While most people understand that it is important to make a Will, many people still die without one. A person might die without a Will because they simply never got around to making one, or they tried to make one, but it is not valid, or the made one earlier in their life and it has since been revoked. The term for dying without a valid will is to die ‘intestate’.
Whatever the reason why someone might die intestate, the outcome is the same: the Intestacy Rules apply.
How the Intestacy Rules work:
The Intestacy Rules are, in essence, a default Will: they determine what will happen to your estate if you have not set out your own wishes properly in a valid Will.
The Intestacy Rules are designed to be appropriate in various standard scenarios, and there are some situations where their application may not cause any problems. For example, if you die without a spouse and have two adult children, the Intestacy Rules dictate that your estate is split equally between the two children, which may be what you wanted to happen anyway.
Similarly, if you are married, but without any children, the Intestacy Rules dictate that everything should pass to your surviving spouse. So far, so good… maybe.
The Intestacy Rules can cause problems, however, as soon as your family circumstances start to get slightly more complicated. The Intestacy Rules do not make any accommodation for unmarried partners (no matter how long you have been together) or step-children. More than that, they certainly do not take any account of the fact that different loved-ones may have different needs, or may have been relying on you financially.
Unless, by pure luck, the Intestacy Rules do exactly what you want them to do, your estate could have problems without a valid Will. A few illustrative examples:
Inadvertently paying more Inheritance Tax:
‘Andrea’ has assets of around £1.5 million, including sole ownership of her £1.2 million home which she occupies with her new husband and two teenage boys from a former marriage. Andrea only recently married again, and she is unaware that this marriage automatically revoked her former Will, which had left everything to a trust for her sons at age 25.
The Intestacy Rules would result in the husband receiving £885,000, and the teenage children receiving around £570,000 after paying HMRC over £45,000 in Inheritance Tax.
The teenagers promptly decide they want their share, forcing the family home to be sold, and go on a spending spree that erodes much of their inheritance.
If a proper Will had been in place, the spouse exemption could have been used to ensure no Inheritance Tax was payable on Andrea’s death, and careful provisions could have been made for both the surviving husband to stay in the family home and for her sons to receive their inheritance at a more appropriate age than 18!
Mis-match between the Intestacy Rules and the family circumstances:
‘Ben’ lives with his unmarried partner her daughter. He and his partner own their home as tenants in common, and Ben has few other savings. They have lived as a family unit since the daughter was a toddler, and Ben thinks of himself as her father.
On Ben’s death, neither his partner nor her daughter qualify to receive anything under the Intestacy Rules, and Ben’s closest blood relatives are his cousins he has not seen since he was a child. His partner is forced to sell the home to pay Ben’s half of the proceeds to those cousins.
A simple Will could have ensured that the family home was retained, and made provisions for his closest loved ones – in this case his unmarried partner and her daughter.
Inappropriate outcomes under the Intestacy Rules:
‘Christine’ is a widow and has one child- a son who has a history of drug use and mental health problems. He is currently receiving significant state benefits. Christine’s estate is worth around £250,000 (the proceeds of her small flat), and on her death everything passes to her son outright under the Intestacy Rules. Not only is the son unfortunately not able to responsibly deal with the inheritance, but the sudden influx of capital means he loses much of the state-funded support he was receiving.
Christine would have wanted her estate to be used for the benefit of her son, but would have wanted a responsible executor named to ensure that the estate provided actual long-term support and benefit to her son, rather than disrupting his current support arrangements.
Where a dispute might arise
If you feel that the Intestacy Rules have unfairly resulted in you receiving no financial provision, you still might be able to apply to the Court for a payment from the estate. Subject to satisfying certain criteria, a Court can award you a financial payment from the assets of the estate. Such a claim may be disputed because if successful, you could reduce the amount available for any other person benefiting from the estate. If on the other hand, you suspect that the estate of the deceased is not being properly managed or that there are unfounded allegations as to the management of the legacy, you may have good reason to take Court action.
If you do not gain from the intestacy
For some family members, not covered by the Intestacy Rules, the outcome may seem unfair. If a person was dependent upon the deceased but there was inadequate or no financial provision from the estate, they could make a claim under the Inheritance (Provision for Family and Dependants) Act 1975. This would involve asking the Court to make an order to make financial provision from the estate of the deceased. To be successful, the dependant would have to prove their relationship, dependency and financial need of the person who has died. The Court would decide the amount such a person would receive. If there are other relatives who stand to gain from the Intestacy Rules, they could oppose such a claim to protect the share they would receive. If the claim is disputed, this could increase legal costs of bringing a Court action. Where there are children involved, a responsible adult known as a ‘litigation friend’ will appoint solicitors. In a number of such cases, solicitors represent clients under a conditional fee agreement (no win no fee). Recent changes in the law mean that where a person bringing a claim recovers an amount from the estate, where the solicitor wins a success fee, the Court can now decide whether payment of that fee comes from the estate, not the award which is good news for anyone wanting to bring such an action. Before the success fee was paid out of the award. Such arrangements allow people who would find it difficult to bring such a claim due to limited finances, be represented by a solicitor. A barrister could also be retained under the same arrangement.
If there could be a dispute involving an administrator of an estate
An administrator is someone who manages an estate from an intestacy.
If you suspect misconduct on the part of an administrator responsible for managing the assets of the person who has died, it would be possible to register a restriction (known as a ‘caveat’) preventing the estate from being administered. You should act as soon as possible to protect assets. This would allow time for investigations to be carried out and evidence gathered to prove misconduct. If the parties are unable to resolve their differences, a Court action could be started.
If on the other hand, you as an administrator are affected by such a caveat, we can help take steps to force the person who entered the caveat to either remove it or provide supporting evidence.
Where an administrator is not performing their role (such as distributing the assets), an application can be made to the Probate Registry which can order that person responsible to perform their duty or to stop acting, be replaced by another who is willing and able to take the necessary action.
If there is disagreement as to how the administrator is performing their role, an application can be made to the Probate Registry who could be ordered to take action or be replaced.
It is always preferrable that a will is made to reduce the prospect of an unfair or unintended outcome of the passing of a loved one. Where however, there is no will and a dispute likely, we would first advise trying to resolve the dispute amicably either through negotiation, perhaps with the assistance of a mediator. Many such disputes are settled by legally represented parties through mediation. This is the most cost-effective way of resolving disputes and gives people concerned some control over the outcome. Litigation is expensive, can take a long time and always carries an element of risk so should always be viewed as a last resort.
At JPC, our experienced litigation team will be able to advise and if necessary, represent you throughout any dispute. We appreciate that such disputes can be difficult and may be a financial burden. We will consider with you different funding options and give you cost advice from the outset, so you are aware of the likely costs throughout.
If you are affected by the above, please contact Alex Mahdavi by email on email@example.com or telephone 020 7581 7505 or connect with him on LinkedIn or Sunil Patel by email on firstname.lastname@example.org or telephone 020 76644 7278 or connect with him on LinkedIn.