What Happens to an Estate When There’s No Will?
Incredibly, it’s thought that some 70% of people in the UK have yet to create a last will and testament, with this representing a worrying trend that could cause significant issues for families in the future.
Distributing an estate certainly causes challenges in the absence of a will, while causing considerable emotional hardship among families and loved ones.
We’ll explore this process in the article below, while asking how things may differ depending on your circumstances.
What Happens to Partners and Children?
An individual who dies without a will is referred to commonly as ‘dying intestate’, with this scenario making the estate administration process incredibly complex and potentially time consuming.
This is because the law specifies who should inherit the estate under the terms of intestacy rules, which initially require all debt and inheritance taxes to be paid to the authorities.
Afterwards, it’s the surviving wife, husband or civil partner who automatically inherits the estate in question. What’s more, they’ll retain the proceeds of the entire estate so long as its total value is worth less than £270,000.
If there is no surviving partner (or the partner in question isn’t married to the deceased at the time of their death), then children or legal guardians will be next in line to inherit the state.
In instances where there is more than one child, the value and contents of the estate will be shared equally between the dependents.
Can Children Gain Where There is a Married Partner?
The question that remains is can children inherit in any circumstances where there remains a married or civil partner?
The short answer is yes, as the deceased’s kids may well inherit a portion of the estate if it’s valued at more than £270,000. More specifically, the sum in excess of this will be inherited by the remaining children, although this rule varies wildly outside the UK.
In certain circumstances, close relatives including surviving parents and siblings can also claim a portion of the inheritance. However, you’ll need to liaise with probate law experts to determine your precise rights and responsibility.
Paying Your Inheritance Tax
With or without a will, you’ll be required to pay inheritance tax (IHT) when the estate meets certain criteria.
In the UK, all estates that are valued at more than £325,000 will be subject to a flat IHT rate of 40%, with this payable by the beneficiary before they can receive their funds.
Given this, and the fact that it can take up to 12 months for them to receive their inheritance, many beneficiaries struggle with their finances during this time. To negate this, you may want to take out a supportive inheritance tax loan, which provides short-term fiscal cover and a debt that can be rapid once the inheritance has been settled.
What About When Children Are Minors?
As discussed above, there are a couple of instances in which children are rewarded with some or all of a deceased’s estate.
But what happens when the kids in question or minors? Well, they’re entitled to receive their inheritance once they receive the 18 or marry, with the latter possible from the age of 16 in instances where parents provide their permission.
Of course, making a last will and testament can allow benefactors to take control of their future finances, and ensure that their estate is distributed in a desired manner.