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If you’ve had the foresight to write a will, then, after your death, your friends and family with have instructions on how to divide your estate. But what happens if the will isn’t up to the required standard, or it doesn’t exist at all? In this situation, the procedure will default to a standard set of rules, known as the rules of intestacy.
Read More: 4 Factors to Consider When Passing Trust Assets to Your Children
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How common is this?
Around 57% of people between 55 and 64 have a will in place, according to research from IRN Wills and Probate Research. This is compounded by the fact that, if we look just at the people aged over 55 who lack a will, around 15% own a home. As such, a substantial minority of deaths will result in an estate being divided in this way.
What do the rules say about partners?
As you might expect, the rules of intestacy treat mere live-in partners as very different from those connected to the deceased through marriage or a civil partnership. This goes the same for divorcees: if your marriage or civil partnership has been dissolved, then you’ll be unable to inherit unless there’s a will which says that you can.
What about children?
In a situation where there are no surviving descendants, then the rules say that the partner will get the entire estate, including personal belongings.
If there are children, grandchildren or great-grandchildren involved, then the rules are slightly more complicated. In this case, the partner gets the first £270,000 of the estate, and then half of anything that’s left over.
What about inheritance tax?
Estates valued at more than £325,000 are subject to inheritance tax, which will take away 40% of anything over and above this amount. Executors who find themselves with tax obligations can help themselves to manage the burden with a specialised executor’s loan.
What if there’s no partner?
In the absence of a partner to take the money, children of the intestate person (that is, the deceased) can inherit equal shares in the estate. Grandchildren cannot inherit directly in this way, unless their parent (i.e. the person who would have inherited) has died.
Of course, there’s nothing stopping children who receive a share of the estate from passing their share to their children, either in whole or in part.
If you’re considering devising a will, then you might take the view that these default rules are actually appropriate. For most people, however, it’s a good idea to get specifics down in writing. This will allow you to single out individuals, or even outside organisations like charities. You can draft a will without the help of a professional, but involving one will tend to minimise the likelihood of mistakes and ambiguity.