Two draft bills published by the Law Commission could potentially change the rules that apply to the distribution of the estate of a person who dies intestate, that is, without a will. The main changes will affect spouses and co-habitants' rights to inherit.
If a person dies intestate leaving a spouse or civil partner but no "issue" (children or, failing that, grandchildren etc) and if that person also leaves surviving parents or siblings, under the current law, the surviving spouse receives only the first £450,000 of the estate plus any personal property. The rest is then divided equally between the spouse in one share and the parents of the deceased in the other or, if there are no surviving parents, the deceased's siblings.
Under the proposed new law, the surviving spouse or civil partner will receive the whole estate, irrespective of the value.
Where a person dies leaving a spouse or civil partner as well as issue, current law provides that the spouse receives the first £250,000 plus personal property. The remainder is then divided with half going to the issue straightaway. The other half is placed in trust to provide an income for the surviving spouse for his or her lifetime and then passes to the issue upon death.
Under the proposed new law, the surviving spouse will still receive a priority lump sum and the remainder is still split. The difference is that the spouse receives his or her half outright as capital, to spend as he or she pleases, rather than in trust.
The proposals under the second draft bill ('The Inheritance Co-Habitants Bill') go even further. Currently co-habitees have no automatic right to inherit if their partner dies intestate and usually have to bring a claim against the estate under the Inheritance (Provision for Family and Dependants) Act 1975. Such a claim has no guarantee of success and raises the spectre of inter family litigation and large legal costs.
The new bill provides that somebody who has co-habited with a person who dies intestate should be entitled to a part of their estate if they had been co-habiting for a period of at least five years immediately prior to death or two years if the couple had a child living with them.
There are other changes envisaged which, alongside the two new bills, make the intestacy provisions more appropriate for the reality of today's society.
So far as co-habitants are concerned, they are a welcome development. Matthew Evans, Partner at solicitors Hugh James says "Recent research undertaken by the Law Commission shows that around 7.5 million people are living in cohabiting families, representing around 15% of all families. As such, it is arguably very important that the law changes to provide for this large section of the population."
Mr Evans continues: "The intention behind the proposals generally is to govern the circumstances where a person dies without leaving a will. However, the point that cannot be emphasised enough is that state-imposed inheritance is rarely satisfactory and can, in most cases, be easily avoided if people make a valid will. By taking that simple step, people can decide at which point their estate passes out of the hands of the state and into their own."
It remains to be seen to what extent the proposals will be adopted into law but, given the exhaustive consultation process that has been undertaken, it seems likely that, one way or the other, there will a drastic overhaul of the inheritance laws in the near future.
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