New rules for the assets of people who die without wills
By:3 commentsSeptember 30, 2014
Where there’s a will there’s a way. The emotions may still be running high after the death of a loved one but for the family members, the opening of a last will and testament can be one of the most important stages in the process of coming to terms with their loss. There may be the odd shock and surprise in store but at least wills offer the consolation of certainty. They are, we can be reasonably sure, what the departed family member intended and wanted.
But if there is no will? Perhaps the person in question, sadly, died unexpectedly or suddenly. Perhaps they simply never got round to considering a will. Legally, dying without a will is termed ‘intestacy’. Death without a will is relatively common and there are specific regulations which set out how money, assets and property should be distributed when this occurs. These are called the ‘intestacy rules’, and they also apply when someone has left a will but it is not legally valid for a variety of reasons.
Now the rules are set to change. On October 1, the Inheritance and Trustees Powers Act 2014 will introduce a number of new inheritance rights and regulations affecting spouses and civil partners, unmarried fathers and adopted children, amongst others.
If you are married or in a civil partnership with no children or grandchildren
The old rules allowed a legacy of £450,000 which would benefit a surviving spouse. Any estate over this amount would be shared between family members. Parents would benefit first, then siblings and then nieces and nephews.
The new rules remove this legacy cap and so the surviving spouse inherits the whole of your estate.
If you are married or in a civil partnership with children or grandchildren
The old rules allowed a legacy of £250,000 for the surviving spouse and any remaining estate was then split. Fifty per cent went to the children at 18 years and 50 per cent was held in trust to pay the income from it to the spouse, with the capital from this ultimately passing to the children.
The new rules simplify the position. The legacy of £250,000 to the spouse remains in place initially but the amount of this legacy will now be reviewed every five years to take into account inflation. The balance of the estate will be split, with 50 per cent going to the spouse and 50 per cent going to children in equal shares. There will be no trust in place to pay income to a spouse.
Where children inherit there are special rules on how funds pass to children and on what happens if a child who would otherwise inherit has died, leaving children of their own surviving.
If you are an unmarried couple with no children or grandchildren
No protection is in place to protect the surviving partner unless a valid will has been made. The intestacy rules do not provide protection for cohabitees and this has not been changed. Pressure is being applied in parliament for some protection but we are still waiting for this.
As recently as June, the Government rejected a recommendation by the Law Commission to amend the rules for cohabiting couples.
So, as things currently stand, your estate on death would pass under the new rules regarding family members. Parents would benefit first and then siblings and then nieces and nephews.
If you are an unmarried couple with children and grandchildren
No protection is in place for the surviving partner unless a valid will has been made.
The rules will remain the same here as well and your estate would pass to your children in equal shares at 18 years.
There have been additional changes under the new rules to provide protection for unmarried fathers and adopted children in certain scenarios. One relates to a child who is adopted following the death of a natural parent and the other concerns the rights of unmarried fathers to inherit on the death of their child.
Under the old rules unmarried fathers could be disadvantaged if their child died without leaving a will. The new rules remove this disadvantage, provided the father is named on the child’s birth certificate.
Meanwhile, under the old rules a child under 18 who was adopted following the death of a natural parent risked losing their inheritance. The new rules close this anomaly to ensure the child would not lose out in these circumstances.
Family lawyers and solicitors across the country will be watching with interest to see how the new regulations translate into real world practice. As ever, the best advice is to take control of your family’s future by making a will with the guidance of a qualified solicitor, who can look at your individual circumstances and tailor the will to your wishes.
Read the Inheritance and Trustees Powers Act 2014 here.
Photo by jochemberends via Flickr under a Creative Commons licence
September 30, 2014
Categories: Wills & Probate