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Estate administration can, like many things of this nature, be filled with jargon, unfamiliar concepts and confusing processes.  The task can become even more incomprehensible when you are dealing with an intestacy – meaning an estate where the deceased did not leave a will.   Yet, most of us do not make wills and leave our estates to be divided up in accordance with statutory rules rather than our own wishes.  Having a will in place can ease the process of dealing with an estate and lessen the burden on surviving loved ones.   Moreover, making a will is not just something to do in your twilight years but something you should do and revise at key stages in your life.  Over the next month, we will be providing some scenarios to help illustrate the issues that can arise from an intestacy.

SCENARIO 1
Arthur is married to Maggie – she is his second wife.  Arthur does not have any children with Maggie but he does have two children from his first marriage.  Arthur dies without leaving a will.  On his death, he owned a property jointly with Maggie, which was worth £250,000 as well as a joint bank account with Maggie which had £20,000.  In addition to this, Arthur owned a car worth £5,000 and a caravan worth £20,000 in his sole name.  He owned some bank accounts in his sole name, which had a total of £40,000, some investments in his sole name totaling £120,000 and a pension with Standard Life worth £100,000.

So, who gets what?

As Arthur did not leave a will, his estate is divided up in accordance with the rules of intestacy.  These say that, if the deceased is married and has surviving children, the estate is divided up as follows:

• All jointly held assets pass to the surviving joint holder(s)

The spouse gets:

• All the deceased’s personal possessions, which includes cars and caravans
• The first £322,000*
• 50% of whatever is left over, if any

The children get:

• The remaining 50% of whatever is left over, if any

So, with the exception of the pension, Maggie gets the lot; Arthur’s children will receive nothing from his estate.

As for the pension, most pensions are written in trust.   This means that they are distributed in accordance with the terms of the trust, not the rules of intestacy (or a will, if one were left.)  In most cases, the trustees will pay the pension in accordance with any expression of wish left by the deceased, but if none, they will pay it at their discretion to the person they deem to be the rightful beneficiary.  In this case, they may pay the pension entirely the surviving spouse, or they may divide it between the spouse and the children.

Even if the step-mother and the children are on good terms, it’s not hard to imagine the tensions that may arise from this situation, particularly during a time when those affected will also be trying to cope with their grief.

* If the deceased died before 26th July 2023, the statutory legacy would be £270,000