If someone dies without making a will, they are said to have died 'intestate'. If this happens, the law sets out who should deal with the deceased's affairs and who should inherit their estate (property, personal belongings and money).
When someone dies without leaving a will, dealing with their estate can be complicated. It can also take a long time, months or even years in some very complex cases.
If matters are complex or you feel you need help, it's a good idea to talk to us as soon as possible. In the meantime, it may be a good idea to put small valuable items away for safekeeping.
Usually the closet surviving relative of the deceased, such as a spouse, child or parent will have the legal right to sort out their estate and may need to apply for a Grant of Letters of Administration. The grant provides proof to banks, building societies and other organisations that you have authority to access and distribute funds that were held in the deceased's name. The overall process is often called 'obtaining probate', though technically this term applies where there is a will. If Inheritance Tax is due on the estate some or all of this must be paid before a grant will be issued.
If you can make a decision for yourself you can be said to have the mental capacity to make that decision. If you aren't able to make a decision because of some form of mental disability or illnes, youy can be said to lack the mental capacity to make that decision. The disability or illness may be either temporary or permanent and could be caused by:
- dementia
- brain injury
- a stroke
- alcohol or drug misuse
- the side-effects of medical treatment
- any other illness or disability.
The Mental Capacity Act 2005 laid down a test to help work out whether someone has the mental capacity to make a decision. Someone is unable to make a decision if:
- they can't: understand the information needed to help them make the decision, even when the information is given in a way which meets their needs, for example, using simple language or by sign language, or
- remember that information, or
- use or weigh the information to help them make a decision, or
- communicate their decision in any way.
Whilst you have mental capacity you can make a Lasting Power of Attorney (LPA) to appoint someone to deal with your finances and/or your health and welfare. It is important that you make an LPA if you have been diagnosed with, or think you might develop, an illness which might prevent you from making decisions for yourself at some time in the future.
The kinds of illness which might prevent you from making decisions for yourself include:
- dementia
- mental health problems
- brain injury
- alcohol or drug misuse
- the side-effects of medical treatment
- any other illness or disability.
You must make an LPA whilst you are still capable of making decisions for yourself.
Inheritance Tax is a tax on an estate (the property, money and possessions) of someone who’s died.
There’s normally no Inheritance Tax to pay if:
- the value of your estate is below the £325,000 threshold
- you leave everything to your spouse or civil partner, a charity or a community amateur sports club
If you’re married or in a civil partnership and your estate is worth less than £325,000, you can transfer any unused threshold to your partner when you die. This means their threshold can be as much as £650,000.
Inheritance Tax is generally charged at 40% but an estate can pay a reduced rate of 36% on some assets if a deceased leaves 10% or more of the ‘net value’ of their estate to charity.
Inheritance Tax may be due on gifts made by a deceased within 7 years of their death. If this is the case it will be charged using a sliding scale known as taper relief.
From 6 April 2017, you’ll get a bigger Inheritance Tax threshold if you give away your main home to your children (including adopted, foster or stepchildren) or grandchildren in your Will.
If you give away your main home whilst alive and remain living in it, your estate will still have to pay Inheritance tax on the property value when you die, unless you have:
- paid rent to the new owner at the going rate (for similar local rental properties)
- paid your share of the bills
- lived there for at least 7 years after giving it away
You won’t have to pay rent to the new owner if both the following apply:
- you only give away part of your property
- the new owners also live at the property
Social care is managed by your local authority. You have to apply directly to them if you need help with paying for long-term care. Your local authority will carry out a care needs assessment to find out what support you need.
The next step is to work out who is going to pay. Your local authority might pay for all of it, part of it or nothing at all.
Your contribution to the cost of your care is decided following a financial assessment, called a means test.
A means test assesses:
- your regular income – such as pensions, benefits or earnings
- your capital – such as cash savings and investments, land and property (including overseas property),
- business assets
If your capital is above £23,250, you will have to pay the full costs of your care.
If your capital is below this figure, you will still have to pay some of your care costs unless you have less than £14,250. In both cases you wiill also have to make a contribution to your care from your income.
If you own your home, the value of it is generally counted as capital after 12 weeks if you move permanently into a residential care or nursing home. However, your home won’t be counted as capital if certain people still live there.
They include:
- your husband, wife, partner or civil partner
- a close relative who is 60 or over, or incapacitated
- a close relative under the age of 16 who you’re legally liable to support
- your ex-husband, ex-wife, ex-civil partner or ex-partner if they are a lone parent
Your local authority or trust might choose not to count your home as capital in other circumstances, for example if your carer lives there.
The cost of care differs around the United Kingdom. The cost is usually higher where employment costs and housing are more expensive.
The short answer is yes.
A property protection trust Will can be used to help protect your property from an assessment to long term care fees. Generally a half share of the family home belonging to the first person to die, passes into such a trust.
Such a Will is suitable for couples who are concerned that one of them may need long term care at some point in the future. Both members of the couple make a Will leaving their share of the property into a property protective trust set up in their Will. There are no adverse inheritance tax implications to such a trust set up by Will.
The value of the half share of the property in the Will trust is a disregarded asset for the purpose of care fees assessment by a Local Authority.
At face value it might seem more straightforward to simply give your house to your children whislt you are alive. However, you are vulnerable should any of your children become bankrupt, get divorced or die during your lifetime. If any of these events occurred, a sale of the property could be forced to make the child’s share of the property available to his/her creditors, the court or his/her executors. Or, you might simply fall out with your children and they could request that the property be sold so that they can receive their share of the cash proceeds of sale.