Intestacy, Co‑Ownership and Inheritance Tax: A Doctrinal Analysis of Succession Outcomes in Modern Family Structures

28 May

Written By Elly .

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Author Elaine Obika

Date December 2025

Introduction

The law of succession in England and Wales continues to reveal the tension between private intention, statutory default rules, and the increasingly complex realities of modern family life. Rising asset values, blended families, and the prevalence of co‑owned property mean that the distribution of estates often turns less on testamentary intention than on technical rules of intestacy, survivorship, and inheritance tax. This essay examines these doctrinal structures through the lens of a hypothetical family scenario, illustrating how the interaction between the Administration of Estates Act 1925, the Wills Act 1837, the Inheritance (Provision for Family and Dependants) Act 1975, and the inheritance tax regime can produce outcomes that diverge sharply from lay expectations.

1. The Intestacy Framework Under the Administration of Estates Act 1925

Where an individual dies without a valid will, the distribution of their estate is governed by s.46 of the Administration of Estates Act 1925. The statutory scheme prioritises the surviving spouse, who is entitled to personal chattels, a statutory legacy (currently £322,000), and half of the residue, with the remaining half held on statutory trusts for the issue. The spouse must survive the deceased by 28 days for these entitlements to arise.

In estates of modest value, the statutory legacy often absorbs the entirety of the residue. This “clearing principle” means that where the deceased’s estate falls below the statutory legacy, the surviving spouse inherits everything outright and the children receive nothing until the spouse’s later death. The effect is particularly stark in blended families: stepchildren are excluded from the statutory definition of “issue” and therefore inherit nothing unless legally adopted.

The intestacy rules thus operate as a blunt instrument. They provide administrative certainty but little sensitivity to family dynamics, testamentary intention, or the needs of non‑traditional households.

2. Co‑Ownership and the Operation of Survivorship

The form in which property is co‑owned is often more determinative of succession outcomes than the existence of a will. Under a joint tenancy, the doctrine of survivorship operates automatically: the deceased’s beneficial interest passes outside the estate to the surviving co‑owner. This transfer does not depend on a will and cannot be overridden by testamentary disposition. By contrast, a tenancy in common allows each co‑owner to dispose of their distinct share by will or, failing that, under the intestacy rules.

The distinction is doctrinally significant. Survivorship can inflate the surviving spouse’s estate, increasing exposure to inheritance tax and altering the distribution on second death. Conversely, a tenancy in common allows each share to pass directly to descendants, enabling full utilisation of the nil‑rate band and residence nil‑rate band.

Severance of a joint tenancy requires written notice under the Law of Property Act 1925. Without severance, any testamentary gift of a joint tenant’s “share” is ineffective, as the interest never falls into the estate. This is particularly relevant where a testator intends to leave property to children from a previous relationship; failure to sever can defeat that intention entirely.

3. Testamentary Formalities and Revocation

The Wills Act 1837 imposes strict formalities for the execution and revocation of wills. A valid will must be in writing, signed by the testator with intention to give effect to the will, and witnessed by two individuals present at the same time. These requirements safeguard against fraud, undue influence, and uncertainty.

Revocation is governed by s.20 of the Act. A will may be revoked only by a later will or codicil, a written declaration executed with the same formalities, or destruction with intent to revoke. Informal acts—such as writing “revoked” on the face of the document—are doctrinally ineffective. The courts have consistently required compliance with statutory formalities to avoid accidental or ambiguous revocation.

The consequences of failed revocation can be severe. An earlier will may remain operative despite the testator’s contrary intention, resulting in unintended beneficiaries inheriting the estate. This underscores the importance of proper execution and professional oversight.

4. Gifts, Ademption, and Trusts for Minors

The law of succession distinguishes between specific gifts, pecuniary legacies, and residuary dispositions. Specific gifts are vulnerable to ademption: if the asset is sold, lost, or changes form before death, the gift fails. Pecuniary legacies depend on estate liquidity; if insufficient liquid assets exist, executors may be compelled to sell specifically gifted property to satisfy debts and expenses.

Gifts to minors raise further doctrinal issues. Under the AEA 1925, such gifts fall into statutory trusts, vesting at 18 unless the will provides otherwise. Many testators prefer to delay vesting to 21 or 25, necessitating express trusts and the appointment of trustees with appropriate financial competence. Executors and trustees may be the same individuals, but conflicts of interest must be considered, particularly where family members are appointed.

5. Family Provision Claims Under the IPFDA 1975

The Inheritance (Provision for Family and Dependants) Act 1975 provides a mechanism for certain categories of individuals to claim reasonable financial provision from an estate. Eligible claimants include spouses, former spouses, cohabitants, children (including adult children), and dependants maintained by the deceased.

The standard of provision varies: spouses are entitled to provision reflecting what they might have received on divorce, while other claimants are limited to maintenance. The courts consider a range of factors, including financial needs, obligations, and the size and nature of the estate.

The jurisprudence demonstrates the limits of testamentary freedom. In Ilott v Mitson, the Supreme Court upheld a modest award to an estranged adult child, emphasising that financial need—not moral entitlement—is the decisive factor. Conversely, in Re Coventry, an adult child who was financially self‑sufficient was denied provision. These cases illustrate that while adult children may bring claims, success depends on demonstrable need or dependency.

6. Inheritance Tax and the Significance of Ownership Structure

Inheritance tax liability is shaped by the interaction between the nil‑rate band, the residence nil‑rate band, spousal exemption, and the structure of asset ownership. Where spouses hold property as joint tenants, survivorship consolidates the estate in the hands of the survivor, potentially triggering tax on second death. By contrast, tenancy in common allows each spouse’s share to pass directly to descendants, enabling full utilisation of both sets of allowances and, in many cases, eliminating liability entirely.

Lifetime gifts may reduce the taxable estate, but potentially exempt transfers require survival of seven years and may be subject to the “gift with reservation” rules if the donor retains benefit. Pensions, depending on structure and nomination, may fall outside the estate altogether. Charitable giving can reduce the rate of tax to 36% where at least 10% of the estate is left to charity.

The doctrinal message is clear: ownership structure is not merely a matter of convenience but a central determinant of tax exposure and succession outcomes.

Conclusion

The law of succession is a tightly interlocking system in which intestacy rules, co‑ownership structures, testamentary formalities, family provision legislation, and inheritance tax operate simultaneously. For modern families—particularly blended families—the default statutory framework often produces outcomes that diverge from personal intention. The doctrinal analysis demonstrates the necessity of valid wills, clarity in property ownership, and regular review of estate planning arrangements. Without these measures, estates risk being distributed not according to the wishes of the deceased, but according to rigid statutory rules that may fail to reflect the realities of contemporary family life.

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