Inheriting a House left in Will: Full Jargon Explained
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Here’s everything you need to know about property inheritance - and what all the jargon ACTUALLY means
Property inheritance is a big, complicated, confusing thing. You may be grieving, going through a really difficult time emotionally, and while you feel lucky to have gained such a valuable asset, the process seems confusing, and you hardly understand half of the terminology associated with it.
So, what do you actually need to know about property inheritance, whether you are the inheritor or intend to leave a property behind?
What happens with property left in trust in a will
Well, the most important document associated with property inheritance is a will. A will is a legal document that sets out a person's wishes regarding the distribution of their assets, be that property, or money after their death. It can also specify funeral arrangements, appoint guardians for minor children, and name executors to administer the estate, the people who will make sure their wishes are acknowledged.
You should consult a solicitor or will-writing service to draft a will to ensure it is valid and reflects your wishes.
What happens if you don’t?
If a person dies unexpectedly, they may not have a will, making things more complicated. If a person dies without leaving a valid will it will be referred to as intestate. Their estate will be distributed according to the rules of intestacy, based on their surviving relatives.
For example, if there is a surviving spouse but no children, the spouse may inherit the entire estate. This can understandably, in a time of high emotions, come with a variety of difficulties and complications, hence why leaving a will should always be a priority.
Do I need probate to inherit a house?
Once a person has died and their will has been obtained, the estate has to go through probate.
If there's a will, the executors named in the will apply for a grant of probate from the Probate Registry. This then grants them the legal authority to administer the deceased's estate, including property.
If there's no will, a close relative or other interested party can apply for letters of administration, which allows them to manage and distribute the estate according to intestacy rules.
The administrators are then responsible for gathering the deceased's assets, paying any debts, taxes, and expenses, and distributing the remaining estate to the beneficiaries as specified in the will or according to intestacy rules. You should have legal advice throughout this process.
This long process can involve valuing assets (such as property, investments, and personal belongings), settling any outstanding debts or mortgages, and dealing with inheritance tax (IHT) where necessary.
How much can you inherit without paying inheritance tax?
When leaving someone a property, or inheriting one, inheritance tax will be of huge concern.
IHT is a tax on the value of a deceased person's estate over £325,000 total.
If the value of the estate exceeds the threshold, IHT may be payable at a flat rate on the amount. Certain exemptions, reliefs, and allowances may apply, and you should seek professional tax advice.
Challenges and disputes
This complicated process can unfortunately become even more complicated.
In some cases, there may be disputes or challenges to the validity of a will, claims against the estate, or disagreements among beneficiaries. There may be unknown family members interested in the will, or property that you may not know about.
Legal advice may be required to resolve such issues, and alternative dispute resolution methods can sometimes be used to reach a resolution without going to court.
When do you actually own the property left in will?
This is a long process, and it could take a year before you actually own a property, or see any cash. Once all debts, taxes, and expenses have been settled, the remaining estate is distributed to the beneficiaries as specified in the will or according to intestacy rules.
What does all the property jargon mean
Testator
A person who has made a will.
Intestate
Dying without leaving a valid will. The estate of the deceased is then distributed according to intestacy rules.
Probate
The legal process of proving a will is valid and then administering the estate of a deceased person.
Executor/Executrix
A person appointed by a testator to carry out the instructions in their will and manage the estate.
Administrator
If there's no valid will, this person is appointed by the court to administer the deceased's estate.
Beneficiary
A person or entity designated to receive a portion of the deceased's estate or a specific asset from the will.
Estate
All the assets (property, money, investments, etc.) and liabilities (debts, taxes, etc.) left by the deceased.
Grant of Probate
A legal document that gives the executor the authority to administer the deceased's estate according to the terms of the will.
Letters of Administration
A legal document that grants an administrator the authority to manage and distribute the estate of a deceased person who did not leave a valid will.
Inheritance Tax (IHT)
A tax on the estate (the property, money, and possessions) of someone who has died.
Residue
The remaining part of the estate after all specific gifts, debts, taxes, and other costs have been settled.
Legacy
A gift of personal property specified in a will.
Codicil
A document that modifies, amends, or revokes provisions in an existing will.
Life Interest
An interest in property that lasts for the lifetime of an individual, typically a beneficiary.
Joint Tenancy
A form of property ownership where each tenant owns an undivided interest in the property, and on the death of one tenant, their share passes to the surviving tenant(s).
Tenants in Common
A form of property ownership where each owner has a distinct share in the property, which can be passed on to heirs upon death.
Deed of Variation
A legal document that allows beneficiaries to redirect their inheritance to someone else, often for tax planning purposes.
Chattels
Movable personal property, such as furniture or cars, as distinguished from real property.
Estate Duty
A former tax on the value of a deceased person's estate.
Per Stirpes
A method of dividing an estate by which descendants of a deceased beneficiary inherit that beneficiary's share.
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