What happens if you pass away without a will? Three little-known things to consider

As you get older, one of your top priorities is likely to be ensuring that your family has a prosperous future.

Nobody knows how many years we have to enjoy together, so it is important to put plans in place to help your family after you pass away. This is known as “estate planning”, and comprises an array of financial and legal steps you could take, such as making a will and taking out life insurance.

You may be surprised to learn that, according to Canada Life, 1 in 3 over-55s do not have a will. 24% of these individuals said they don’t believe they have enough wealth to need one, whilst 17% said they assume their loved ones will inherit their money anyway.

Yet in truth, passing away without a will (known as “dying intestate”) could be both emotionally and financially strenuous for the loved ones you leave behind.

Let’s take a closer look at three little-known facts about dying intestate.

1. Dying without a will means some loved ones may be locked out of their inheritance

If you pass away without a will in place, the laws of intestacy are automatically applied to your estate. These are extremely complicated, but the bottom line is that they dictate who will inherit either part or all of your estate, no matter what your beneficiaries think they are entitled to.

Crucially, the laws of intestacy can leave some loved ones locked out of an inheritance, even if you told them that they should inherit your estate before you die.

For example, estates worth up to £270,000 are usually passed in full to your spouse or civil partner upon your death, even if you have adult children who are expecting to inherit some of these funds straight away.

What’s more, if you are in an unmarried relationship, your life partner could be deprived of receiving your wealth, even if you live together.

Moreover, making a will with the help of a legal professional could ensure that the right people inherit your hard-earned wealth. Remember that a will is a legal document, so in most cases, your wishes should be enacted clearly and efficiently after you pass away.

2. Your next of kin may be made responsible for distributing your estate and paying IHT

Inheritance Tax (IHT) is a complex subject for all families who are liable to pay it, even if the deceased person made a will. Without a will, working out how much IHT to pay, and who should be in charge of paying it, can be difficult.

If you passed away without a will, your next of kin, or the “most entitled inheritor”, can apply to be the administrator of your estate. This is likely to be your spouse if you are married, but if you have no legal partner, the role may fall to your eldest child if they are an adult.

The administrator has a similar role to the executor of a will, in that they are responsible for ensuring the assets are distributed according to the laws of intestacy.

What’s more, the administrator is then responsible for ensuring that the correct amount of IHT is paid in a timely fashion.

Crucially, when you leave a will, you are able to name an executor who you trust is capable of taking on these responsibilities. You may even discuss the role with them when you draw up your will, to make sure they are happy to act as your executor.

Without a will, the administrator of your estate is left to cope with all these responsibilities without any preparation, and potentially without any knowledge of how important processes work, like probate and IHT. This could prove stressful for the individual, especially in a time of grief.

So, not only can a will make sure your estate is passed to the correct people, it also means you can name an experienced, willing individual to be in charge after you pass away.

3. The absence of a will often leads to costly legal disputes

In 2022, research published by Today’s Wills and Probate revealed that 3 in 4 people are likely to experience a will, inheritance, or probate dispute in their lifetime. The study showed that disputes between siblings are the most likely forms of conflict in this area.

While a will does not always prevent a dispute from occurring, the absence of this document could make conflict even more likely. The laws of intestacy would determine who inherits your estate, no matter the verbal promises you have previously made – meaning that your family could choose to legally dispute the outcome.

Entering a legal dispute can take months, if not years, and may cost your loved ones thousands of pounds in fees. Plus, these legal processes can be very emotionally challenging for the family members involved.

On the other hand, having a well-crafted will in place could prevent a dispute from happening. The document, often accompanied by an additional letter of wishes, allows you to clearly state who should inherit your estate and why, which may help your family to accept the outcome of your choices.

Get in touch to learn how a Financial Planner can help with all aspects of estate planning

Drawing up a will is an important part of your estate plans, but it is just one of the many essential steps you could take in order to ready your estate before you pass away.

Working with a Financial Planner could help you to:

• Pass your wealth to loved ones whilst mitigating IHT where possible
• Ensure your family are aware of how much inheritance they can expect to receive
• Put protection in place that could financially support your family if you pass away.

We’re here to help you through every life stage. Email us at enquiries@pen-life.co.uk, or call 01904 661140.

Please note

PenLife does not offer will writing services, but we are happy to recommend local, trusted professionals for this purpose upon request.

All information is correct at the time of writing and is subject to change in the future.

This article is for general information only and does not constitute advice. The information is aimed at retail clients only.

The Financial Conduct Authority does not regulate estate planning or will writing.

Note that life insurance plans typically have no cash in value at any time and cover will cease at the end of the term. If premiums stop, then cover will lapse.

Cover is subject to terms and conditions and may have exclusions. Definitions of illnesses vary from product provider and will be explained within the policy documentation.