A new survey has revealed that 60% of adults in the UK are leaving themselves in the hand of intestacy laws as they do not have a will in place.*

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What happens to your home when you die depends on several factors, including whether you left a will, how the property is owned, and the value of your estate. Here's a breakdown of the key points:

1. If You Left a Will

• Executor Responsibilities: The executor named in your will is responsible for managing your estate, which includes your home. They will apply for probate, which is the legal right to deal with your property, money, and possessions.
• Distribution: The home will be distributed according to the terms of your will. If you specified who should inherit the property, the executor will transfer ownership to that person or those people.

2. If You Didn't Leave a Will

• Intestacy Rules: If you die without a will, your estate (including your home) will be distributed according to the rules of intestacy. Typically, this means that your spouse or civil partner will inherit the majority, if not all, of your estate if you don't have children. If you have children, your spouse or civil partner will inherit the first £270,000 of the estate and half of the remainder, with the rest divided among your children.
• Administrator Responsibilities: An administrator will be appointed to handle the estate. They will apply for a grant of letters of administration, similar to probate.

3. Jointly Owned Property

• Joint Tenancy: If the property is owned as joint tenants, the ownership automatically passes to the surviving owner(s) upon your death, outside of the will or intestacy rules.
• Tenants in Common: If the property is owned as tenants in common, your share of the property will form part of your estate and will be distributed according to your will or the rules of intestacy.

4. Inheritance Tax

• Thresholds and Rates: Inheritance tax (IHT) may be due on your estate if its value exceeds the IHT threshold, which is £325,000 as of 2024. Anything above this threshold is taxed at 40%, although there are exemptions and reliefs available.
• Residence Nil Rate Band (RNRB): There is an additional threshold called the Residence Nil Rate Band, which can increase the IHT threshold if you pass your home to your children or grandchildren. This is an additional £175,000 as of 2024, potentially raising the total threshold to £500,000.

5. Selling the Property

• Executor or Administrator Role: The executor or administrator may decide to sell the property, especially if the estate needs to pay off debts, including inheritance tax, or if the will directs that the property be sold and the proceeds distributed.
• Beneficiaries' Decision: If the property is inherited, the beneficiaries can choose to keep it, rent it out, or sell it. The property might need to be valued for inheritance tax purposes, and any capital gains tax implications will need to be considered if the property is sold.

6. Mortgage and Debts

• Outstanding Mortgage: If there is an outstanding mortgage on the property, it must be settled. This might involve using funds from the estate or selling the property if necessary. Some life insurance policies might cover the outstanding mortgage.
• Debts: Any debts secured against the property must also be paid from the estate before any distribution to beneficiaries.

7. Special Considerations

• Trusts: If the property is held in a trust, the terms of the trust will dictate what happens to it. Trusts can provide more control over the distribution and management of assets after death.
• Living Arrangements: If someone is living in the home (such as a spouse, partner, or dependent), their right to remain in the property might be protected under certain circumstances.

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Understanding these factors can help you plan your estate effectively and ensure your property is distributed according to your wishes. If you don't want to leave your loved ones with a mortgage to pay - this is where life insurance can come in handy. Speak to one of our team at go2mortgages to discuss how this works.

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*Source: https://glazerdelmar.com/news/nearly-60-of-adults-in-the-uk-do-not-have-a-will/

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^{Your home may be repossessed if you do not keep up repayments on your mortgage}

^{The information contained within was correct at the time of publication but is subject to change}

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