What is ‘intestacy’?

‘Intestacy’ refers to the circumstances whereupon a person dies without having made a valid will or other binding declaration to indicate how their estate should be distributed.

Intestacy may also apply where a will or declaration has been made, but where the document only relates to a part of the estate (i.e. some assets are not distributed);  the remaining estate forms the “intestate estate”.

An intestate estate must be shared out in accordance with the rules of intestacy and despite the complexities that this brings, it is still all too common an occurrence.

What are the rules of intestacy?

First and foremost, the rules of intestacy exist to stipulate who should benefit from the deceased’s estate and in what order.

The order itself also determines who can act as administrator for the estate, following an application to the Probate Registry for ‘Letters of Administration’*. The administrator is responsible for distributing the estate properly and handling any Inheritance Tax (IHT) obligations, alongside other related issues.

Sorting out an intestate estate usually takes more time, so the sooner you apply for probate, the sooner the you can begin to distribute the estate to the beneficiaries. As per the rules of intestacy, the order in which surviving relations will inherit runs as follows:

In this scenario the surviving spouse or civil partner inherits everything. Married or civil partners inherit under the rules of intestacy, only if they are married or in a civil partnership at the time of death. If, at the time of death, you are divorced or the civil partnership has been legally ended, you cannot inherit under the rules of intestacy. Couples who have separated informally can still inherit, whilst couples who are cohabiting without being married or in a civil partnership cannot. A couple remain married up to the Decree Absolute.

A surviving spouse or civil partner will inherit the estate in its entirety, provided that the value of the estate does not exceed £322,000 (effective 26 July 2023). Previously, this figure was £270,000. If the value of the estate exceeds this and the deceased had children, the spouse or civil partner will retain all assets up to £322,000, as well as any possessions.

Of the remainder, the excess is split one half to the spouse absolutely, with the other half being split between the children.

Assets held as joint tenants, such as joint bank accounts and often the family home, pass by survivorship and not intestacy so do not count towards the £322,000 limit.

If there is no surviving spouse or civil partner, the estate will be distributed in equal shares to surviving children. If any of the children of the deceased had pre-deceased them, the estate will be distributed in equal shares their children (i.e. their grandchildren).

When an estate is being divided under the rules of intestacy, all of your children are treated equally. Children from all relationships and legally adopted children will receive equal shares of your estate. Step-children will not inherit if there is no will providing for them, regardless of your relationship or how long you cared for them, unless you have legally adopted them.

If there are no surviving children, the deceased’s parents stand to inherit the estate in equal shares (if both are alive). As with step-children, step-parents are not entitled to inherit under the rules of intestacy where no provision has been made for them in a valid Will.

If the deceased has no surviving children, grandchildren or parents, siblings will inherit the estate in equal shares. If a sibling had pre-deceased the person who has died, then their offspring (the deceased’s nieces and nephews will inherit the share of the estate that their parent would have inherited.

If none of the relatives previously mentioned are surviving, half-brothers and half-sisters inherit under intestacy, with the same aforementioned rules applicable for pre-deceased half-siblings.

If none of the aforementioned relations are surviving, the deceased’s grandparents will inherit the estate in equal shares.

If there are no surviving grandparents, under the rules of intestacy, the estate will be inherited by the deceased’s uncles and aunts. If surviving uncles and aunts have pre-deceased the person who has died, then their children (the deceased’s cousins) will inherit their parents share of the estate. In the absence of aunties and uncles, half-aunties and half-uncles and their children can inherit.

If there are no surviving relatives as per the predefined list, the whole of the deceased’s estate will go to the Crown where the Treasury Solicitor will administer the estate.

*Letters of Administration are not always required; if you are unsure, we would urge you to seek professional advice.

Exclusions from the rules of intestacy

When someone dies without leaving a will, the following are not entitled to inherit via the rules of intestacy:

  • Cohabitants or unmarried partners
  • Common law spouses
  • Ex-spouses or civil partners
  • Step-parents or stepchildren (or other relations by marriage)*
  • Close friends
  • Carers

*Adopted children and adoptive parents are entitled to inherit via the rules of intestacy.

Exceptions to the rules

In certain circumstances, though rare, it is possible for part of an intestate estate to go to a person who would not normally benefit.

For example, if you do not stand to inherit but were financially dependent on the deceased prior to their death, you may be able to make a claim for financial provision under the Inheritance (Provision for Family and Dependants) Act 1975. If and how you receive any financial provision will be decided by the courts, after taking into account your current financial status, the size of the estate and your assumed future needs.

You can use this provision if the deceased did have a will. A claim must be made within six months of the Grant of Representation being given.

A Deed of Family Arrangement

Beneficiaries and executors can make an arrangement that would allow some or all of the estate to be passed onto someone else, who perhaps would not otherwise benefit under laws of intestacy. This can be useful when looking to ensure that the deceased’s estate is distributed in the most tax-efficient way, taking into account family circumstances.

In order for a Deed of Family Arrangement to be valid, a number of conditions must be met:

  • all affected beneficiaries and executors agree, and all beneficiaries are over the age of 18;
  • it can be made at any time after a person has died but the Deed must be executed within two years of the date of death if any tax variation is being made;
  • to ensure that the deed is effective for IHT purposes the Capital Taxes Office should be informed within six months of the deed being created; and,
  • for the deed to be effective for Capital Gains Tax (CGT) purposes HM Revenue and Customs (HMRC) must be notified within six months of the deed being created.

Gifts that are made under the terms of a Deed of Family Arrangement are treated as though they were made in the Will of the deceased. This can be useful when it comes to redirecting inheritance where the original intended beneficiary is elderly or otherwise is not financially reliant on receiving the sum of money, often passing it instead to their children or grandchildren to avoid a further tax charge.

Making arrangements of this nature can be a complex task and so it is always advisable to seek professional guidance at the earliest opportunity.

Strange as it may seem, you can ‘re-write’ a will that is not written, i.e. if somebody dies intestate, those who will inherit under intestacy can rewrite a will.

Seeking the advice of a Probate specialist – How can GH Probate help?

At GH Probate, we understand that, following bereavement, dealing with a loved one’s estate can be a difficult and often confusing process and even more so where there is no Will to refer to.

The role of an executor/administrator can be an onerous one involving many important responsibilities and this, combined with the stress and emotion present at such a time, means some families find it easier to appoint a professional to assist them.

We can obtain Probate, on your behalf, in a cost-effective manner as well as advise on Inheritance Tax and tax planning for the executors and beneficiaries named in the Will. We offer this plus a whole range of other Probate and Estates services, all delivered with the utmost sensitivity and discretion.

In addition, there are many other advantages associated with using an accountant for Probate:

  • If you are a client of the firm, we will already hold an in-depth knowledge of your financial affairs and will have an awareness of the history of the estate assets.
  • We understand our client’s businesses and can offer valuation services as well as advisory services to those who will take-over the running of the business.
  • We have a wealth of experience when it comes to gathering information and completing forms for submission to HMRC.
  • We keep clean records throughout the process and have the experience necessary to complete estate accounts.
  • We cover the entire range of taxes so can, for example, advise beneficiaries on the future tax consequences of inheritance.

GH Probate Ltd. support bereaved families and individuals across Bedfordshire, Cambridgeshire, Hertfordshire and beyond, simplifying the probate process and ensuring that nothing is overlooked.

To find out more about the Probate & Estates service that we provide, from our offices in Huntingdon, Letchworth and Biggleswade, or to have a confidential discussion with one of our probate practitioners, contact us today.