Changes to the Rules of Intestacy – a change for the better?

If a person dies without a will they are deemed to die intestate and the distribution of their estate is governed by a strict set of rules originally laid down in an Act of Parliament dated 1925, known as the Intestacy Rules.

The rules had not been reviewed for over 20 years and no longer reflect modern family arrangements, or met their needs and requirements.

However, following a lengthy consultation begun in 2008, Royal Assent was given to the Inheritance and Trustees Powers Bill on the 14th May 2014 and becomes law from the 1st October 2014.

The changes to the intestacy rules are as follows

  1. Surviving Spouse with no children

The entire estate will pass to the spouse. Currently, the spouse receives the first £450,000, personal possessions and the remainder is shared between the spouse and the deceased’s parents and siblings.

  1. Surviving Spouse with children

The life interest to the spouse is abolished. Currently, the spouse receives the first £250,000, personal possessions and a life interest in half the remainder with the other half shared between the children. There will be an outright gift to the spouse of half the remainder.

The changes also apply to civil partners.

  1. Personal possessions

The old fashioned definition of personal chattels has been updated and now refers to “tangible moveable property” and excludes those items used as security for money, business purposes or held as an investment.

The definition could still lead to problems over what is classed as an investment – are paintings or jewellery or antique furniture a possession or an investment? In second marriages would such items pass to the spouse as a possession or into residue and half pass to the children from the first marriage?

However, the new Act also affects the ability for people to challenge a Will or Intestacy under the Inheritance (Provision for Family and Dependents) Act 1975 as follows:

  1. Child of the family

Currently to bring a claim against an estate as a child of the family an applicant had to show they were a child of the deceased’s marriage or civil partnership. Now a claim can be made where the deceased stood in the “role of a parent”. This will extend the meaning of family relationships and focus on the quality of the relationship between the child and the deceased.

It remains to be seen whether this leads to an increase in litigation from applicants who claim the deceased had a “parental” relationship with them.

  1. Surviving Co-habitee

The Act does not deal with the proposed changes to the rights of couples who cohabit.

Contrary to popular belief there is no such term as “common law husband/wife” and cohabiting partners have no automatic rights to their partner’s estate.

Proposals were to have given partners who had lived together for more than five years – or two years if there were children – the same inheritance rights as a spouse or civil partner, but these will not become law until after the next election at the earliest.

Whilst the aims of the Act go some way to modernise the rules of intestacy by providing a more sensible and realistic approach, dying intestate will still result in the administration of an estate being a lengthy and sometimes complicated procedure.

The Act does not encourage people to make a will or highlight the many advantages in making a will. The Government has failed to bring these to the attention of the public.

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