• Urgent review needed as law fails to account for cohabiting couples
  • Three year old ''inherits'' £750,000 estate 

A new case has highlighted the urgent need for a full review into the laws of inherited estates, says City law firm Wedlake Bell. 

Wedlake Bell says that a recent ruling, in which the cohabiting partner of a deceased man was bypassed for inheritance of an estate worth potentially £750,000 in favour of their three year old son, highlights the need for reform of this area of law. (Wright v Gater, 2011) 

Wedlake Bell explains that current 'intestacy rules', which govern what happens to the deceased's estate after his or her death, are inflexible and so discriminate against the growing number of cohabiting couples who have children. Under current intestacy laws, an estate passes directly to the deceased's children if he or she is unmarried and is managed by trustees until the children are 18.* 

The Law Commission is due to publish a full review into intestacy laws in the coming months, but Wedlake Bell warn that the complex legal issues surrounding cohabiting couples may see politicians bypass the subject in favour of more straightforward reforms in other areas of the law. 

Oliver Embley, Solicitor in Wedlake Bell's Private Client team, comments: "Current intestacy rules do not take into account changing family structures. Increasingly couples are choosing to live together and have children without marrying. If one partner dies, then the other may not inherit anything if there is no will in place." 

"This can lead to significant hardship when longstanding cohabitants are bereaved. Many cohabitants do not realise that, if one of them dies without leaving a will, the other may not automatically inherit anything under the intestacy rules." 

"In cases like these, the bereaved partner is left with no option but to make an application to the court for a share of the estate, at substantial expense. This can be particularly stressful, both emotionally and financially, at a time when any partner will be mourning." 

"In addition, many parents might be concerned to know that their children could inherit potentially large sums of money at age 18." 

Wedlake Bell explains that all this can be avoided if the deceased has prepared a will. In doing so, he or she can dictate the terms of the estate. For example they could: 

  • Include a trust leaving their estate to trustees who would hold it for the child until he or she had reached a certain age, say 25 or even 30.
  • Stipulate a clause leaving the estate on full discretionary trust – doing so gives his trustees the power to decide when to pass money to the relevant beneficiary, which can include a partner as well as children. 

"The current intestacy rules do not allow for any degree of flexibility. This case in particular highlights the problem of applying outdated intestacy rules almost a century after they were written. Any reasonable person would see that this amount of money could pose significant risks for any young adult, especially one who is not accustomed to managing wealth." 

In this case, the child's mother, who was also the cohabiting partner, applied to the courts that the child should be entitled to the money when he reached the age of 30.  Close family members would control the money until then. 

The judge finally rejected the idea, but did relax the current rule slightly and ruled that the child would be entitled to 10% of the money at 21 and all of the remaining money at 25. 

*Currently, unmarried partners do not have any right to inherit where a will is not left, unless property is jointly owned.

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