HMRC data reveals a sharp rise in the number of million-pound estates being left without a valid will, prompting warnings about inheritance tax implications. In the last tax year, 781 estates valued at more than £1 million were declared intestate, more than double the 332 recorded in 2023.
Intestacy rules and the growing trend
When an individual dies without leaving a will, their estate—comprising money, property, and other assets—is distributed according to the 'rules of intestacy'. This legal process can be complex and often requires formal intervention, especially for larger estates. Overall, the number of estates left without a valid will surged from approximately 29,000 in 2023 to over 43,000 last year, according to official figures.
David Fenwick, Senior Solicitor at Co-op Legal Services, commented: "Rising asset values, particularly property and savings, mean more estates now require formal legal intervention, yet many people underestimate their wealth and decide not to make a will."
Fiscal drag and frozen thresholds
Mark Chandler, Chartered Financial Planner at Shackleton, highlighted the impact of fiscal drag: "Fiscal drag has steadily brought more families into scope, with the standard nil-rate band having been frozen for many years despite significant growth in property prices." This means that more estates are now potentially liable for inheritance tax, as the threshold has not kept pace with inflation or rising asset values.
However, Mr Chandler stressed that rising property prices were "only part of the story." He added: "We continue to see a surprising number of people with substantial wealth who have never made a will. Some people dislike dealing with solicitors, some don't like talking about death, some find discussions around family arrangements uncomfortable, and many simply never get around to doing it."
Complexities for international estates
Jamie Mathieson, of law firm JMW, noted that larger estates often involve foreign elements. "Individuals coming to the UK to live with assets often understandably do not understand the laws in the UK regarding death and intestacy," he explained. This can lead to additional complications and delays in administering the estate.
Financial consequences of intestacy
Mr Chandler warned about the financial repercussions: "Where inheritance tax is due, those delays can become expensive. Interest can accrue on outstanding liabilities, while professional costs and financing costs can further reduce the value ultimately passed to beneficiaries."
In response, a Ministry of Justice spokesman said: "Making a will is one of the most important steps people can take to protect their families and ensure their wishes are respected." The spokesman urged individuals to seek professional advice to avoid the pitfalls of intestacy.
Expert advice for estate planning
Legal experts recommend that individuals, particularly those with substantial assets, review their estate planning regularly. This includes updating wills after major life events such as marriage, divorce, or the birth of children, and considering the potential inheritance tax liabilities that may arise.
The rise in intestate estates underscores the need for greater public awareness about the importance of making a will. As asset values continue to climb, the financial and emotional toll on families can be significant, making proactive planning essential.
