Exactly what happens if you don’t write a will

As many as six in every 10 adults in the UK haven’t made a will¹ and even among people over the age of 55, more than three in 10 have yet to write theirs. This means a lot of people are risking leaving their loved ones in financial limbo if they die without leaving a will.

If you’re one of them, you’re not alone, but in order to ensure that your nearest and dearest get what’s yours when you die, you need to have a will in place that clearly states your wishes. Otherwise, many people, who you might want to leave something to, could be left out.

If you die intestate. i.e. without a will, you have no say over what happens. Instead, intestacy laws determine how your property is distributed upon your death and any bank accounts, securities, property and any other assets you own at the time of death, are effectively put in limbo, until the court has decided what should be done with them.

Only married or civil partners and some other close relatives can inherit under the rules of intestacy. So, fail to leave clear instructions in a will and relations by marriage, close friends and carers and even unmarried partners – often misleadingly referred to as common-law spouses - could be left with nothing, as they have no right to inherit under intestacy laws.

Are you married or not?

In the case of intestacy, it matters whether you are married or not. In England and Wales (the rules are different in Scotland) if you are married with no children, everything goes to your spouse or civil partner.

If you are married with children, then your spouse/civil partner will inherit:

• Your personal possessions, and
• the first £322,000 of your estate, and
• half of your remaining estate. The other half will be shared equally among your children. 

If you’re not married, everything will go straight to your children and if you don’t have any children, it will be shared equally among just one of the following groups of people:

• Your parents
• Your siblings - or any nieces and nephews if your siblings are dead
• Your grandparents
• Your aunts and uncles 

All for King and country

And, if no living relatives can be tracked down, under the archaic system of ‘bona vacantia’, everything you own will go to the Crown. The Duchy of Lancaster, the monarch’s private estate, is estimated to have collected more than £60m over the past decade as a result of Brits dying without leaving a will.

No place like home

Even your home can be in dispute if you die without a will and even being married does not give you any protection here. It all comes down to how you hold the property. If you own your home as beneficial joint tenants, when one of you dies, the surviving partner will automatically inherit the other partner’s share of the property. However, if you own it as tenants in common, the surviving partner does not automatically inherit the other person’s share. Instead that will be dealt with by the rules of intestacy (or your wishes if you have written a will). So be careful when you choose how to hold the property when completing house purchases.

Your finances are also affected. Couples may also have joint bank or building society accounts. If one dies, the other partner will automatically inherit the whole of the money. If, say, you have children from another relationship, they could miss out on money that you would want to go to them.

That’s because children of the intestate person will inherit if there is no surviving married or civil partner. If there is a surviving partner, they will inherit only if the estate is worth more than a certain amount.

If there is a surviving partner, a child only inherits from the estate if the estate is valued at over £322,000. If there are two or more children, the children will inherit in equal shares. And it’s important to note that all the children of the parent who has died intestate inherit equally from the estate; this also applies where a parent has children from different relationships.

Even if you are happy for your assets to be divided equally, intestacy is still not necessarily ideal as your children will not receive their inheritance immediately. Intestacy rules mean that they get it when they either reach the age of 18 or marry or enter into a civil partnership before then. Until then, trustees manage the inheritance on their behalf.

And beware if you have been married and have separated but have not legally divorced. In this case, your spouse or civil partner may still inherit if you die intestate or fail to change your will. This could mean that your children again fail to inherit anything when you die.

Family squabbles

Legally, it is possible to rearrange the way property is shared out when someone dies without leaving a will, provided this is done within two years of the death. This is called making a deed of family arrangement or variation. All the people who would inherit under the rules of intestacy must agree. And as many high-profile intestacy cases have shown, that’s not always a straight-forward matter. A lot of it comes down to how ‘friendly’ your friends and family are with one another. Nor is it one that comes without costs involved.

It’s far better to set out your wishes in advance of your death, so loved ones and others who you wish to leave something to, aren’t left to squabble over their entitlement to what was once yours, when you die.

More on passing on wealth

Source:

¹ Unbiased.co.uk, December 2023

Important information - investors should note that the views expressed may no longer be current and may have already been acted upon. This information is not a personal recommendation for any particular investment. If you are unsure about the suitability of an investment you should speak to one of Fidelity’s advisers or an authorised financial adviser of your choice.