What happens to your estate when you die?

Planning for the future is crucial, especially when it comes to ensuring that your estate is handled according to your wishes when you pass away. In the UK, the way your assets are distributed after death depends on whether you have left a valid Will or not. 

Dying with a Will

A Will is a legal document that outlines how you want your estate — your money, property, and possessions — to be distributed after you die. Having a Will ensures that your wishes are carried out and makes the process of settling your estate smoother for your loved ones.

Here is what happens when you die with a Will in the UK:

1. Appointment of Executors

In a Will, you name executors — the individuals responsible for administering your estate. Executors are tasked with:

•    Applying for probate, a legal document that gives them authority to deal with your estate
•    Valuing your estate, paying any debts, and distributing assets according to your Will.

Executors can be family members, friends, or professionals such as solicitors, or a combination of the aforementioned. 

2. Distribution of assets

Your assets Will be distributed according to the instructions laid out in your Will.  This can include:

•    Financial assets such as savings, shares, and investments
•    Property such as your home or any other real estate
•    Personal belongings such as cars, jewellery, or artwork

If you have specific requests — such as leaving assets to charity or making gifts to friends — these will also be followed.

Dying without a Will (Intestate)

If you die intestate — without a valid Will — the distribution of your estate will follow the UK's intestacy rules. This process can lead to unintended consequences, particularly if you have complex family arrangements or specific wishes that have not been documented.

Here is what happens when you die intestate:

1. Who manages your estate?

Without a Will, no executors are named, so someone (usually a family member) must apply to the court for the role of administrator. The administrator has a similar role to that of an executor, managing the estate, paying debts, and distributing assets. They must apply for letters of administration, which is the equivalent of probate but for intestate estates. The process the administrators must follow usually takes a longer time than executors of Wills.  

2. Distribution of assets under intestacy rules

Under intestacy rules, your estate is distributed according to a strict hierarchy. The order of priority for beneficiaries is as follows:

• Spouse or civil partner with children: If you are married or in a civil partnership at the time of your death, your spouse or civil partner will inherit the first £322,000 of your estate, all personal possessions, and half of the remaining estate. The other half of the remainder will be shared equally among your children.
• Spouse or civil partner with no children: If you are married or in a civil partnership at the time of your death, and have no surviving children, grand-children or great grandchildren, your spouse or civil partner will inherit the whole estate.
• Children: If you have children, they will inherit equally once the spouse's or civil partner's share has been settled. This includes biological, adopted, or legally recognised children. Stepchildren, however, do not automatically inherit under intestacy rules.
• No spouse or children: If you have no surviving spouse or children, your estate will be distributed to other relatives in a specific order: parents, siblings, nieces and nephews, grandparents, and then uncles and aunts.
• No relatives: If no eligible relatives are found, your estate will pass to the Crown, known as bona vacantia, meaning it is claimed by the government.

3. Complications for unmarried partners

One of the most significant consequences of dying intestate is that unmarried partners or cohabiting partners are not entitled to inherit anything automatically, no matter how long the relationship lasted. This can lead to financial hardship for the surviving partner if no other legal arrangements, such as joint property ownership or life insurance policies, are in place.

4. Provision for dependants

If you die intestate, there may be no clear provision for dependants such as minor children or vulnerable family members. This could mean that decisions about guardianship or financial support are left to the court. It also increases the chances of family disputes.

Potential issues with Intestacy

• Unintended beneficiaries: Without a Will, your estate may go to relatives you had no intention of benefiting, such as estranged family members.
• Family disputes: The rigid intestacy rules may lead to family disagreements, especially if expectations differ from the legal distribution.
• Longer and more costly process: Dying intestate typically makes the estate administration process longer and more complex, potentially causing delays in releasing funds to your loved ones.
• Missed opportunities for tax efficiency: Without a Will, your estate could be liable for higher tax bills, which a well-planned estate could have reduced.

Having a valid Will in place offers significant advantages. It ensures that your assets are distributed according to your wishes, and allows you to make provisions for dependants, loved ones, or charitable causes. Additionally, it can help minimise taxes and ensure that your estate is managed efficiently.

Although every effort has been made to ensure that the information provided in this article is accurate and correct, the information provided does not constitute any form of financial advice. We recommend that you take financial advice before making any financial decisions.