WINTERBORNE LEGAL SERVICES
An intestacy arises when someone dies without leaving a Will. Their money and property (their ‘estate’) must be shared out between their close family members in accordance with certain rules.
These rules are referred to as the intestacy rules, and the person who has died is referred to as having died intestate.
These rulesmay not be suitable in all cases and create difficulties where minor children receive a share in the family home.
Husbands, wives and civil partners
Husbands, wives and civil partners are the primary beneficiaries under the intestacy rules. We will use the term ‘the partner’ in the rest of this article, instead of referring to husband, wife or partner.
If the intestate had children, the partner will receive:
- the ‘personal chattels’ which is personal and household items including cars, jewellery, books, furniture, pictures and paintings and musical instruments;
- a statutory legacy of £270,000;
- half of any remaining estate.
If the intestate had no surviving children or grandchildren, the partner will receive:
- the personal chattels; and
- the whole of the estate.
Not everything owned by the intestate will pass to the partner or children under the intestacy rules.
Jointly Owned Assets
A home owned by the couple as beneficial joint tenants will pass automatically to the surviving partner. It cannot pass under the intestacy rules and could not have been left to anybody else in a Will.
A home owned by the couple as tenants in common is owned in shares. The share belonging to the intestate will pass under the intestacy rules.
A joint bank account or building society account will pass automatically to the surviving partner.
Anything that the partner receives as surviving joint owner will not be counted as part of the intestate’s estate when calculating the statutory legacy.
Example: Fred and Ginger are married and have two children, Bob and Bing. They own their house as beneficial joint tenants. When Fred dies, the house is worth £600,000 and the rest of his estate amounts to £150,000.
As the house passes automatically to Ginger, and the rest of Fred’s estate is below the statutory legacy, Bob and Bing receive nothing.
If Fred and Ginger had owned their house as tenants in common, Fred’s half share would have been worth £300,000. Ginger would have been entitled the first £270,000, leaving £30,000 from the value of the house and £150,000 from the rest of Fred’s estate, a total of £180,000.
Ginger would have received £90,000 and Bob and Bing would each have received £45,000.
The intestate’s children will inherit the whole of the estate, which will be divided equally between them, if there is no surviving partner.
If there is a surviving partner, the children will only inherit from the intestate’s estate if the value of the estate exceeds £270,000.
Remember that a partner is a husband, wife or civil partner to whom the inestate was legally married (or in a civil partnership) at the time of their death.
All the children of the intestate are entitled to inherit equally. If the intestate had children from more than one relationship, they are all equally entitled to the estate.
Young children do not receive their share of the estate until they reach the age of 18, or if they marry under this age.
Whilst the children are minors, trustees will manage the money on their behalf.
Grandchildren of the intestate are not able to inherit from the estate whilst their parent is alive.
People who cannot inherit from the estate
The class of people who can inherit from the estate is limited to close blood relatives.
Some people whom you may have wished to benefit from your estate will have no right to do so. They include:
- cohabitees and unmarried partners;
- Step-children and people who are related by marriage;
Appointing an administrator to deal with the estate
Without a Will there is nobody appointed to deal with the estate of the intestate. This means that one of the family will need to apply to the Probate Registry to be appointed as an administrator.
The administrator will deal with the estate in the same way as an executor, but there are some differences.
Grant of Letters of Administration
The Probate Registry will issue a Grant of Letters of Administration. This Grant provides both authority to the administrator and evidence of intestacy.
The administrator’s authority begins when the grant has been issued to him or her. This authority is not backdated to the date of death so the administrator must be careful what action they take before the Grant is issued.
When the Grant has been issued
The administrator has a duty to administer the estate in accordance with the intestacy rules. They will need to understand how the intestacy rules operate and how the estate should be distributed. He or she will be personally liable for mistakes which cause a loss to the estate, in the same way as an executor.
This is an area where the administrator would benefit from some advice.
Who can take out the Grant?
A person who is 18 or over and entitled to share in the estate can apply to take out a Grant of letters of Administration.
For example, if the value of the estate was £200,000, the entire estate would pass to a surviving partner. The partner would be the only person entitled to take out a Grant.
If the value of the estate was £200,000 and there was no surviving partner, the children of the intestate would be equally entitled to take out a Grant.T
The person who is first entitled to take out the Grant does not have to do so. Instead, they may ‘renounce’ their entitlement. This means that they give up their entitlement to deal with the estate. They cannot change their mind at a later date.
Your must renounce your entitlement to a Grant in writing.
Your renunciation will be submitted to the Probate Registry by the person who does apply for the Grant.
Power of Attorney
If you are entitled to the Grant and neither wish to renounce nor deal with the administration, you can appoint an attorney to take a Grant instead.
You must do this in writing. Your Attorney will need to submit the Power of Attorney to the Probate Registry when he makes the application.
Changing the way the estate is shared
It is possible to change the way the estate is shared out under the intestacy rules.
This can be helpful where people who do not inherit under the intestacy rules can still have some financial provision made for them.
Any one or more of the people who inherit under the intestacy rules can agree to change the amount they are due to receive and pass it to somebody else.
This should be recorded by making a deed which is signed by everybody who is giving up a share.
This is an area where you will benefit from legal advice.
If you have any unanswered questions about intestacy, please call us on 01308 424808 to make a free enquiry to see how we can help.
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