Caroline Flack, TV presenter, very sadly took her own life in February 2020. Newspapers estimated that her estate was worth around £2 million but, after debts, the value was £827,000. Caroline had passed away unexpectedly without a Will having been made and therefore, by law, her estate is to be administered in accordance with the rules of intestacy. But what does it mean to die without a Will and what key points should you be aware of?
What Does it Mean to Die Without a Will?
When someone dies without a Will, there is a strict order set by law that determines who is entitled to inherit – this is known as the rules of intestacy.
Under the intestacy rules, Caroline’s parents will inherit in equal shares as Caroline did not have a spouse nor any children. Her partner, siblings, friends and charities are not entitled to anything.
Who is Responsible for Administering an Estate?
Executors can only be appointed in a Will and are entitled to apply for a Grant of Probate. If you die without a Will, the law provides who is entitled to apply for ‘Letters of Administration’ in order to formally administer an intestate estate. These rules generally follow the intestacy rules, so the persons entitled to the estate are also entitled to apply to administer the estate. Caroline’s mother therefore made the application for Letters of Administration to administer her daughter’s estate.
Leaving the Estate to Charity
The standard Inheritance Tax rate is 40%, but this is subject to potential reliefs and exemptions which depend on what assets there are and who will inherit them. Inheritance tax is payable within 6 months of death.
Charities are exempt beneficiaries for inheritance tax and so if Caroline had prepared a Will leaving her estate to charity, there would be no inheritance tax to pay.
However, legitimate inheritance tax savings can still be made. In England and Wales, it is possible to vary a Will, or the intestacy rules that apply, within two years of death. Depending on the circumstances, and subject to appropriate advice, it is possible for Caroline’s parents to use a Deed of Variation to vary their entitlement to pass these funds to charitable causes in a tax efficient way.
Lessons to Learn
- Make sure to choose your own beneficiaries by making a Will and keep it up-to-date.
- It is important to consider your inheritance tax position as part of your estate planning.
- Gifts to charity offer an opportunity to save inheritance tax.
- A beneficiary does not have to accept their inheritance, it is possible to vary their entitlement within 2 years of death.