Intestacy
Your way or the law's way!?
English novelist D H Lawrence (1885-1930) died intestate, leaving an estate worth about £4000. His wife Frieda (née von Richtofen) was entitled to £1000 but she persuaded a judge that Lawrence had written, and lost, a will leaving everything to her. Lawrence is best known for such novels as Sons and Lovers, Lady Chatterley's Lover, The Rainbow and Women in Love. Frieda was distantly related to German World War I fighter pilot Manfred von Richtofen - the "Red Baron"
With a will, you dictate who gets what, and how much.
If you die intestate - without a will - the government does the dictating. And the government dictates that your wealth is given to your closest relatives.
The intestacy list moves from from very close to less close blood relations. It distributes wealth according to the presumed wishes of the average person: the arrangement the deceased probably would have made had they made a will.
From the point of view of surviving relatives, the closer the relationship, the better.
From the point of view of the no-longer-alive testator, the assets may go to someone whom the testator detested in his or her lifetime.
And if there are no relatives, or no relatives can be traced, the estate goes to the Crown.
THE INTESTACY LADDER
If there is no will, who gets what?
The estate is distributed to the first person(s) reached on this list.
1. spouse/civil partner and/or children (or their children) via a complex formula (see Notes below)2. parents
3. brothers and sisters, and the children of a deceased brother or sister
4. half-brothers and half-sisters and the children of any deceased half-brother or half-sister
5. grandparents
6. uncles and aunts and the children of any deceased uncle or aunt
7. half-brothers and half-sisters of the deceased's parents and the children of any deceased half-uncle or half-aunt
8. The Crown, the Duchy of Lancaster or the Duchy of Cornwall
NOTES
The spouse/civil partner must survive the deceased by at least 28 days. If both die more or less simultaneously - in an accident, for example - the deceased is assumed to have had no spouse/cp.
The term 'children' applies to children from previous as well as current relationships, whether full blood, adopted or illegitimate. The term does not include step-children.
'Spouse' and 'civil partner' mean what they say: couples who are married or have formally registered their relationship as a 'civil partnership.' Intestacy rules do not recognise couples who live together but are not married or civil partners. Even if a couple have been co-habiting for decades, 'common-law marriage' is not recognised in intestacy.
Winner Takes All
In intestacy, distribution is usually winner takes all - if, for example, one or both parents are alive, they inherit everything. The categories below them on the priority list get nothing at all.
The winner-takes-all principle does not apply to the highest priority of spouse or civil partner and/or children.
In addition, if some family members are themselves deceased who would have been beneficiaries if alive, but they have surviving children, their share goes to their children.
Suppose the deceased had two children - a boy, Brian, who has five surviving children, and a girl, Gill. However, Brian has died.
If Brian had been alive, he and his sister would share the estate fifty-fifty. As he is dead, his share goes to his five children. The estate is still divided in two: Gill still gets her half. Brian's half goes to his children, and as there are five of them, each gets one-fifth of Brian's share (one-tenth of the entire estate).
The moral of this story
If you have a husband, wife or civil partner, several children, a few grandchildren, and maybe step-children or great-grandchildren too, and you want each to get a portion of your wealth, you must have a will.
If you die intestate, depending on which of your relatives are still alive, an elderly grandparent may get it all, and a beloved niece or nephew may get nothing.
The will that won't
Will versus intestacy. Either or.
Logic suggests that you either have a will or you don't and die intestate. Reality is a bit messier.
Testator beware.... All or part of a will can fall through any number of legal and linguistic cracks. This can result in unintended intestacy of all or part of the will. In other words, you can make a will and still die intestate (see the section on Accidental Intestacy).
Spouse does NOT automatically inherit everything
Many people mistakenly believe that the surviving spouse or civil partner automatically inherits everything - and on this mistaken belief, they refrain from making a will.
The basic rule under intestacy is that the spouse receives a set amount depending on the size of the estate and whether or not there are children. This automatic inheritance is the 'statutory legacy'.
The surviving spouse gets the first £250,000 of the estate if there are children and the first £450,000 if there are no children.
The rest of the estate - the amount above the statutory legacy - is divided between the spouse and surviving children or other close relatives if there are no surviving children.
If there are children, they get half of the remainder, and the spouse gets the other half as a 'life interest'. Thus, the surviving spouse may be entitled to remain in the family home for his or her lifetime, even though the property is owned by the children.
LIFE INTEREST: The capital is invested and the beneficiary is entitled to the interest but not the capital for the remainder of their life.
The spouse can opt to take a lump sum instead of periodic payouts: the amount is determined by actuarial tables predicting life expectancy. When the spouse dies, their capital sum goes to the children.
BREAKING NEWS
Effective 1 February 2009, the statutory legacy has been significantly increased. If there are no children the surviving spouse receives £450,000 (up from £200,000). If there are children, the amount is £250,000 (up from £125,000).
This is the first increase since 1993 and reflects a number of economic factors. Among them, average house prices in England and Wales increased from £60,000 to £160,000 (up by 165%) between 1993 and 2004.
Determining the statutory legacy involves a tricky balancing act. An amount that is too low may mean that the spouse or civil partner has to sell the family house to raise cash to pay the children or other relatives. A generous amount for the spouse may mean that the children get very little or nothing at all. A further complication is that, if the children are from an earlier relationship, they will be "less likely to be provided for in the surviving spouse’s will, and they will not be entitled to anything under the intestacy rules if the surviving spouse subsequently dies intestate."
Government Consultation Paper, 2005.
Widows and widowers, and "common-law" partners
When there is no spouse to inherit, the statutory intestacy priority list applies. Cohabiting couples (neither married nor in formal civil partnerships) are not provided for in the statutory legacy, although they may have a claim under the Inheritance (Provision for Family and Dependants) Act 1975. Marriage or civil partnership offers more protection and rights. Better still: make a will.
Personal Property
The spouse generally inherits all personal possessions that have not been given to someone in a will.
Historical Note
"The statutory legacy itself was first introduced into the law of England and Wales by the Law of Property Act 1922. The level was then £1000. At that time 98% of estates were worth less than that amount. The purpose of the statutory legacy was to ensure that in the great majority of cases the surviving spouse received the whole estate absolutely. In the event, the 1922 Act was not brought into force, but the intestacy provisions (including the £1000 level) were carried into section 46 of the Administration of Estates Act 1925, and took effect on 1 January 1926 as part of the 1925 property law reforms."
Administration of Estates – Review of the Statutory Legacy, Consultation Paper CP 11/05 (7 June 2005), http://www.justice.gov.uk/docs/cp1105.pdf
