Leeds Day: What happens to your estate without a valid will

There are also instances when a valid will is in place, but it doesn't cover the entire estate. This is more common with homemade wills. In such situations, the estate that the will does cover will be handled as per the deceased’s instructions. The remaining part, however, will be distributed according to the intestacy rules. This is what we refer to as partial intestacy.

An estate includes various types of assets, such as houses, bank accounts, savings, personal possessions, pensions and insurance policies. However, only those owned solely, and a share of those co-owned with another as beneficial tenants in common, can be disposed of under a will or pass under the intestacy rules.

Assets held as beneficial joint tenants will pass to the other co-owner(s) automatically under survivorship rules. Pensions and life insurance policies, often nominated assets, are subject to the discretion of the plan’s trustees and may not pass under the terms of the will or intestacy rules.

This complexity highlights the need for professional advice when planning your estate.

Knowing what assets can be inherited, let's look at who can receive the estate under the intestacy rules, which depends on the estate's value and the deceased's family circumstances.

Scenario 1: A married couple or civil partnership with no children

The surviving spouse or civil partner will inherit everything.

Scenario 2: Married couple or civil partnership with children

The surviving spouse or civil partner will receive the personal possessions and the first £322,000 of the estate. They will also receive half of everything else. The other half will pass to the children in equal shares. If the estate is less than £322,000, the spouse or civil partner will receive it all.

If the deceased was separated but not yet divorced, with no judicial separation in place the spouse would still inherit under intestacy rules. This is not an irregular occurrence.

It is worth mentioning that transfers between spouses are tax-exempt, even on death. Moreover, any unused percentage of tax allowances, such as nil rate band and residence nil rate band, can be claimed and added to those available to the surviving spouse on their death. This means that the couple can pass up to £1,000,000 tax-free on the second death.

However, if the estate is shared between the spouse and the children, depending on the value of the estate, there may be an inheritance tax to pay on the first death, and the allowances would have been used up.

Marta Sikora, chartered legal executive in the private client team at Leeds Day (Image: Leeds Day)

Scenario 3: Children and no spouse or civil partner

The deceased’s children will inherit all of the estate. It is important to note that if the children are to inherit, they will do so at the age of 18. Children include those legally adopted, but not stepchildren unless adopted. If any child dies, their share will pass to their children if they survive the deceased.

Under the intestacy rules, the parents of the deceased will inherit if there is no spouse or children. If the deceased also left no parents but siblings, the siblings of the deceased will inherit in equal shares. If a sibling dies before the deceased, their share will pass to their children (nieces and nephews of the deceased) in equal shares.

If there are no siblings, nieces, or nephews, the estate is divided between half-brothers and half-sisters. Again, if any of them died, their share would pass to their children.

If there are no relatives in the above categories, the estate will pass to grandchildren, and if none, to aunts and uncles of the deceased, again in equal shares. If any of them died before the deceased, their share will pass to their children (cousins of the deceased) in equal shares.

The next to inherit stand half-aunts, uncles, and their children, if any of them died before the deceased.

It does not matter if a family member entitled to the estate under intestacy rules has been estranged from the deceased; they will still inherit.

If there are no surviving relatives, the estate passes to the Crown.

Under intestacy rules, partners, cohabitants, friends, charities, carers, your late/ex-spouse’s family etc. cannot receive anything from the estate unless they are blood relatives.

All the estate debts must be paid off before the funds are distributed to those entitled to the estate. Whoever stands to inherit is also responsible for the estate administration, ensuring all the matters are in order and the funds are appropriately distributed. They are called the administrators of the estate.

If any of the beneficiaries are minors, the administrator will also act as trustee for their share of the estate until they are 18.

Interestingly, when there is a will, the executors derive their authority to act in the estate administration from the will itself. Some banks or institutions will release the funds to them before the grant of probate (court order confirming executors’ authority to act) has been obtained. This way, executors can deal with some parts of the estate administration early on.

On intestacy, however, the administrator’s authority to deal with the estate comes from the grant of letters of administration (court’s order granting administrators authority to act). Therefore, until this document has been obtained, they can only take steps to preserve and protect the estate.

Dying intestate can mean not providing for the people or charities you wish to benefit after your death but also providing for people you may not want to benefit at all, and it can have an avoidable tax tag added to it.

If you have any questions about the intestacy rules, wish to make a will or need assistance with estate administration, please call Leeds Day on 0333 577 2250 and make an appointment with a member of the private client team.

For more information, visit leedsday.co.uk