Intestacy – who inherits if someone dies without making a will?

The Government has introduced an increase to the statutory legacy on Intestacy. From the 26^th July 2023, where a person dies without a will leaving a spouse and children, the spouse will receive a statutory gift of £322,000 (an increase from £270,000) plus personal possessions and half of the remainder. The children will receive the other half of the remainder.

Unfortunately, half of UK adults don’t have a will including 33% of adults aged over 55 years, which means they will pass away interstate. When someone dies without a valid will there are strict inheritance laws, often referred to as the rules of intestacy, which apply in England and Wales.

The rules of intestacy are set out in The Administration of Estates Act 1925 – an historic set of rules which state exactly who inherits under intestacy, like an order of priority. It starts with the closest family members, then moves to distant family, and finally to the Crown.

The rules of intestacy don’t allow for modern family relationships. For example, they make no provision for unmarried and unregistered partners. Only natural and adopted children for the purpose of inheritance are recognised – they do not acknowledge step children, but in many cases they often have a valid claim.

As of May 2023, the average house price in the UK was sitting at £285,861. This means that if a married couple with children owned a house solely in the name of the deceased individual, the current sum would result in the spouse receiving the first £270,000, with the remainder being divided between the spouse and the children.

However, with the new figure of £322,000, the revised Statutory Legacy allows the entire value of an average house to be transferred to the surviving spouse. This eliminates the need to sell the property, making the change advantageous for individuals who have failed to create a Will.

So what does intestacy mean for the surviving families?

• If the children are not all from the same marriage/relationship, it may not be desirable for them to share assets with the surviving spouse, particularly if that means sharing a property or income from rental properties.
• If the estate is large, the share passing to the children may attract Inheritance Tax. This does not include joint assets which pass to the survivor automatically. Where the deceased left no children, the surviving spouse will inherit everything. If deceased is survived by children only, then children will inherit everything equally.
• If there is no spouse and no children, the estate is firstly split between surviving parents. If no parents, then siblings, if no siblings, then aunts and uncles from both parental and maternal line or their children (i.e. cousins etc.)
• Cohabiting couples have no automatic rights to inherit anything from each other. If they have been cohabiting for at least 2 years, then they would have a right to make an application in court for a provision out of the estate. This is not a simple and a very expensive process, so it is essential for cohabiting couples to create a Will.
• A single person dies leaving a partner but no Will, their estate may have to go to their parents by law. However, if parents are divorced, or one parent may have been absent, they will still inherit under the law and must act in the estate administration.

Written by Donata Crossfield, Wills and Probate Director.