We have rebranded Retirement Advantage products as Canada Life. Visit our Retirement Account and Home Finance pages.
Advisers looking to use MyAccess should login to our Adviser Connect Portal.

More Adviser News

Adviser News Intestacy

The rules around intestacy in the UK

The United Kingdom is made up of England, Wales, Scotland and Northern Ireland. But would a person’s loved ones receive the same inheritance under the rules of intestacy in each country?

 

If a person dies without a valid will, it means they have died “intestate.” When this happens, the intestacy laws of the country in which they resided will determine how their property is distributed upon their death.

 

This article follows 4 sisters Victoria, Jane, Charlotte and Anne, each of whom died intestate.

Victoria
Victoria is tragically killed in a car crash on her honeymoon. She is survived only by her husband Fitzwilliam.


Under the intestacy rules for England and Wales on Victoria’s death Fitzwilliam would receive the whole of her estate.


However, if Victoria had resided in Scotland on her death Fitzwilliam would only be entitled to the whole of the estate if Victoria’s parents and siblings were not alive. As we know that Victoria is survived by her 3 sisters and both of her parents previously died, Fitzwilliam would only be entitled to the house up to a value of £473,000. If the house is worth more than £473,000 Fitzwilliam would be entitled to a lump sum which could mean that the house would need to be sold.

 

Fitzwilliam would also get furniture and moveable household goods up to the value of £29,000 and up to £50,000 in cash. The balance of the estate would then be divided one third to Fitzwilliam and two thirds equally between Victoria’s 3 sisters.

 

To illustrate:

  • Victoria dies with an estate worth £700,000
  • Included in the estate is her house worth £200,000 and the fixtures and fixings worth £20,000
  • Fitzwilliam is entitled to the house plus the £20,000 fixtures and fixings
  • He is also entitled to £50,000 cash
  • The remaining £430,000 is divided equally between her 3 sisters

 

If Victoria had resided in Northern Ireland Fitzwilliam would be entitled to take all the personal effects plus the first £450,000 of the estate. The balance of the estate would then be divided one half for Fitzwilliam and one half equally between Victoria’s 3 sisters. But, if Victoria’s estate had been less than £250,000 Fitzwilliam would receive the whole of her estate.

 

Personal effects means anything that is not monetary, business assets or held as an investment and can often be in dispute as they can be seen as many different things. What is an investment, and where there are collectable items of value in an estate, there may be a dispute over whether they pass to the widow/widower as ‘chattels’, or form part of the estate that the sisters might inherit as an investment.

 

Jane
Jane sadly dies and is survived by Edward and they have 2 children, aged 5 and 7.

 

Under the intestacy rules in England and Wales Edward would receive all the personal effects plus the first £250,000 of Jane’s estate. The balance of Jane’s estate would then be divided one half for Edward and one half divided equally between her 2 children. As the children are minors their share of their mother’s estate would be held on statutory trusts until they are 18 years old.

 

If Jane had died in Scotland Edward would have been entitled to the house up to a value of £473,000. If the house is worth more than £473,000 Edward would be entitled to a lump sum which could mean that the house would need to be sold. Edward would also get furniture and moveable household goods up to the value of £29,000 and up to £50,000 in cash. The balance of the estate would then be divided one third to Edward and two thirds equally between Jane’s 2 children. As the children are minors their share of their mother’s estate would be held on statutory trusts until they are 16 years old, earlier than would be available under the rules for England and Wales.

 

However, if Jane had resided in Northern Ireland, Edward would receive all the personal effects plus the first £250,000 of the estate. The balance of the estate would then be divided one third to Edward and two thirds equally between Jane’s 2 children. Again the children’s share would need to be held on statutory trusts until they reached 18, consistent with the rules for England and Wales.

 

Charlotte
Charlotte is divorced from Arthur and lives with her 2 children.

 

As Charlotte was divorced at the time of her death, under the intestacy rules it doesn’t matter where in the United Kingdom she resided when she died.



Charlotte’s estate would always be divided equally between her 2 children. If either had died leaving children then their share is divided equally among their children, that is, the deceased’s grandchildren.

 

Anne
Anne had a successful business career and never found the time to get married or have children.

 

If Anne had resided in England & Wales on her death her estate would be divided in the following order:

  • Parents
  • Brothers or sisters or their descendants
  • Half siblings or their descendants
  • Grandparents
  • Uncles and aunts or their descendants
  • Half uncles and aunts or their descendants
  • Whole estate passes to Crown

 In Scotland if Anne had been survived by her parents as well as her 3 sisters her estate is divided half to her parents and half to her sisters. However, if Anne was not survived by her parents or her sisters on her death her estate would be divided in the following order:

  • Uncles or aunts on both parents’ side or their descendants
  • Grandparents
  • Brothers or sisters of any grandparent or their descendants
  • Any ancestors of Anne
  • Whole estate passes to Crown

 If Anne had resided in Northern Ireland on her death her estate would be divided in the following order:

  • Parents
  • Brothers or sisters whether whole or half blood or their descendants
  • Any remote relative
  • Whole estate passes to Crown.

 

Jointly Owned Property
When dealing with intestacy you need to consider whether the deceased jointly owned their house with their spouse/civil partner. There are two different ways of jointly owning a home. These are beneficial joint tenants and tenants in common.

 

In our examples if the sisters and their husbands were beneficial joint tenants at the time of the death, their husband would automatically inherit their deceased wife’s share of the property.

 

However, if the house was held as tenants in common, Fitzwilliam, Edward and Arthur would not automatically inherit the share.

 

Couples may also have joint bank or building society accounts which means, that if one dies, the other surviving partner will automatically inherit the whole of the money.

 

Property and money that the surviving partner inherits does not count as part of the estate of the person who has died when it is being valued for the intestacy rules.

 

Conclusion
Not having a will can mean that an estate is divided in accordance with the rules of intestacy and this can mean that loved ones may not inherit all that a deceased wants them to. It is therefore important to write a will as this ensures that the people you want to benefit on your death are the ones that will.


This article, written by Kim Jarvis from Canada Life's Technical Services Team, first appeared on Professional Paraplanner's website.

Categories

All News

Search Our News Archive

Archive

Register For Latest News Updates

Register Now

This website is for UK professional advisers only and is not approved for use by private customers.

Canada Life Limited is authorised by the Prudential Regulation Authority and regulated by the Financial Conduct Authority and the Prudential Regulation Authority.

Canada Life International Limited and CLI Institutional Limited are Isle of Man registered companies authorised and regulated by the Isle of Man Financial Services Authority.

Canada Life International Assurance (Ireland) DAC is authorised and regulated by the Central Bank of Ireland.

Stonehaven UK Limited and MGM Advantage Life Limited, trading as Canada Life, are subsidiaries of The Canada Life Group (U.K.) Limited. Stonehaven UK Ltd is authorised and regulated by the Financial Conduct Authority. MGM Advantage Life Limited is authorised by the Prudential Regulation Authority and regulated by the Financial Conduct Authority.