If you die without having made a Will, the Intestacy Rules are the legal framework which determines who will inherit your estate. These rules have recently been updated, but are still 'one size fits all'. The reality is that modern families come in all shapes and sizes, and these rules will not be appropriate for everyone. If you have not made a Will, then you should consider the new rules. If they do not give effect to how you want your estate to be left, then you can contact Paul Lowery for a quotation and an appointment.
The Inheritance and Trustees' Powers Act 2014 came into force on 1 October 2014. The major changes where a person dies without a Will are:
- Where a husband and wife, or civil partners, have no children, then all of the person's assets will pass to the surviving spouse or civil partner. Their wider family members will receive nothing.
Previously the spouse or civil partner would have received the first £450,000, their personal belongings and half the value of anything else in the estate. The other half would have passed to their other relatives in a strict pecking order. This change appears to treat married couples or those in a civil partnership more fairly.
- Where a husband and wife, or civil partners, do have children, then the surviving spouse or civil partner will now receive the first £250,000 of the estate, their personal belongings and half of the remaining assets to do with as they wish. The other half passes to their children in equal shares, or is held for the children in a trust until they reach the age of 18.
Previously, the surviving spouse or civil partner would have still received the £250,000 and the personal belongings. However, they would have only received an income from half of the remaining balance, with no right to access the capital. On the second spouse's death, this income-producing fund would pass to the children. There had been the option to apply for a conversion of this right to income into a capital payment, so it is good to see that these complex provisions have now been abolished.
Whilst these rules are slightly easier to apply, they may still create complications for married couples and civil partners who have not made a Will, and who have children. Many people assume that the surviving spouse or civil partner will get everything, but that is not necessarily so.
It is also important to note that this marginal improvement in the Intestacy Rules provides no protection for unmarried couples – they will still receive nothing from their partner's estate, if they die without making a Will. Likewise, no provision has been made for step-children.
For people with mental capacity issues, they may not pass the legal test for being able to understand what making a Will entails. If you have a family member who you do not think would be capable of making a new Will, then you should consider the recent changes in the law and whether the Intestacy Rules are now appropriate for that person. If not, then it is possible to apply to the Court of Protection, to make a Will on their behalf that better suits their wishes, beliefs and family circumstances. This is called a Statutory Will, and it is overseen by the Court of Protection, to ensure that the terms of the Will are in the person's best interests and comply with their prior wishes and values.
Needless to say, there is a lot more to the Intestacy Rules than we have highlighted here, and if you would like more information on this, please contact our Wealth Protection Team.
If you have concerns over someone close to you who no longer has the understanding to make a new Will, but who you think would benefit from a Statutory Will being put in place for them, then please contact Joanna Staerck, who will be happy to discuss what this entails in more detail. It is a lengthy and costly court process, but may be of great benefit to families where the act of making a Will has not been possible - it may not be too late to do something about it.
Consistent with our policy when giving comment and advice on a non-specific basis, we cannot assume legal responsibility for the accuracy of any particular statement. In the case of specific problems we recommend that professional advice be sought.