Dying intestate: 3 financial implications, plus tips for handling intestacy

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Dying intestate means passing away without a valid will in place. Find out 3 financial implications of intestacy plus helpful tips for beneficiaries.

“Intestacy” is used to describe a situation in which a person passes away without a valid will.

Also known as “dying intestate”, leaving no will behind changes the process through which the courts divide your assets among your loved ones. While this might sound uncommon in today’s world, Canada Life reveals that 51% of UK adults don’t have a will, including 30% of over-55s.

What’s more, if your will is declared invalid upon your death (such as, if you were not of sound mind when you drew it up, or if some of the details are incorrect), your estate may be subject to intestacy rules.

Whether you don’t have a will yourself, a loved one has died intestate, or you simply wish to know more about this subject, keep reading to discover three financial implications of intestacy plus tips for handling it.

3 financial implications of dying intestate

If you passed away without a valid will, your estate would be subject to intestacy laws. This means your belongings would be divided according to the rulings of the court, as opposed to your specific intentions and wishes.

Here are three financial implications your loved ones could experience if you pass away intestate.

  1. Your spouse or civil partner may inherit your entire estate

If you passed away intestate and were married or in a civil partnership, it’s likely that your entire estate would be bequeathed directly to them. Properties, cash, investments, and pensions could all fall straight to this one person, rather than being spread out among other family members or organisations of your choice.

  1. Your children and grandchildren may not automatically receive any inheritance

If you’re married or in a civil partnership and you share children, your children may not automatically receive an inheritance – your surviving spouse would have to divide funds between them by choice.

Although this can be arranged quickly and easily, leaving the decision up to your spouse could breed some tension among other family members, including your children. This is especially true if you have been married more than once and have children from your first marriage.

So, having a will that clearly lays out your intentions might help to avoid arguments and ensure everyone is on the right page.

  1. Your unmarried partner may receive nothing from your estate

Cohabiting without being married is far more common these days than in previous generations – particularly if you have been divorced and are living with a new partner later in life.

While this way of living might suit you both very well, passing away without a will could leave your partner with very little to inherit – even if you’ve been together a very long time.

There are a few exceptions to this rule. For instance, if you own a home together, your partner may inherit the property if you are “joint tenants” but not if you are “tenants in common”. Similarly, any money residing in joint bank or building society accounts could go straight to your partner if you passed away intestate.

Aside from these circumstances, though, your partner isn’t legally entitled to a portion of your estate, which could instead pass to family members like children, grandchildren, or siblings.

Remember – the easiest way to avoid passing away intestate and leaving your estate for the courts to distribute, is to make a valid will as early in life as you can. You can do this yourself, but it helps to have this witnessed by a legal professional and your GP, in order to ensure its validity.

It’s also wise to treat your will as a “live document”. If your situation changes, such as welcoming new babies into the family or getting divorced, make sure to update your will to keep your wishes relevant.

3 tips for handling intestacy if a family member passes away without a will

You’re now aware of what might happen if you pass away without a will in place. But you might have experienced a close family member, or even a partner, dying intestate – and if so, you may wish to learn more about how this type of inheritance works.

Here are three simple tips for handling intestacy as a beneficiary.

  1. Figure out who is likely to inherit the estate

If you are the child, spouse, civil partner, or closest surviving relative of a person who has died intestate, you might be likely to inherit some or all of their estate. While a will would have named an executor, nobody is immediately placed in charge of an estate in the case of intestacy.

If it proves unlikely that you would inherit part or all of the person’s estate, it may be wise to contact the person or people who are – they can then engage the relevant professionals and take the next steps.

  1. Apply for a “grant of letters of administration”

As a close family member or next of kin, you can apply to the probate registry for a “grant of letters of administration”, which essentially puts you in charge of distributing the deceased person’s estate.

This role is similar to that of an executor, but instead you would be named an “administrator”. This role places the responsibility of sorting a person’s affairs, including paying any Inheritance Tax (IHT), in your hands.

  1. Talk to a financial planner about tax, investing an inheritance, and any other questions you may have

It can be overwhelming to handle a loved one’s estate after they pass away, and this stress may only be exacerbated if they died intestate.

Moreover, it may be useful to consult your Kellands financial planner about any financial concerns or queries. Whether you’re the administrator or a beneficiary (or both), we’re here to help you take the right steps for you – whether it’s investing your inheritance, paying an IHT bill, using the funds to pay off debt, or any other matter.

Get in touch

To find out more about creating an estate plan that benefits your whole family – or for help after receiving an inheritance – get in touch today.

Email us at hale@kelland.co.uk, or call 0161 929 8838.

Please note

This article is for general information only and does not constitute advice. The information is aimed at retail clients only.

All contents are based on our understanding of HMRC legislation, which is subject to change.

The Financial Conduct Authority does not regulate estate planning, tax planning, or will writing.

The value of your investments (and any income from them) can go down as well as up and you may not get back the full amount you invested. Past performance is not a reliable indicator of future performance.

Investments should be considered over the longer term and should fit in with your overall attitude to risk and financial circumstances.

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