The Inheritance and Trustees’ Powers Act 2014 comes into force on the 1 October 2014. This legislation includes provisions which apply to those who die intestate (i.e., without making a Will) and changes the way in which the assets of people who die without making Wills are shared between their relatives.
Some of the main changes include the way that spouses and civil partners are treated. However adopted children, unmarried fathers and other family members may also be affected. There are also changes to the powers trustees have to deal with the capital and income of trusts and the way in which personal ‘chattels’ (or personal effects) are defined.
However, in this newsletter we will focus on a few of the more significant changes that will now apply when a person dies without making a Will.
If a person dies without making a Will and was married (or in a civil partnership) but also left surviving children, the intestacy rules state that the estate is to be shared between the surviving spouse (or civil partner) and the children. Where the deceased died before 1 October 2014, the surviving partner was only entitled to the first £250,000 outright and then the income for life from one half the rest of the estate (over £250,000). From 1 October 2014, the surviving spouse (or civil partner) will receive the initial sum outright as well as one half of the rest of the estate outright (rather than just receiving the right to the income).
Where a person died without making a Will prior to 1 October 2014, and was married (or in a civil partnership) but had no children, the surviving partner would receive the first £450,000 but would have to share anything exceeding that with other surviving relatives of the deceased, such as their parents or brothers and sisters. This could mean that, in respect of larger estates, the surviving partner may not have inherited the entire estate of the deceased or even that the family home may have had to be split with other relatives. Following the changes that apply after 1 October 2014, the spouse or civil partner will now inherit the whole of the deceased’s estate in these circumstances.
There is also a change to the initial fixed sum that surviving spouses (or civil partners) are entitled to receive. Surviving spouses (or civil partners) receive an amount known as the statutory legacy. Before October 2014, this was fixed at £250,000 where there were surviving children. From 1 October 2014, the statutory legacy will be reviewed at least every five years. It will rise in line with the Consumer Prices Index and will be rounded up to the nearest £1,000. Interest is also payable on the statutory legacy from the date of death to the date when the amount is paid out to the surviving spouse (or civil partner).
It is important to be aware of these rules and the ways in which they can affect the distribution of your estate upon your death. The new legislation does not change the position where couples are unmarried and one partner dies without making a Will. It also does not change the position with regard to step children who have no automatic right to inherit. It is unlikely that these rules will produce the distribution of your estate that you would have wanted. It is important therefore to make a Will which sets out exactly what you would wish to happen to your assets upon your death.
Please be aware that the information contained in this newsletter is of a brief and general nature and should not be used or viewed as a substitute for specific individual legal advice. Should you wish to obtain any further information about any of the issues raised here, please contact a member of the Private Client Team at Pinkney Grunwells Lawyers.
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