An update on the long-overdue review of the Intestacy Rules
On 29 October 2009 the Law Commission published a consultancy paper reviewing the law of intestacy. The report is the first step to the proposals being formed into a new Bill and then perhaps an Act of Parliament.
A change to the intestacy law is long overdue, as the rules are substantially the same as they were in 1925. Society, of course, had moved on a great deal over that time, both in terms of our finances (we are much wealthier as individuals) and our social structures (people often co-habit rather than marry). Under the existing rules many people do not really understand what will happen to their estate where there is no will. People believe that everything automatically goes to their spouse or partner, but that is not necessarily the case.
Two of the main problems with the existing rules are:
1) A surviving spouse does not always inherit the whole of his or her partner’s possessions – A surviving spouse is entitled to a “statutory legacy”. Before the limit was increased on 1 February 2009, a surviving spouse would inherit £125,000 if the deceased left children or £250,000 where there were no surviving children. These limits have been increased to £250,000 and £450,000, respectively.
2) Couples who are not married or in a civil partnership have no rights to their partner’s property – The existing intestacy rules make provision for an estate to be shared with children, parents or siblings, and give unmarried partners nothing at all.
To simplify matters, the Law Commission has made a very straightforward suggestion that would deal with point one above: “We propose that if someone dies without a will and without children, the surviving spouse should take the whole of the estate even where there are surviving parents or siblings”. In a nutshell, the Law Commission would scrap the existing rules relating to surviving spouses sharing the estate. This has the great advantage of simplicity, but this change is unlikely to be fully accepted as it ignores the rights of surviving children. In the event of a surviving spouse remarrying, the children may lose any right to an inheritance.
The second problem we have mentioned is probably more important to address, as many people misunderstand the current law. Professor Elizabeth Cooke from the Law Commission is quoted as saying:
“Many people feel that if they live together for many years, perhaps have children together, that the co-habitant is in the same position as a spouse and will be provided for… That is not the case. The intestacy rules give nothing to co-habitants, and they often have to apply to the court for provision particularly if they are left looking after the couple’s young children.”
Again the Law Commission has made a fairly simple suggestion: that where co-habitants have children together or have been together for at least five years, they should be treated in the same way as a surviving spouse.
It is unusual that proposed reforms to the law can be summarised in relatively simple terms. There will be nearly two years of consultations and amendments before a draft bill is ready, but with any luck the final proposals will be clear and straightforward, as this is an important area of law that affects a large number of families at a time of extreme financial and emotional vulnerability.