What are the intestacy rules?

We sometimes get so busy with life that we forget to plan for the future.  So much so that according to recent research, over half of UK adults do not have a will.  When someone dies without a will they are considered as passing away intestate.  Contrary to what many believe, in these circumstances an estate cannot just be divided how the family wishes or how the family feels the deceased would have wanted – instead the intestacy rules apply.

The intestacy rules set out a statutory order of entitlement, they are strict and can be considered unfair as they do not necessarily fit the structure of a modern day family. Remarriages, step children and divorces can all result in more complicated family arrangements and these do not always work seamlessly with the intestacy rules.

So how do intestacy rules work?

Who inherits from an estate under the intestacy rules depends upon the nearest living family members.  If someone passes away leaving a spouse or civil partner and children, the first £322,000 passes to the spouse absolutely (the figures were different for deaths before 26 July 2023).  The remaining assets are split 50/50 between the surviving spouse or civil partner and the children.  The children become entitled to receive their share outright when they reach the age of 18 and until such time, their share will be held on statutory trusts for their benefit.

If someone passes away leaving a spouse but no children, then the spouse will take the whole estate.  Similarly, if someone passes away leaving no spouse but children, the whole estate would be shared equally between the children.  If a child of the deceased had predeceased, that child’s share would be split between any children they had (i.e. the deceased’s grandchildren).

Order of entitlement for intestate estates

If there are no spouses or children, the order of entitlement would be as follows:

• Parents of the deceased
• Siblings of the full blood (or nieces and nephews if siblings predeceased)
• Siblings of the half blood (or nieces and nephews of the half blood if siblings predeceased)
• Grandparents
• Aunts and uncles (or cousins if uncles or aunts have predeceased)
• Aunts and uncles of the half blood (or half-cousins if uncles or aunts have predeceased).

When this order is followed, it is not uncommon for a more distant relative, that perhaps you have lost touch with, to inherit over those closest to the deceased.  There are no provisions for friends or charities irrelevant of the effect that such people or charities could have had on someone’s life.

Does dying without a will make things more difficult?

It can do.  When someone dies intestate, it is usually necessary to apply for a grant of letters of administration to administer the estate as this document gives someone the authority to do so.  Without this, no one has the legal authority to deal with any assets.

There is then the practical issue of who is entitled to apply for the grant. The order of entitlement to act as administrator is very similar to the order of beneficial entitlement above.  This may result in someone who knew very little, if anything, about the deceased’s financial affairs tackling the complicated job of administering the estate.

There can also then be problems if the family is large as the administrator may not know the entire family tree and will therefore have to make full enquiries to ensure the whole family is captured.   It becomes harder if some family members are missing and tracing agents may need to be instructed.

How to navigate intestacy

The intestacy rules themselves are fairly straightforward due to how strict they are.  There are, however, a number of hurdles to get past to even make the application for a grant of letters of administration.

It is incredibly helpful to have the assistance of a genealogist when acting as an administrator on an intestate estate.  They can take a great deal of the burden of ascertaining the full family tree to enable the administrator to focus on valuing the deceased’s financial affairs.

Many genealogist companies now include additional services so they are able to assist an administrator with the entire administration.  This can range from them placing financial asset searches for peace of mind if an administrator has limited knowledge of the deceased’s affairs to arranging missing beneficiary insurance if there are family members who stand to benefit but have not been located.

Working with professional advisers when dealing with an intestate estate is certainly the best advice for administrators in this situation so they can have the peace of mind the intestate estate has been dealt with properly.

Tips and traps in relation to the intestacy rules

As outlined above, the intestacy rules do not always allow for a completely fair distribution of an estate unless a person has a very traditional family dynamic.  A few common issues people are caught by are outlined below:

• The definition of children under the intestacy rules does not extend to step children – only biological or adopted children of the deceased – which could be extremely problematic for a family with multiple marriages
• A child will automatically become entitled to receive their inheritance at the age of 18. This may not be the age at which a parent would prefer their children receive a potentially large sum of money but without a will specifying a preferred age, the parent cannot control this
• A co-habiting partner of the deceased, no matter how long they lived together, or the family set up, will not be entitled to anything under the intestacy rules. They would have to pursue a claim under the Inheritance (Provision for Family & Dependants) Act 1975 which can be very expensive, time consuming and does not guarantee any results
• For larger estates, the intestacy rules often do not fall in the most inheritance tax efficient way and can lead to a larger liability to inheritance tax than if the deceased had made a will
• There may be complicated family dynamics and the persons entitled to administer the estate may not wish to act, this makes the application more complicated and will inevitably cause a delay with the issue of a Grant.

The expert Probate team at Thomson Snell & Passmore has a great deal of experience in dealing with complex, intestate estates, as well as in working with genealogist companies.