intestacy changes - will you avoid them?
For the first time since 1993 a change to the provisions on
intestacy has been brought into effect. The statutory rules apply
where a person dies without having made a Will and lay down the
entitlements for specific surviving relatives.
The change, which is effective for the estates of persons dying
without a Will since 1 February 2009, increases the cash legacy for
the surviving spouse or registered civil partner. After a period of
consultations, this legacy has been increased from £125,000 to
£250,000 where the deceased had children and from £250,000 to
£450,000 where the deceased had no children.
The remaining provisions are unchanged so that the surviving
spouse or registered civil partner will continue to receive
personal effects and chattels owned by the deceased and, if he had
children (regardless of their age), the right to the income only
from one half of the residue (ie the remaining assets after the
legacy). The children have the right to the second half of the
residue. If there are no children but the deceased had surviving
parents, siblings or children of predeceased siblings, then those
surviving relatives will receive one half of the residue and the
spouse or civil partner only has the right to the other half.
Despite general public opinion, the surviving spouse only receives
the whole of the estate where the deceased had no children and
nobody in this second class of surviving relatives.
The increase in the spouse’s legacy is of course welcome and
does give the spouse or civil partner extra protection but the
intestacy provisions are still no substitute for making a Will to
give effect to your wishes on your death.
The increase to the spouse’s legacy does not keep pace with
inflation and there is no provision for it to be index linked. The
increases are not in line with the increases in prices, and
particularly house prices that have occurred since 1993 even taking
into account the current state of the housing market.
No account is made for the significant changes in society and
the rise in cohabitation that has occurred since the last changes
in 1993.
The legacy, at any level, is not available to cohabiting
partners and the other provisions only apply to blood relatives
(including adopted children). A bereaved cohabitee has no
entitlements at all to inherit under the intestacy provisions where
there is no Will.
Where a cohabitee is bereaved and there are children of the
relationship, the bereaved partner may be left in the unfortunate
position of having to bring a legal action to obtain financial
provision against the estate, and this would in effect be against
the cohabitee’s own children and their right to inherit.
Further there is no provision available for step children of the
deceased. If they are dependent on the deceased then it would be
necessary for them to bring legal action against the estate which
could effectively be against their own parent and step
siblings.
The intestacy provisions may not apply to assets which are held
in joint names. This may provide some relief but in the greater
complexity of social relationships which are prevalent, many
cohabiting couples, and some married couples do not hold their home
in joint names and the family home may well be part of the estate
subject to the intestacy rules. We will continue to see situations
where the bereaved spouse or partner has no right to remain in
their home. In addition for partners who are unmarried, Inheritance
Tax may also be a liability to be met adding to the difficulties
for the family.
Further consultations are to be carried out to ascertain if
there is need for further change. These current changes are the
result of a consultation process that began in 2005 and with the
government’s recent abandonment of consultations relating to
greater protection in property law for unmarried couples it seems
unlikely that we will see any significant changes to the basic
premise of the intestacy rules at any time in the near future.
Despite the welcome changes that are effective from 1 February
2009, a valid and effective Will is and remains necessary to ensure
that the best provision is made for loved ones and the most
advantageous tax position is considered in the arrangements that
are put into place in a Will.
