What Happens To Your Money If You Die Without A Will?
In the United Kingdom, if a person dies without leaving a will they are deemed to be an intestate person.
This means that their assets will be distributed according to the rules of intestacy — a set of legal rules that determines who is eligible for a share of a deceased person’s estate.
If the rules of intestacy are applied, only close relatives and married or civil partners will be able to inherit a share of the estate.
That means any close friends or distant relatives will receive nothing.
This can be a very poor outcome in situations where the deceased person wanted some of their assets to be given to friends or other relatives.
This guide will explain how the rules of intestacy are typically applied to an estate and who will be eligible for a share of an inheritance.
Rules for married and civil partners
Married and civil partners are allowed to inherit if they are currently in a relationship with the person who has died.
Divorcees and people who have officially ended a civil relationship are not eligible to receive an inheritance under the rules of intestacy.
If a separation has occurred but it was informal, an inheritance can still be received.
It’s important to note that cohabiting partners who are not in a civil relationship and are not married will not be eligible for an inheritance.
How much will married or civil partners receive?
Under the rules of intestacy, if the value of the estate is over £250,000 and there are children, grandchildren, or great-grandchildren involved, the partner of an intestate person will receive:
- All personal property and belongings of the person who died
- The first £250,000 of the estate
- Half of the remaining estate
If there are no children, grandchildren, or great-grandchildren involved, the partner will receive all personal property and belongings of the person who died and their entire estate.
Dealing with jointly owned property
In many cases, a couple will jointly own a home.
There are two ways of co-owning a home:
Beneficial joint tenancies
The property belongs to you and the other owner or owners jointly.
Tenancies in common
A shared tenancy in which each party has a distinct, separately transferable interest.
If a couple had a beneficial joint tenancy, the surviving partner will inherit the deceased partner’s share of the property.
If a couple has a tenancy in common, the transfer of ownership of the remainder of the property is not automatic and other rules apply.
When it comes to jointly owned bank accounts, the surviving partner will receive all of the money in the account.
One important thing to note — any property or money in joint bank accounts that is received by the surviving partner is not valued for intestacy rules.
That means property and money in joint bank accounts does not contribute to the £250,000 threshold mentioned earlier.
What about children?
Children will always inherit if the deceased person doesn’t have a married or civil partner.
If there is no surviving partner, the children will equally share the inheritance.
If there is a surviving partner, children will only inherit if the estate is worth more than £250,000.
Once the £250,000 threshold has been surpassed, the children will share one half of the estate.
For example, if there is a surviving partner and the estate is worth £500,000, the first £250,000 will go to the partner.
The remaining £250,000 will be split in two, with the partner receiving £125,000 and the children receiving £125,000.
All children share equally from the estate, even if they are from different marriages.
Children will receive their inheritance once they reach 18 years of age or when they marry or enter into a civil partnership (whichever occurs first).
What about grandchildren and great-grandchildren?
Grandchildren and great-grandchildren will only inherit if:
- Their parent or grandparent died before the intestate person
- Their parent dies before the age of 18 and does not enter into a marriage or civil relationship
If eligible for a share of the estate, grandchildren and great-children will only inherit what their parent or grandparent would have been eligible to receive.
What about other relatives?
It is possible for other relatives including parents, siblings, nieces and nephews to inherit under the rules of intestacy.
This may occur if an intestate person does not have a surviving partner, has no children, has no grandchildren, and has no great grandchildren.
In the case of nieces and nephews, they will only be eligible for an inheritance if their parents are deceased.
It is also possible for grandparents, uncles, aunts, half-uncles, and half-aunts to inherit.
However, they wail only be eligible after surviving partners, children, grandchildren, great grand-children, parents, siblings, nephews and nieces have been considered.
Who will never inherit under the rules of intestacy
In no circumstances will the following people inherit under the rules of intestacy:
- Unmarried partners no in a civil partnership
- Lesbian or gay partners not in a civil partnership
- Close friends
- Relations by marriage
They may have a claim under the Family Provision Act but who wants to leave a litigation battle for their family?
What if there are no surviving relatives?
If the intestate person does not have any relatives, their estate will be given to The Crown under a process called bona vacantia.
Changing how your estate is distributed
It’s possible to rearrange the way that an estate is distributed even if there is no will.
A deed of family arrangement or variation can be lodged within 2 years of the intestate person’s death.
This will change the amounts that each eligible person receives from the estate.
For this arrangement to be valid, all of the people who would inherit must agree to the changes.
Avoiding the rules of intestacy
If you believe the rules of intestacy are not reasonable or you wish to give an inheritance to individuals not included within these rules, you must create a will.
The safest way to write a will is to work with a solicitor or will-writing firm.
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