Inheritance Laws in United Kingdom
Inheritance laws in the United Kingdom (UK) are a combination of statutory law, common law, and equity. The key sources for inheritance law are the Wills Act 1837, the Inheritance (Provision for Family and Dependants) Act 1975, and various other laws that govern the distribution of estates when someone dies. These laws apply to England and Wales, Scotland, and Northern Ireland with some variations between the regions.
1. Testate Succession (When There is a Will)
If the deceased has left a valid will, the estate will be distributed according to the instructions in that will. The will must be made in accordance with the legal requirements for it to be valid.
1.1 Requirements for a Valid Will
To be legally valid in the UK, a will must:
- Be written (it can be typed or handwritten).
- Be signed by the testator (the person making the will).
- Be signed in the presence of at least two independent witnesses, who must sign the will as well, in the testator's presence.
- Be made voluntarily and without duress.
- The testator must be 18 years or older and of sound mind.
1.2 Executor of the Will
The testator can appoint one or more executors in their will. Executors are responsible for managing the estate, paying any debts, and distributing the assets according to the terms of the will. Executors must apply for Grant of Probate from the court before administering the estate.
2. Intestate Succession (When There is No Will)
If someone dies intestate (without a valid will), their estate will be distributed according to the laws of intestacy. These rules are outlined in the Administration of Estates Act 1925 and the Intestates' Estates Act 1952.
2.1 Order of Succession
The estate is distributed according to a specific order of priority:
- Spouse or Civil Partner: The surviving spouse or civil partner is entitled to a portion of the estate. If there are children, the spouse or civil partner gets:
- The first £270,000 of the estate, plus half of the remainder of the estate.
- The children inherit the other half of the estate, divided equally. If there are no children, the surviving spouse inherits everything.
- Children: If there is no surviving spouse, the estate is split equally among the children. If there are no children, the estate passes to other family members.
- Parents: If there is no surviving spouse or children, the estate goes to the deceased's parents.
- Siblings: If there are no surviving parents, the estate goes to the deceased's siblings. If any siblings have passed away, their share will go to their children (the deceased's nieces and nephews).
- Extended Family: If no immediate family members are alive, the estate may pass to more distant relatives like grandparents or aunts and uncles.
- The Crown: If no relatives can be found, the estate is claimed by the Crown (i.e., the government).
2.2 Cohabiting Partners
Cohabiting partners (those who live together but are not married or in a civil partnership) do not automatically inherit under intestacy laws. They must be specifically named in a will to inherit from the deceased’s estate, or they can apply under the Inheritance (Provision for Family and Dependants) Act 1975 if they were financially dependent on the deceased.
3. Inheritance (Provision for Family and Dependants) Act 1975
This Act allows certain people to make a claim against the deceased’s estate if they believe they have not been provided for adequately in the will or under intestacy rules. Eligible claimants include:
- Spouse or civil partner.
- Children, including adult children in certain cases.
- Dependants (such as cohabiting partners or anyone who was financially dependent on the deceased).
- Persons treated as children (such as stepchildren).
The court will consider factors like the financial needs of the claimant, the size of the estate, the claimant's relationship to the deceased, and the deceased’s obligations to provide for them.
4. Probate and Administration of the Estate
The probate process involves administering the estate of a deceased person. It includes:
- Grant of Probate: If there is a will, the executor applies for a Grant of Probate to have the legal authority to administer the estate.
- Letters of Administration: If there is no will, a relative can apply for Letters of Administration to manage the estate.
- Asset Distribution: After debts, funeral costs, and taxes are paid, the remaining estate is distributed to the beneficiaries according to the will or intestacy laws.
5. Inheritance Tax (IHT)
In the UK, Inheritance Tax (IHT) is levied on estates above a certain threshold. As of 2023, the tax-free threshold for IHT is £325,000. Estates valued above this amount are subject to a tax rate of 40%. However, the tax is applied only to the value of the estate that exceeds the threshold.
5.1 Exemptions and Reliefs
There are various exemptions and reliefs that can reduce the amount of IHT payable:
- Spouse or Civil Partner Exemption: There is no IHT charged on assets passed to a surviving spouse or civil partner.
- Residence Nil-Rate Band: If the deceased’s estate includes a home that is passed to direct descendants (children or grandchildren), there is an additional £175,000 allowance.
- Charitable Donations: If a portion of the estate is left to charity, the estate may be eligible for a reduced IHT rate (i.e., 36% instead of 40%).
6. Wills and Property in the UK
If the deceased owned property, this will be addressed in the will or by the rules of intestacy. If the property is to be inherited by a beneficiary, the legal title must be transferred to that person. If there are debts on the property (such as a mortgage), they must be paid before the estate is fully distributed.
If the deceased owned property jointly with another person, the surviving co-owner may automatically inherit the deceased’s share through joint tenancy.
7. Rights of Foreign Nationals
Foreign nationals living in the UK have the same inheritance rights as UK nationals, subject to the laws of their home country if they are non-UK residents. If they have assets in other countries, they may need to follow the laws of those countries for distributing their estate.
8. Disputes Over Inheritance
Disputes over inheritance may arise for various reasons, including:
- A challenge to the validity of the will (e.g., if it was made under duress, fraud, or undue influence).
- Claims made under the Inheritance (Provision for Family and Dependants) Act 1975.
- Disagreements between beneficiaries or between family members.
In such cases, the matter may be taken to court to resolve the dispute.
9. Renouncing Inheritance
An heir can renounce their right to inherit. This may be done if they do not want to accept the inheritance, perhaps because of associated debts. This must be done through a formal declaration, and the inheritance will then pass to other eligible heirs according to the will or intestacy rules.
10. Inheritance and Minor Children
If the deceased has minor children, the will may appoint a guardian to care for them. If no will exists, the court may appoint a guardian. Minor children’s inheritance will generally be held in trust until they reach the age of 18.
Conclusion
Inheritance laws in the UK are governed by a mix of statutory laws and common law. Key points include:
- Testate succession follows the instructions in a valid will.
- Intestate succession distributes the estate according to a set order of priority, with the spouse/civil partner and children having the first claim.
- The Inheritance (Provision for Family and Dependants) Act 1975 allows certain individuals to challenge an inheritance if they believe they were not adequately provided for.
- Inheritance tax is payable on estates over £325,000, but there are exemptions, such as for spouses and charitable donations.
- Disputes over inheritance are common, and the courts may be involved in resolving them.
It is important to have a valid will in place to ensure that your estate is distributed according to your wishes, and individuals may want to seek legal advice in cases of complex estates or potential disputes.
RELATED Blog
0 comments