Caroline Flack, the TV and radio presenter, probably best known as the host of Love Island and the winner of the Strictly Come Dancing “glitter ball” in 2014, very sadly took her own life in February this year.
It has been reported that letters of administration in relation to Caroline Flack’s estate have recently been granted to the TV star’s mother. Having not prepared a Will, Flack’s net estate of just over £827,000 (£2million before debts and inheritance tax) will pass in accordance with the statutory intestacy rules of England and Wales. Our understanding is that, under these rules, Flack’s parents will inherit her estate and Flack’s mother has been quoted in the press as saying that the estate will be used “wisely to help good causes that Caroline was passionate about”.
This unfortunate situation illustrates a number of important estate planning points:
- The potentially (and very often) unsuitable consequences of the fixed statutory intestacy rules;
- The need to put in place an appropriate Will; to appoint the most appropriate executors and ensure the estate is inherited by those the deceased would want to benefit;
- The UK inheritance tax (IHT) consequences of gifts to charity; and
- The possibility and opportunities of varying dispositions taking effect on death.
Our blog seeks to remind readers to take appropriate advice in advance and to ensure a valid Will is in place.
Who benefits from the deceased’s estate?
Where a deceased (in England and Wales) had not prepared a Will during their lifetime, the statutory intestacy rules will determine who will benefit from the estate. These rules are fixed and unlikely, in most cases, to meet the deceased’s wishes. Caroline Flack was unmarried, but left behind a partner, parents and three siblings, including a twin sister. Under the intestacy rules, because Flack was not married, did not have any children and was survived by her parents, all of her estate including her property in North London will pass to her parents. Her partner and siblings will not receive anything, which may, or may not, have been what she would really have wanted.
Who administers the estate?
Executors can only be appointed in a Will (or codicil) and can then apply for a ‘grant of probate’. Since Flack had not prepared a Will, the entitlement to administer her intestate estate is provided by law. In England and Wales, the Non-Contentious Probate Rules apply to identify the person(s) with a right to apply to administer the estate by obtaining ‘letters of administration’. As a general rule, these rules follow the intestacy rules so the persons entitled to a share in the estate are also the persons formally able to apply to administer the estate; in Flack’s case, her parents, and the reports are that her mother has applied to administer her estate. Again, this may, or may not have been what she would really have wanted.
UK inheritance tax
Depending on the value and type of assets owned by a deceased, IHT at 40% (subject to reliefs and exemptions) is payable within 6 months of the death and prior to any application for grant of probate or letters of administration.
In this case, with the intestacy rules passing the estate to Flack’s parents, there was an IHT liability. However, Flack’s mother has suggested that the estate will be used for charitable causes in her memory. Charities are exempt beneficiaries for the purposes of IHT and if a Will had been prepared to this effect, any assets left to charity would have been exempt from IHT; there would have been no need to pay any IHT on those assets prior to obtaining the grant.
Varying the inheritance
However, legitimate IHT savings can still be made. In England and Wales, it is possible to vary the dispositions made by a Will, or by the statutory intestacy rules, within two years of death. Depending on the circumstances, and subject to appropriate advice, it would be possible for Flack’s parents to vary their entitlement to their daughter’s wealth in order to pass these funds to charitable causes. Such variation would be “read back” for IHT purposes, as if the charitable dispositions had been effected on death (i.e. as though a Will had been executed) and the IHT liability reassessed. It should therefore be possible for any IHT paid to be reclaimed on the value of the assets which are to be earmarked to be given to charity.
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Please note that this blog is provided for general information only. It is not intended to amount to advice on which you should rely. You must obtain professional or specialist advice before taking, or refraining from, any action on the basis of the content of this blog.
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