There has been some coverage in the press recently about the changes to the law which governs what happens to your assets if you die without a Will (known as the 'intestacy rules'). These changes were brought about by the 'Inheritance and Trustees Powers Act 2014? ("the Act") which came into force on 1 October 2014.
Before 1 October, where a couple were married or in a civil partnership but had no children then the surviving spouse/civil partner only received £450,000 from the estate of the first spouse to die plus half of the remainder above £450,000 with the other half being split between blood relatives of the deceased spouse.
For deaths after 1 October where there is no Will and no children, the surviving spouse receives everything with the relatives of the first spouse to die getting nothing. This seems to make sense but is still likely to give rise to problems. For example, where parents have made a contribution towards a house for their child, that child marries and predeceases their parents, the 'family money' will end up passing to their child's surviving husband, wife, or civil partner.
For married couples with children, the old intestacy rules were even more complicated; the surviving spouse received the first £250,000 outright and a 'life interest' in half of any remaining assets with the deceased's children splitting the other half. Put simply, the surviving spouse had an automatic right to receive income from half of their deceased's spouse's estate above £250,000. The capital from this 'life interest' then passed to the children on the death of the surviving spouse.
Under the new rules, there are no more 'life interests'. The surviving spouse still receives £250,000 from the estate of the first spouse to die. However, anything over £250,000 is now split equally between the surviving spouse and the children. This actually puts children in a worse position because on the death of the surviving spouse, they will not necessarily inherit half of the capital of the first spouse to die as they did under the old rules.
The new rules do not quite bring the law into the 21st century. Importantly the Act does not recognise the rights of unmarried cohabiting couples. If one unmarried partner dies then their surviving partner still inherits nothing where there is no Will, even if the couple have children together.
The unintended consequences of the intestacy rules can easily be overridden by making a Will and the best advice (especially if you have children) is to go and see a solicitor and get a Will drawn up!
Oliver is an associate in the Private Client team at Wedlake Bell and specialises in wills, trusts, tax planning and contentious trusts and probate.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
