Understanding Intestacy: What Happens When There’s No Will?

The concept of intestacy might sound complex, but a new article breaks it down into bite-sized, understandable chunks. Essentially, it’s about understanding who gets what if someone dies without having written a will.

Recent Changes to the Intestacy Law

From the 26th of July 2023, the UK Government has made a significant change concerning intestacy. Now, when a person dies without leaving a will and has both a spouse and children, the surviving spouse will get a “statutory gift” of £322,000. This is a bump up from the previous £270,000. Additionally, the spouse also inherits personal possessions and half of whatever remains in the estate. The children will then split the other half of what’s left.

Why This Change Matters

You might be surprised to hear that half of UK adults don’t have a will. Even among those aged over 55, a significant 33% haven’t penned down their final wishes. This means they’d be subject to the rules of intestacy, which are specific inheritance laws in England and Wales. These rules, which come from The Administration of Estates Act 1925, lay out a pecking order of who gets what. It starts with immediate family members, goes further out to distant relatives, and if there’s no one in line, it all goes to the Crown.

However, these rules haven’t kept pace with modern times. They don’t consider relationships such as unmarried partners or recognise step-children, although there are occasions where step-children might stake a claim.

Given that the average house price in the UK was £285,861 as of May 2023, the increase to £322,000 is quite significant. Imagine a situation where a family’s home was only under the deceased’s name. Before, the first £270,000 would go to the spouse with the balance split between the spouse and children. But with the new amount, the surviving spouse can now inherit the value of an average UK house in its entirety. This change helps families avoid selling their homes and offers some relief to those who haven’t prepared a will.

Impact on Surviving Families

But what does this all mean for the families left behind?

  1. Children from Different Marriages: Challenges might arise when children aren’t from the same marriage or relationship. They might not fancy sharing assets, like property, with a step-parent.
  2. Inheritance Tax Implications: Large estates passing to children might face inheritance tax, though assets jointly owned with the deceased typically go to the surviving partner.
  3. No Spouse, No Children Scenario: When there’s no surviving spouse or child, the estate goes to the parents. If there aren’t any, it goes down the line to siblings, then aunts and uncles, and so forth.
  4. Challenges for Cohabiting Couples: Couples living together without a marriage or civil partnership aren’t automatically entitled to inherit from each other. If they’ve been together for at least 2 years, they can fight for a piece of the pie in court, but it’s a costly and complicated process.
  5. Singles with Partners but No Will: In such a situation, the estate might legally go to the parents. This applies even if the parents are separated or if one hasn’t been present in the deceased’s life.

Final Thoughts

It’s clear that the landscape of intestacy is complicated. While the recent changes favour spouses, many potential pitfalls remain. To avoid the uncertainties and challenges of intestacy, the best advice is still the oldest: Make a will, ensuring your assets go precisely where you want them to.