The laws of intestacy are something which most people do not want to encounter in their lives – but under some unfortunate circumstances, it is important to know what this means.
The laws of intestacy become relevant when someone dies, and their estate needs to be inherited by someone else. In the blog below, we’ve outlined exactly what the phrase ‘laws of intestacy’ means, along with other important questions surrounding this topic.
What are the Laws of Intestacy?
If someone dies without leaving a will, or if they have left a will which is found to be invalid, they are described as having died ‘intestate’. Under these circumstances, the laws of intestacy become relevant.
The laws of intestacy dictate who can inherit from the deceased person, and who cannot. Generally speaking, it is only very close relatives who will inherit, which is why so many unmarried couples that live together are advised to write a will.
Close relatives who can inherit under the laws of intestacy
Only a select group of people can inherit under the rules of intestacy. These are primarily relatives who are close to the individual who has died. The list of people that this applies to includes:
- Married partners
- Civil partners
- Adopted children
- Grandchildren or great grandchildren
In some circumstances, you will also find that parents, siblings, nieces and nephews are able to inherit under the laws of intestacy. However, whether this occurs depends on whether there is a surviving husband/wife or children.
Who cannot inherit under the laws of intestacy
There are certain people who cannot inherit under the laws of intestacy. Generally speaking, these are people who not related to the individual in any way. The most common examples include unmarried couples, friends and carers. It is for this reason that unmarried couples are typically strongly advised to write a will – because they may not inherit their partner’s estate if they don’t.
What is partial intestacy?
Partial intestacy is when a will has been left by the person who died, but it does not fully deal with their entire estate. For example, this may take place when a named person in the will is no longer alive. In this case, ‘partial intestacy’ means that intestacy rules will be followed for that part of the estate. The rest of the will remains valid.
If you want more guidance on the rules of intestacy, and who can/can’t inherit an estate when there is no will, then you should visit the UK Government’s website.
Do I pay Capital Gains tax on an inherited property?
When you inherit a property, you will typically have to pay Capital Gains Tax on it. However, the amount that you must pay will vary.
To give an example, if you sell the property straight away after you inherit it, you may not have to pay any Capital Gains Tax on it at all, as the UK government does not require you to pay tax on assets which have not been sold before the deceased individual passed away.
On the other hand, if you inherit a property and keep it for a period of time before selling it, you will have to pay capital gains tax on how much the property’s value has increased since you inherited it. Even then, you typically will not have to pay any tax if the inherited property becomes your main residence, once you inherit it.
Capital Gains Tax and foreign property
Just like property located in the UK, you do not have to pay Capital Gains Tax on a foreign property if it is your primary residence. You will have to declare that your property is your main residence, to avoid tax in this way, within two years of purchasing the foreign property.
There have been some reports of difficulty, however, when people have tried to sell their UK property and their foreign property both in the same tax year. If you are planning on doing this, you should consult an accountant before going ahead, to see how you can sell your properties in the most tax efficient way.
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