When a loved one dies, an unwelcome but unavoidable part of the process involves the administration of the deceased’s estate. Whilst sorting through a loved one’s estate is never straightforward, it can be made significantly more complex where the deceased leaves no Will. The recent settlement of the estate of the music artist Prince only highlights that administering complex estates can drag on for years where insufficient preparations are in place, often at great cost to the surviving family.
Where a person dies without leaving a valid Will, they are referred to as having died “intestate”. Even if a person leaves a valid Will, if it does not dispose of their whole estate, a partial intestacy can occur. Some individuals also do not realise that getting married usually revokes a pre-existing Will, so may not even know that their Will is no longer valid. Therefore, simply having prepared a Will a number of years ago does not necessarily mean that a person’s estate is safe from the issue of dying partially or fully intestate.
If a person dies intestate, their estate is governed by the statutory intestacy rules which divide the estate depending on the family structure the deceased left behind. For example, in England, where someone leaves a spouse/civil partner and surviving children, the spouse/civil partner usually receives all chattels and a statutory legacy, and the remainder of the estate is split between the spouse/civil partner and the children. Where there are no children, the spouse/civil partner receives the entire estate. These rules might not necessarily reflect the deceased’s wishes, for example, if there are other family members, friends or charities they wish to benefit, or if they wish to have any flexibility, or specify a particular age at which their children inherit.
Furthermore, the intestacy rules in England assume a particular family dynamic which is not reflective of every person. Cohabitees, step-children and step-siblings are not currently included at all. Instead, where the deceased leaves no children or spouse/civil partner, the estate passes only to blood relatives such as parents, siblings, nieces, nephews, half-siblings, grandparents, aunts, uncles, cousins, and so on, according to a statutory hierarchy.
The intestacy rules can also be problematic in that they do not necessarily result in the most tax-efficient distribution of the estate. They also specify who the deceased’s personal representatives will be which, again, may not align with the deceased’s wishes.
In short, the division of assets under the intestacy rules can be complex and unexpected, leaving many family members with a feeling that they have not been adequately provided for. Family members may therefore feel that they must make claims against the estate for their ‘fair share’, which can lead to long, protracted disputes.
The issues surrounding dying intestate were recently highlighted in the estate of Prince. Prince, who died in April 2016, left no spouse or living children and, therefore, under the applicable intestacy rules in the US, his estate passed to his six half-siblings. Three of the half-siblings sold their shares of Prince’s extensive song catalogue to a company called Primary Wave, whilst three others kept their shares. In January, the heirs agreed to a $156 million valuation of the estate with the US Internal Revenue Service and on 8 August 2022 the parties agreed to split the estate between the three remaining heirs, their families, advisers and Primary Wave, finally settling the estate after 6+ years of negotiations and disputes.
Although the dispute and eventual agreement unfolded in the US courts, the lessons learned are equally important in England. Prince had a complex (and valuable) estate which contained a great deal of intangible and intellectual property. He did not have a traditional family structure, and he did not have a valid Will setting out his wishes. In these circumstances, in England just as in the US, the intestacy rules are inadequate to provide for all family members in a way that can be considered satisfactory. Many families may find that they do not see a resolution for some time, with the 6+ years it took to settle Prince’s estate being a prime example of the extent the delays can take.
To avoid the issues that arise when dying intestate, a person should ensure that they have a valid Will in place which covers the entirety of their estate. They should also keep their Will under review so as to ensure that it remains in force and reflects their wishes for their whole estate, even as their personal and financial circumstances may change over time.
If you have any questions concerning the intestacy rules, or if you would like to discuss suitable lifetime planning to avoid leaving your estate subject to the intestacy rules, please contact Matthew Barnett, Wendy Hall, Alison Broadberry or another member of the Private Client team.
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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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