An article was last published in this Journal about the law of intestacy in 2009. There had been a Law Commission paper published on the 29th October 2009 with a number of proposals that might be formed into a new bill. Well, nearly five years later that proposed bill has been made into an Act of Parliament as the Inheritance and Trustees’ Powers Act 2014, receiving royal assent on the 14th May. The commencement date for the Act is the 1st October. So what has changed?
Key changes include simplifying how assets are shared when someone dies intestate and recognising more modern family structures (i.e. the fact that many in today’s society choose to cohabit rather than marry).
The Intestacy Rule Changes
The Spouse – If a spouse (or civil partner) survives the deceased but does not leave any children, the entire estate will pass to the spouse rather than a portion passing to surviving parents of the deceased as was previously the case. If the deceased is survived by a spouse and children (or other issue such as grandchildren), then the spouse will receive all personal chattels and a statutory legacy of £250,000 plus half of the residue above that statutory amount. The surviving children will share the remaining half of the residue. Before the Act the surviving spouse would have gotten a life interest in half the residue, so this change has simplified the law. As you can see, the main beneficiary of these changes is the surviving spouse or civil partner.
The figure of £250,000 may also now be changed by the Lord Chancellor and must be reviewed at least every five years.
Here are the key changes on intestacy:
Deceased dies leaving a spouse and children
- Statutory legacy of £250,000 (indexed linked)
- Personal chattels
- Half estate outright
Children are entitled to remaining half of residuary estate at 18.
Deceased dies leaving a spouse but no children (parents and/or siblings survive)
Spouse receives the whole estate.
Parents / siblings do not receive anything.
The Inheritance (Provision for Family and Dependants) Act 1975
Children – It is now possible for a claim to be brought by a person who was treated as a child of the deceased regardless of whether that parent-child relationship arose because of a marriage. So for example, where the deceased was the unmarried partner of the parent, the child will now have the right to make a claim against the estate of the unmarried “parent”.
Dependants – The test for whether someone is a dependant of the deceased has changed so it is no longer necessary to show that the deceased contributed more than 50% of total financial contributions. The new test simply verifies that the deceased made a substantial contribution to the needs of the dependant making the claim.
This is just an overview of two of the most significant changes brought about by the Inheritance and Trustees’ Powers Act. Looking back at the Law Commission’s proposals in 2009, we see that the law relating to married spouses does seem to have improved their position significantly. Although the test for who can be classified as a dependant has widened, I am not sure it fully addresses the problem that unmarried partners have in relation to inheriting the property of their deceased partners. Personally I feel the Law Commission’s suggestion that cohabitants who have children together (or have lived together for at least five years) should be treated in the same way as surviving spouses was simple and straightforward, but this was not adopted.