What if there are no eligible heirs?
If there are no eligible heirs for an intestate estate, then the estate passes to the Crown – when this happens, it is known as Bona Vacantia.
Today’s family structures are diverse and varied so it’s not always an easy task to identify potential heirs even with the help of a family tracing service or genealogist. Before the estate is taken by The Crown, the Government Legal Department (GLD) places deceased estates notices in The Gazette to offer some protection to executors and administrators of unclaimed estates. The unclaimed estate list is also available on the government website and is publicly accessible and searchable. It lists all current unclaimed estates which potential beneficiaries can view and if they believe they are entitled, there is a process to identify themselves.
What happens to jointly owned property?
We have already mentioned that unmarried couples and those in a relationship outside of a civil partnership won’t inherit under the rules of intestacy. This strict rule applies even if you lived together before your partner died, so what happens where property is jointly owned if the surviving joint owner is not entitled to inherit?
How the property is jointly owned determines who inherits, when it comes to probate law for an intestate estate. For property that is owned as joint tenants, the surviving owner automatically inherits the deceased owner’s share. However, for property owned as tenants in common, the surviving owner won’t automatically inherit the deceased owner’s share.
To demonstrate how property ownership impacts on beneficiary rights, take as an example Tom and Heather who own a flat worth £600,000.
Married, one child, property owned as Joint Tenants
In scenario one, Tom and Heather are married with one child and own their flat as joint tenants. Tom dies intestate and, in addition to owning the house as joint tenants he has £50,000 in savings. As Joint Tenants the rights of survivorship mean that the flat automatically goes to Heather. This leaves Tom’s estate with a value of £50,000 which also goes to Heather because the value is below £270,000.
Married, one child, property owned as Tenants in Common
If Tom and Heather owned the flat as Tenants in Common with each owning 50% of the property upon his death his estate would have been worth £350,000. According to the rules of intestacy Heather would get the first £270,000. The remaining £80,000 would be shared evenly between Heather and their child.
Unmarried, one child, property owned as Joint Tenants
In this scenario Tom and Heather are not married and they own the property as joint tenants. The rights of survivorship apply to the property and the house will be passed to Heather leaving Tom’s estate with a value of £50,000. Under the rules of intestacy the £50,000 will go to the child.
Unmarried, one child, property owned as Joint Tenants
In this final example. Tom and Heather are not married and they own the property as Tenants in Common each owning 50% of the property. This means Tom leaves and estate with a value of £350,000 (half the value of the flat and the £50,000). In this case Heather is entitled to keep her 50% of the property but everything else, Tom’s half of the flat and the £50,000) will go to the child.
What are the other disadvantages of intestate succession?
Aside from the fact loved ones can be excluded from an inheritance because of the intestacy rules on beneficiary rights when it comes to intestate succession, the intestate estate won’t necessarily be divided in a tax efficient way.
For the individual, it means a loss of control and inability to leave assets to those they wish to and how they wish to, and for family members of the deceased individual, it means facing a big inheritance tax bill that could have been avoided had a will been put in place. Furthermore, intestacy rules often cause conflict and additional stress for the family members and loved ones left behind.
Challenging Intestacy Rules
Inheritance (Provision For Family and Dependants) Act 1975
Under the Inheritance (Provision For Family and Dependants) Act 1975, individuals can make an application to the Court for the redistribution of an intestate estate if the original distribution failed to make reasonable financial provision for them as a dependent of the deceased.
However, only certain people are eligible to apply, including the spouse or civil partner of the deceased person, a former spouse or civil partner, a person who lived with the deceased for at least two years, a child of the deceased or someone treated as a child of the deceased, or someone in receipt of financial maintenance by the deceased when they died.
Deed of variation on intestacy
Making a deed of variation or family arrangement involves the beneficiaries rearranging the details of the intestate estate distribution. This needs to be done within two years of the death and all the beneficiaries under the rules of intestacy must agree. It might be that people who do not inherit under the intestacy rules now receive a portion of the estate or there is agreement to change the amount people inherit compared to what’s stated under the UK intestacy rules.
The Law Commission’s Proposals for Reform
The Law Commission has proposed that intestacy rules be reformed to make them fairer and to ensure that an intestate estate can be distributed to family members and loved ones in a way that more accurately reflects modern society.
Reforms include providing protections and beneficiary rights to certain unmarried cohabitants when they have lived together for more than five years, to enable them to inherit from a deceased cohabitant under the intestacy rules UK.
It is estimated that 40% of adults do not have a will. When a person dies without leaving a will, their estate is distributed according to the rules of intestacy, which can result in loved ones unfairly inheriting very little or nothing at all. It is hoped that the proposed reforms for the intestacy system will make intestate succession more straightforward and fairer to family members and loved ones.
Probate law is complex, and many people do not realise the serious implications of dying intestate as the intestacy rules means unmarried couples and their children won’t automatically inherit when a partner dies without a will.
It is hoped that the Law Commission’s proposals for reform will pass into law in the near future and make a significant difference to beneficiary rights and the way an intestate estate is distributed – as well as to the lives of family members and close friends when a loved one dies.