Where an individual dies without a Will this is known as an intestate estate. Administering an intestate estate presents many challenges for personal representatives (“PRs“), not least the additional responsibility of identifying and locating beneficiaries.
Under the intestacy rules, assets in an intestate estate pass in order of priority to any spouse, children, parents or siblings. If the deceased dies without immediate family, however, more distant relations may need to be traced, commonly aunts and uncles and their descendants, who may not even have known the deceased or had any contact with other family members.
PRs must make reasonable efforts to determine the whereabouts of all beneficiaries, which can be time consuming and expensive. A genealogist can assist in ascertaining and tracing beneficiaries. Placing a trustee advert protects the PRs against claims from beneficiaries that are unknown to them at the time of distribution; however, it does not protect them against claims by known beneficiaries who are missing.
If beneficiaries are known about but cannot be traced, PRs have several options available to them.
Funds due to the missing beneficiary can be retained for 12 years, after which a beneficiary is barred from making a claim for their share; however, delaying the conclusion of an estate for this length of time can be frustrating.
Another option is to distribute to the located beneficiaries and obtain indemnities from them whereby they agree to repay part of their entitlement should the missing beneficiary ever resurface. This is problematic, however, as the other heirs may be unable to repay the PRs if requested. A safer alternative is to obtain an indemnity from a large registered charity and to pay the funds due to the missing beneficiary to them.
A more expensive option is for the PRs to apply to court for an order making an assumption that the missing beneficiary has predeceased and allowing the estate to be distributed on that basis.
The most common solution is for the PRs to obtain missing beneficiary insurance, paying a premium to insure against the missing beneficiary appearing at a later stage to claim their inheritance. They can then distribute the estate to the remaining heirs, safe in the knowledge the insurer will meet the costs of any later claim.
Undoubtedly the best way to avoid the complexities of an intestate estate is to have a professionally drafted Will in place and to keep the details of your heirs updated.