Sorting out the estate when there isn’t a will

A person who dies without a will is known as ‘dying intestate’.

This can make sorting out their estate a bit more complicated because the law decides who inherits the estate according to certain criteria called ‘intestacy rules’.

If there’s a relative or friend who is willing and able to sort out the estate, they can apply for a ‘grant of letters of administration’ - also known as grant of representation, grant of probate, or confirmation (in Scotland).

This grant makes them the ‘administrator’ of the estate and allows them to value the estate, pay any debts and distribute the estate according to the intestacy rules.

Sorting out an estate without a will usually takes more time. So, the sooner you apply for probate, the sooner you can distribute the estate to heirs.

If there are no surviving relatives, the person’s estate passes to the Crown.

HM Treasury is then responsible for dealing with the estate.

If you choose to take on the job of administering the estate, you can:

• use a probate specialist, or
• sort out the estate yourself.

Sorting out an estate where there is no will is sometimes tricky. Especially if it’s not clear what assets the deceased had, or there are complex family relationships which make distributing the estate under intestacy rules difficult.

In these types of situations, it’s sensible to consider using a solicitor or accountant that specialises in probate.

Using a probate specialist can also make the process of sorting out intestacy easier and a bit quicker, even for less complicated estates.

If you do decide to use a probate specialist, you should budget for several thousand pounds for their services.

If you decide to take on the job of administering the estate, you can still pay a solicitor for their time, if there are some things such as checking over the probate application, or working out how to distribute the estate.

The process of sorting out an estate without a will is almost the same as when there is a will. If you want to sort out the estate yourself, see our guide What to do when someone dies and leaves a will?

The first step in applying for probate involves some ‘hunting’ and a little paperwork. Specifically, you need to find certain documents and make copies of them.

These documents are needed as you go through the process of getting probate.

You’ll need to get at least six certified copies of the following documents:

• death certificate
• birth certificate
• marriage or civil partnership certificate, if the person was married.

You’ll need to attach copies of these various documents to probate forms, and to access the deceased’s bank accounts, investments or life insurance.

Before you can apply for probate, or confirmation if you live in Scotland, you’ll need to value the estate.

When you fill in the probate forms, you need to put in how much the estate is worth.

To value the estate, you need to find out the following information.

1. Find out the value of any assets, such as property, private pensions, savings, shares, jewellery, or valuable collectibles. If you think the item is worth more than £500, you should get it professionally valued.
2. Find out the value of any gifts that the person gave away in the seven years before they died. You’ll need to include these in the value of the estate. Certain types of gifts which were given away before the person died might incur Inheritance Tax.
3. Find out how much debt they have if any, such as a mortgage, credit cards or loans. You should include funeral costs as part of the debt if the estate is paying for the funeral. If there is joint debt, you’ll need to work out how much is the deceased’s share of that debt.
4. Work out how much the estate is worth once the debt(s) are paid.

You’ll also need to work out if they had any jointly owned assets, such as a bank account or a property.

Depending on how it’s owned, you may have to include it in the value of the estate.

Before you can work out the value of the deceased’s share of a jointly owned asset, you’ll have to find out how it was owned.

Examples of this type of assets are a car, a house or a piece of land.

They may have owned this asset either as:

• a ‘joint tenant’, or
• a ‘tenant in common’.

• both owners have equal rights to the whole asset
• the asset automatically goes to the other joint owner if one of them dies
• the deceased can’t pass on their ownership of the asset in their will
• you have to value the asset and include it when working out the Inheritance Tax. But, there may not be Inheritance Tax to pay on this asset if the value falls within their tax-free allowance.

Joint bank accounts are nearly always held as ‘joint tenants’.

So, while ownership of the account usually automatically passes onto to the joint account holder, you do need to value it as part of the deceased’s estate.

To value the deceased’s share of a joint bank account, you need to find out the balance in the account and divide it by the number of account holders.

HMRC usually scrutinises joint accounts held by unmarried couples or other combinations (such as parent and child) more closely.

This because the normal exemptions from Inheritance Tax might not apply, and that the surviving joint holder(s) could be liable for a certain amount of tax.

• each owner can own a different share of the asset
• the asset doesn’t automatically go to the other owner if one of them dies.
• the deceased can pass on their ownership of the asset in their will.
• you have to value the deceased’s share of the asset and include it when working out the Inheritance Tax.

If the deceased owned other assets, such as shares, you’ll need to contact the company:

• to find out how it was owned
• work out how much the deceased’s share of the asset was, and include that as part of the estate.

For property or land, if you can’t find this information in their papers and records, you can get it for a fee, from:

• Land Registry for properties in England and Wales
• Department of Finance and Personnel for properties in Northern Ireland
• Registers of Scotland (Opens in a new window) for properties in Scotland.

You can get access to the deceased’s financial assets (such as bank accounts) by asking banks and other institutions to release the deceased’s assets to you.  

You should open a separate bank account for the estate, to avoid getting it confused with your own personal bank accounts. 

Opening a separate bank account will also make it easier for you to see the value of the deceased financial assets, and might also help avoid any disagreements between beneficiaries of the deceased’s will. 

The banks might refer to this type of account as an ‘executorship account’ or client account if solicitors are acting for them. 

If you choose to open a separate bank account, you should also consider opening it with an entirely separate bank to your own.

This is so you can be sure that any money held in the bank account has the full Financial Services Compensation Scheme (FSCS) protection.

While the FSCS does allow a temporary £1million deposit protection for up to six months for ‘proceeds of a deceased’s estate held by their personal representative’, they can’t guarantee this protection if your bank or building society goes bust.

The standard amount of protection is £85,000 per financial institution (some banks share a licence, eg, Halifax and the Bank of Scotland), which might be lower than the value of the deceased’s estate.

Once you’ve got the value of the estate and how much debt the deceased had, you need to work out the Inheritance Tax due.

If the total value of the estate after debts are taken out is over £325,000, then there may be inheritance tax to pay.

This tax is due within six months from when the person died. And interest is charged if it’s not paid within six months.

So to help avoid paying this interest, consider paying some or all of the Inheritance Tax before you finish valuing the estate. If you’re paying this from your own account, you can claim it back from the estate.

Once you’ve valued the estate, you’ll need to fill in a few forms and send it to the nearest Probate Registry office.

You’ll also need to pay an application fee.

How much you need to pay and what forms you need to fill in depend on if you live in England or Wales, Scotland or Northern Ireland.

Once they’ve received your application, the probate office will contact you to arrange for you to swear an oath.

You can do this either in the local probate office or in the office of a commissioner for oaths.

You don’t normally need to apply for probate if the estate was either:

• jointly owned and so passes to the surviving husband, wife or civil partner, or
• doesn’t include land, property or shares.

Depending on the size of the estate, there are different forms to fill in:

• small estates (worth £36,000 or less), you need form C1 and C5(SE)
• large estates (worth over £36,000), you need form C1.

The confirmation fee varies depending on the size of the estate.

If the estate is worth more than £325,000, you’ll need to pay at least some if not all of the Inheritance Tax before probate is issued.

If you think you’ll struggle to pay the tax because you need to sell assets from the estate first, you could ask HMRC for a grant of credit

A grant of credit means that you can get probate first so that you can sell off the assets to pay the tax.

When you have probate, you can then contact the organisations that are holding the deceased’s assets, such as the bank or private pension provider.

They’ll ask for a copy of the probate or confirmation letter before they’ll release the assets.

You can then pay the various debts (if any) and the taxes due.

If the assets are in the form of property or shares, you might need to sell this in order to pay off the debts and taxes.

If you’re looking to sell a property:

• You can get advice on valuing a property and the costs involved as well as selling tips on the Which? website
• Read our Quick house sales guide if you’re thinking of using a quick house sale company instead.

If you’re disposing of shares:

• You might want to consider doing this yourself, if the amount of shares is small.
• For a complex portfolio or if the shares are worth a lot, it’s a good idea to get professional advice. You could also speak to an adviser if you’re unsure about whether to sell these shares. Read Choosing a financial adviser for more guidance.

After you’ve paid the debts and taxes, you have to distribute the estate according to the intestacy rules.

The surviving husband, wife or civil partner who was still legally married to the deceased can inherit the estate.

The deceased’s children might also inherit part of the estate if it’s worth more than a certain amount.

Close relatives such as surviving parents or siblings of the deceased could also inherit the estate in certain situations.

Each country has a different rule for working out who gets what and how much.

If the estate is worth less than £322,000, the spouse will inherit the entire estate.

But if the estate is worth more than £322,000 and there are children:

• The spouse inherits up to £322,000 worth of assets, all the deceased’s personal possessions, half of the remainder of the estate.
• The other half is divided equally between the children.
• If any child is under the age of 18 when the person died, his or her share is held in statutory trust.
  He or she will receive their inheritance when they reach the age of 18, or when they marry or enter into a civil partnership, whichever comes first.

If the estate is worth less than £250,000, the spouse will inherit the entire estate.

If the estate is worth more than £250,000 and there are children:

• The spouse will get up to £250,000 worth of assets and all the deceased’s personal possessions – if there were no children, it would be £450,000.
• If there is only one child, then the spouse also gets half of the remaining estate and the child gets the other half.
• If there is more than one child, the spouse gets a third of the remaining estate, and the remaining two thirds is shared between the children.

If there are no children or surviving close relatives, the spouse gets the entire estate.

If there are children, the spouse is entitled to the following (these are known as ‘Prior Rights’):

• The house up to a value of £473,000, or a lump sum of £473,000 if the house is worth more.
• Furniture and household goods up to the value of £29,000.
• Up to £50,000 in cash if the deceased left children. If the deceased did not leave children, then £89,000.

After the ‘Prior Rights’, there are ‘Legal Rights’ to the remaining estate:

• The spouse would get a third of the moveable estate if there are no children. If there are children, then one-half.
• The children are similarly entitled to one third of the moveable estate if there is a spouse, and one-half if there is no spouse.

After satisfaction of Legal Rights, the remainder of the estate passes in accordance with a list of priority, set out in the Succession (Scotland) Act 1964.

The Scottish Law Commission is looking into simplifying the rules on intestacy.