in his eighties and will be one of the beneficiaries of his younger brother (i.e the one who did pass on without making any will). He would like to know what happens to his ‘share’ from the estate of the younger brother, if he also suddenly died. Would that ‘share’ from the younger brother, still pass to the older brother’s estate (because the older brother HAS made a will) or would it revert to the remaining “original” beneficiaries, now less one of course, warranting an even bigger share for those who remain.

Many thanks again for your help and best regards.

Probate Answer on Intestacy

When someone dies intestate, the Rules of Intestacy fix the shares of any beneficiaries under intestacy at the date of death.  Therefore, if the younger died one day, the relevant share would belong to the older for tax and distribution purposes even if he died the next day.

Whilst the beneficiary is still alive, a deed of variation can be written (if he so wishes) to pass the share to other people if he doesn’t wish to inherit. Is your legal Planning up to speed – see attached!

Peter

Intestacy – Dying without a valid Last Will – THE OLD RULES pre 2014 changes.

My father died in 2003 left no will and with the family house in his sole name, valued at £160,000, which my mother still lives in. The Rules were briefly explained when my fathers affairs were sorted out, although never formally recorded.

Updated page. (see also the Rules of Intestacy)

The family home is now in my mothers’ name (after probate) and my mother now wishes to sell the house, will not be buying another property and therefore wishes to settle my brother and I of the amount we may be entitled to under the intestacy rules. Am I right in thinking that my brother and I are entitled to share the balance of the original house valuation £160,000 less the £125,000 that my mother is entitled to keep.

Intestacy – probate answer

Technically, assuming the total value of your dads’ estate in 2003 was £160,000 and assuming it was just the house, the following calculations would have applied at the time.  Being in percentage terms, the same would apply now at the current valuation.  However, it might be argued that you have given your shares to your mother by default, should anyone be disposed to argue!

  • Your mother would own 125/160 = 78.125 percent of the house absolutely plus
  • she would have a life interest in half of the remainder i.e. 10.9375% and
  • each of the two brothers would have been entitled to 5.46875% then plus
  • a further identical amount you would own the capital of, but your mother would be entitled to the interest until she dies.

In effect, this keeps the proportions the same, although it should really have been recorded on the title deeds at the time, and as a result, you may lose your inheritance to Community Care Tax (i.e. Care Fees).

You should also make sure your mother has an up to date Will, and both types of Lasting Power of Attorney (www.LastingPowerofAttorneyUK.com . It may be too late to protect her assets if she needs to go into a care home, but (if it is not too late) you could consider the www.HomeProtectionPlan.co.uk which not only saves money on probate fees but may offer protection against care fees, depending on your mothers’ health.

Intestacy

Intestate Rules for England and Wales

 

 

 

 

 

 

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