No one likes thinking about their own mortality. But sometimes, our reluctance to think or talk about what happens when we die can have negative consequences. Especially for the loved ones we leave behind.
Intestacy refers to a person dying without leaving behind a will. In practice, intestacy triggers a set of laws that govern how a person’s money, property and assets are distributed when they haven’t left behind legally binding instructions on inheritance.
The rules are formulated to ensure the deceased’s estate passes to their closest surviving relatives. However, the rules are very fixed and apply to all cases without consideration of individual circumstances. This often leads to close relatives not inheriting what they might have expected to. Or what they believe the wishes of the deceased had been. This can in turn cause conflict between family members.
In particular, the laws of intestacy are not well-equipped to deal with more complex family arrangements. Take the example of someone who divorces and then remarries. The first spouse no longer has any right to inheritance following divorce. But any children from the earlier relationship do.
However, under intestacy rules, all inheritance goes to a surviving married spouse or civil partner. So children from the earlier relationship would not get anything while the second spouse was still alive. If that person then went on to make a will bequeathing everything to their own children, their partner’s children from the earlier relationship could be cut out completely.
Another glaring omission is that unmarried partners or those who are not in a civil partnership have no legal right to claim inheritance under intestacy rules. No matter how long they had been in a relationship for, a surviving unmarried partner could be left with nothing.
Eating into inheritance
People often wish to leave something to more distant relatives or friends they were close to. Or to charities or other organisations they supported or were part of. None of these have any realistic chance of inheriting anything under intestacy rules. Even close relatives like siblings are at the back of the queue behind spouses and civil partners, children and grandchildren.
Because of these omissions and complexities, intestacy cases often end up going to court. They can drag on for months or even years as varying claims and counterclaims are made. It can take a big emotional toll on everyone involved. And it can cost a small fortune in legal fees, eating away at the inheritance.
Another way intestacy can lead to the value of an inheritance being eroded is through tax. Through effective estate planning and permissible tax efficient measures, the liabilities on high value estates can be reduced. But if no provisions are made in advance, beneficiaries will have to pay Inheritance Tax at the full 40% rate above the statutory thresholds.
Stay in control by writing a will
In summary, the overriding implication of intestacy is a loss of control over how assets are passed on after death. The deceased’s wishes carry no weight if they are not confirmed in a will or similar legal document. Under the rules of intestacy, an estate is passed on first to a surviving spouse or civil partner, then to children, then to grandchildren. It makes no concession for anything but the most simple family arrangements, and leaves unmarried partners out of the picture completely. Intestacy often leads to conflict. And for large estates, it leaves beneficiaries to pay Inheritance Tax at the full rate.
The way to avoid these implications is to write a will and consult with a professional on the arrangement of your estate. Seeking legal advice can provide valuable guidance in creating a comprehensive plan that reflects your wishes and protects the interests of your loved ones.
