This note applies to the law in England & Wales only.
Statutory intestacy rules dictate how an intestate’s estate will be dealt with on their death.
Only property that could be validly left in a Will will pass under these rules. The rules do not apply to joint property (which passes under the survivorship rules), assets held on trust for the deceased, life insurance policies and pension benefits in certain circumstances.
Who inherits under these rules will depend on the extent of the deceased’s estate and which family members have survived them. The rules aim to protect the deceased’s immediate family including any spouse or civil partner and issue.
1 Spouses and civil partners
The intestacy rules apply equally to spouses and civil partners, they also apply to same sex married couples from 13 March 2014.
Where a marriage or civil partnership has been legally dissolved or there is a continuing judicial separation, the surviving spouse or civil partner will not benefit under the intestacy.
The rules do not recognise unmarried ‘common law’ spouses or cohabitees, although they may be able to apply to the court for financial provision from the deceased’s estate.
Entitlement under these rules is conditional on a spouse or civil partner surviving the deceased by 28 days.
For the purpose of these rules ‘issue’ includes all direct descendants of the intestate. Adopted children and children whose parents were not married at the time of their birth are included, and rank equally as children of the marriage. Step children are not included.
On the intestacy of an individual whose parents were not married at the time of his or her birth it is presumed that the intestate was not survived by his father unless the contrary is shown. However, from 1 October 2014 this presumption will not apply if the father is named as the intestate’s father on their birth certificate.
Intestacy Rules from 1 October 2014
The intestacy laws have recently changed. The following rules apply to the estate of a deceased who dies on or after 1 October 2014. Different rules apply to a deceased who died intestate prior to this date.
1 Deceased leaves surviving spouse or civil partner and no issue
Where a deceased leaves a surviving spouse or civil partner and no issue the surviving spouse or civil partner will inherit everything.
2 Deceased leaves surviving spouse or civil partner and issue
Where a deceased leaves a surviving spouse or civil partner and issue the residuary estate is distributed as follows;
If the value of the deceased’s estate is less than £250,000 the surviving spouse inherits everything.
3 Deceased dies leaving no surviving spouse or civil partner
If the deceased dies with no surviving spouse or civil partner but with blood relatives his or her residuary estate passes in the following order;
The general principle is that the estate is shared by the highest category of relatives, to the exclusion of the remaining categories.
4 Deceased leaves no blood relations
His or her estate passes as bona vacantia to the Crown, the Duchy of Lancaster or the Duke or Cornwall.
Each category of relatives (except for parents and grandparents) takes the intestate’s estate ‘on statutory trusts’. The statutory trusts establish membership of a class of beneficiaries and the terms on which they take in a similar way as is provided in a Will.
Under the statutory trusts the residuary estate is held equally for all members of the class of relatives concerned, living or conceived (but not born), at the death of the intestate. The interests of the beneficiaries are contingent upon them attaining the age of 18 or marrying earlier. If a member of the relevant category dies before the intestate leaving issue (living at the intestate’s death), the issue take their deceased parent’s share, in equal shares if more than one, contingently on reaching 18 years or earlier marriage.
There are no forced heirship rules.
A will must be in writing, appoint someone to carry out the instructions (an executor) and dispose of possessions/property. It must be signed by the person making the will (the testator), or signed on the testator’s behalf in his or her presence and by his or her direction. This must be done in the presence of two witnesses who then sign the will in the presence of the testator.
The witnesses must not be blind and must be capable of understanding the nature and effect of what they are doing.
A witness should not be a beneficiary in the will or married to, or be the civil partner of, a beneficiary. In these circumstances the will remains a valid and legal document, but the gift to the beneficiary cannot be paid.
Inheritance tax is in place.
Inheritance Tax is usually paid on an estate when somebody dies. It's also sometimes payable on trusts or gifts made during someone's lifetime. Most estates do not have to pay Inheritance Tax because they are valued at less than the threshold (£325,000 in 2013-14). The tax is payable at 40 per cent on the amount over this threshold or 36 per cent if the estate qualifies for a reduced rate as a result of a charitable donation.
Increased threshold for married couples and civil partners
Since October 2007, married couples and registered civil partners can effectively increase the threshold on their estate when the second partner dies - to as much as £650,000 in 2013-14. Their executors or personal representatives must transfer the first spouse or civil partner's unused Inheritance Tax threshold or 'nil rate band' to the second spouse or civil partner when they die.
Sometimes, even if your estate is over the threshold, you can pass on assets without having to pay Inheritance Tax. Examples include:
This information was compiled by Ambrose Appelbe.