What is Intestacy?
Intestacy is the term that refers to the administration of the estate of a person who dies without leaving a valid will, an invalid will or, a will that only covers part of the estate.
How does intestacy differ from probate?
Probate is the process of dealing with someone’s affairs after they have died and in line with their will. We take a closer look at the in the article “What is Probate?”
Probate and a grant of probate are only relevant to estates where the deceased has left a will. Where there is no will then the deceased is described as dying intestate and a different process is followed. Intestacy and probate are similar in that they both have the same result, but they are legally distinct and follow different roads to reach the same destination: the winding up of the deceased’s affairs and estate.
As with many aspects of the law it is not always straightforward. Some estates may need to be split between probate and intestacy. For example, a valid will exists but it does not cover the whole estate e.g. The deceased owned two properties, but the will only stipulates how to deal with one property. In this instance it is always advisable to seek advice from a probate solicitor.
What is a grant of representation?
A grant of representation allows people who meet the necessary criteria to administer the estate of someone who has died – it is an umbrella term to refer to either probate or intestacy. This process will either be via a grant of probate because there is a will or, letters of administration when there is no will and the deceased has died intestate. Once again this is not always straightforward. Letters of administration are also used in probate if there is no executor named in the will or the executor is unable or unwilling to act e.g. the named executor has died.
What are letters of administration?
Letters of administration provide an entitled person, or persons, with the legal right to manage and distribute the personal possessions, property and money of someone who has died without leaving a will.
What are the rules of intestacy?
When there is no will there is a statutory set of rules which the Administrator(s) must follow to distribute the deceased’s estate. These rules may not necessarily reflect the actual intentions of the deceased and even when those intentions are well known, they are not legally binding. The Administrator(s) are legally bound to follow the rules of intestacy.
Inheritance Tax
Probate and Inheritance Tax can become very complicated and it is important to get it right. Administrators can be held personally liable if they get the tax wrong – even if it is a genuine mistake. One of the first tasks of an Administrator is to report the death to HMRC. The deceased’s personal tax affairs will need to be finalised e.g. income tax, pensions and benefits.
There may also be Inheritance Tax payable on the estate. An Administer is responsible for obtaining a value of the whole estate and they must provide this information to HMRC. Any Inheritance Tax payable will need to be paid before the estate is distributed to beneficiaries. It is highly advisable to seek professional advice with regards to Inheritance Tax – getting it wrong can be a costly mistake. Start with a free consultation with a probate solicitor.
What is an estate?
‘The estate’ is all money, property and possessions owned by the deceased.
This might include:
- Property and land
- Money – cash and money held in bank accounts
- Stocks, shares and investments
- Cars and other personal possessions
- Any outstanding debts e.g. loans, credit cards
You may want to read
What happens to debt when someone dies?
How to value a probate property?
How to sell or transfer shares of someone who has died
How is the estate distributed under the rules of intestacy?
The rules dictate the division of the estate in a fixed order: –
- Married couples and civil partners – the spouse or civil partner of the deceased will receive personal items and any jointly held assets e.g. property held as joint tenants and joint bank accounts. They will also receive the first £270,000 of the deceased estate plus half of everything over that amount.
- Children and grandchildren – the rest will go to any surviving children, or their children if they have died.
For example: Susan was married to Albert and they had a daughter called Mary. Susan died without leaving a will. Her estate is worth £470,000. Albert inherits the first £270,000. The remaining £200,000 is split between Albert and their daughter Mary.
Some of the crucial points to understand include: –
- If the estate is worth less than £270,000 then it passes in its entirety to the surviving spouse or civil partner and any children receive nothing
- If a married couple or civil partners have separated but not ended their relationship in an official and legal capacity e.g. divorce or dissolution, they will still receive the first £270,000 and half of any amount over £270,000
- Children from all relationships are treated equally. All birth children and children who have been legally adopted by the deceased will receive an equal part of the estate. The exception is a birth child who has been legally adopted by another family. They are not legally entitled to any of the estate.
- Stepchildren receive nothing
- Unmarried partners receive nothing
If there is no surviving spouse or civil partner, no children, grandchildren or great-grandchildren, then the rules of intestacy will continue to follow a prescribed list of distribution to more remote relatives. If this is the case the Administrator may need professional help, a probate solicitor or a family tracing service, to identify and locate the beneficiaries.
The rules of intestacy are an imperfect tool to distribute an estate in a set order when the deceased has left no instructions in a will. Understanding the rules of intestacy and how they might impact your family is one of the best ways to convince anyone to write a will.
Are letters of administration required?
Yes, if the estate consists of assets that need to be distributed. You will not be able to administer the deceased’s estate without letters of administration which is the legal document giving you the power to do this.
Who applies for letters of administration?
Just like the rules on the distribution of the estate, the laws of intestacy lay down strict rules on who can administer the estate. Priority is given to the legal spouse or civil partner of the deceased followed by other relatives in a prescribed order e.g. children, grandchildren, parents of the deceased. Someone who is not related, for example a life partner who cohabited with the deceased but never legally formalised the relationship, cannot apply.
