New Intestacy Rules: What They Mean To You Monday, June 15, 2015
If a loved one dies without leaving a Will, the Intestacy Rules dictate how his or her estate is divided. These rules stipulate who inherits and who does not. On 1 October 2014 changes were made to these rules through the Inheritance and Trustees' Powers Act 2014 (ITPA 2014) - but just how will you be affected?
Every situation is different, but here is a quick overview of the new intestacy rules to help you understand what they might mean for you.
Spouses and Civil Partners - Without Children
If the deceased's estate was worth more than £450,000 then the surviving spouse or civil partner had to share it with other surviving relatives. The first £450,000 plus half of the remaining amount would go to the spouse or civil partner, but the other half had to be shared between various surviving relatives.
The changes give spouses and civil partners greater inheritance rights. For deaths that occur after 31st September 2014, the spouse or civil partner will inherit the entire estate of the deceased.
Spouses and Civil Partners - With Children
The first £250,000 would go to the spouse or civil partner and the remaining amount would go to the surviving children - the first half of the remaining amount would be given to the children straightaway and the second half when the surviving spouse dies. The spouse could claim income for life from this second half of the remaining amount but could not touch the capital.
The first £250,000 goes to the spouse or civil partner plus half of the remaining amount, and the other half of the remaining amount goes to the children.
The amount of £250,000 is called the statutory legacy and will now be reviewed at least every 5 years, with the amount increasing according to the Consumer Prices Index and rounded up the closest £1,000.
What Other Changes Have Been Made To The Intestacy Rules?
Trustees are now allowed to use all the capital income of a trust to support beneficiaries, making it easier to support those who are dependent on the estate.
There is now more protection for adopted children to ensure they do not lose out on their inheritance. The definition of who can claim under the intestacy rules now includes any individual "treated as a child of the family".
What Hasn't Changed?
Unmarried Couples - With or Without Children
Co-habiting couples still have no protection when it comes to the Rules of Intestacy and the surviving partner will inherit nothing, regardless of how long the couple has lived together. If the unmarried couple has children, the surviving partner will inherit nothing and the estate will be divided among the children and possibly other surviving relatives.
Are The Changes Good?
Overall, the new intestacy rules are positive. However, they are still far from ideal, especially for unmarried couples, and to make sure your family is properly protected after your death we recommend that you write a Will.
For confidential advice and guidance on making a Will, please contact our dedicated team in our Failsworth office on 0161 681 4005 or in our Chorlton office on 0161 860 7123.