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Two-thirds of adults in England and Wales pass away each year without having made a valid Will. Some people simply don't get round to making one; others don't realise that significant events in life, for example marriage, can revoke a previously made Will. Whatever the precise reason for not leaving one, such individuals are said to die 'intestate' and their estates are governed by the ‘intestacy rules’. These determine the distribution of a deceased’s estate after any debts and liabilities, funeral expenses and costs of the administration of the estate have been paid.
The intestacy rules are changing from 01 October 2014. For deaths on or after this date, all estates subject to the intestacy rules will be subject to the revised rules as introduced by the Inheritance and Trustees' Powers Act 2014 (ITPA 2014). The main changes introduced by the ITPA 2014 are set out below. Please note that references to spouses and marriage made below include same-sex spouses and civil partners respectively.
Key changes introduced with ITPA 2014
Winners and losers of the new rules
The new rules are simpler but, as with any changes, there are some losers.
Firstly, the children of wealthy families where a parent dies intestate will benefit less under the new rules than before. Under the revised rules, spouses are the main beneficiaries of an intestate’s estate.
Secondly, where there are no children, the other relatives of the intestate individual, for example siblings, parents and cousins, will no longer automatically inherit part of their estate.
The intestacy rules provide a fall back to situations where an estate is not disposed of by a valid Will. Having a Will in place allows the estate to be divided according to the wishes of the deceased rather than be at the hands of intestacy rules - and in many situations, a Will can save surviving relatives an enormous amount of hassle and stress.
For unmarried and cohabitating couples, having a Will is equally important (if not more) as the rules for an unmarried surviving partner remains the same as before – under the current and the revised intestacy rules, they are not automatically entitled to a proportion of the estate.
To receive further information on issues raised in this blog or advice on drafting a Will, please contact a member of our private client team.
You may also be interested in reading our recent blog, “Will you or won't you? - Passing down wealth to your children”, which considers some of the issues relating to children and inheritance in further detail.
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