Changes to intestacy rules from October 2014
The Inheritance and Trustees’ Powers Act 2014 is expected to come into force on 1 October 2014. This legislation will be a significant amendment to the intestacy rules that apply to those who die without a Will (“intestate”).
Two major changes are:
Where the intestate is married (or in a civil partnership) and does not have children, then all of the assets will now pass to the surviving spouse (or surviving civil partner). Currently, the surviving spouse receives £450,000, personal belongings and half the remaining assets of the Estate. The other half is shared by parents or if they are not alive, by any siblings or their children.
Where the intestate is survived by a spouse and children, the surviving spouse will receive the so called statutory legacy (a fixed sum which is revised from time to time) and half of the remainder of the Estate outright. The remaining half will be held for the Deceased’s children absolutely. Currently, the surviving spouse receives the statutory legacy of £250,000 and half of the remainder as a Life Interest Trust (meaning they are entitled only to the income of that share of the Estate). The children receive the remaining half share of the Estate outright and the balance of the Trust following the surviving spouse’s death.
However, although a major update, the new legislation does not alter the position of unmarried couples or step children who have no automatic right to inherit. It is therefore important to keep advising clients to make a Will setting out exactly how they want their estate to be distributed rather than relying on the intestacy rules.