New Intestacy Rules
It is said that up to 75% of people die without a Will, leaving their Estate to be divided in accordance with rules laid down by the Government.
The effect of this being that many people die with their estate being shared out to people that they would not wish to benefit. Solicitors and our peers have campaigned for a change in the Intestacy Rules in order that they reflect modern society and modern families, to ensure that the “correct” people inherit following the death of a loved one.
As a solicitor it does seem a foreign principle that we would campaign for a change that may mean that even less people draft Wills. However one of the greatest “modernisations” of probate law took place on 1st October 2014. The new Intestacy Rules were introduced under Inheritance and Trustees Powers Act 2014.
For a long time Solicitors and Lawyers alike had expressed a desire for a reform in the legislation which governs a person’s estate following a person’s death. This is the law that decides how your belongings and property are divided after your death. The old rules were viewed as non reflective of today’s society, often leaving people disadvantaged financially, following the death of a loved and leaving them only with the option of claiming against their loved ones estate and entering into lengthy, long winded litigation to result in them, if they were lucky, being placed in the same position that they had been in when their loved one was alive.
As a whole it was expressed that the Intestacy Rules should consider the modern family, the way in which people raise their children, accept that people do not always enter into marriage and that on death the deceased would wish to benefit their families in the same way they had during their life and that the lack of the nuclear family doesn’t dictate the distribution of assets to relatives out of the immediate family.
After waiting with baited breath, the changes were received on 1st October 2014. The main impact being for married couples with or without children.
Sadly, the law was not reformed to benefit co habitees nor has the threshold under which the estate is divided increased.
The changes to married couples affect an estate of £250,000 or more. Bearing in mind today’s property prices and the threshold before the estate begins to be divided is merely the average property price, before calculating any assets.
If a couple have co habited for any length of time, be it 2 years or 30 years the surviving co habitee does not have a right to inherit from the estate of their Partner.
If the couple have lived as a “married” couple and one of them dies without a Will the survivor is left with the option of making a claim against the deceased’s estate in order to be financially provided for in the same way as they had been during the deceased’s lifetime. The surviving co habitee may be claiming against the Estate which may be defended by blood relatives that do not have or maintained a relationship with the deceased. Arguably the reforms have failed in reflecting the way in which many couples live.
However, positively the reforms have acknowledged that if a couple are married and do not have children of their own, there must be a greater need for the surviving spouse to inherit. Previously the surviving spouse would inherit the first £450 and the remainder would be divided between the blood relative, in the pecking order as set down by the Legislation.
After 1st October 2014 the surviving spouse (should the couple not have any children together) would inherit the entire estate. At first glance it appears that the reforms have taken into consideration the modern lifestyles of people. However this reform is highly criticised as it fails to consider children from former marriages. This rule alone will create many difficulties for children both under and above the age of majority that are born into either a former relationship or a former marriage.
The new Intestacy Rules do not make provision for the children of former relationships, to their detriment. A child of a former relationship may completely miss out on any inheritance should the spouse of their deceased parent draft a Will and not make financial provision for that child or in fact die themselves leaving their Estate to be divided under the Intestacy Rules.
An area that has benefitted children of the deceased greatly are the changes made to children that are adopted following the death of their parent. Under the new Intestacy Rules a child that is adopted following the death of their parent will not lose their right to inherit. However taking into consideration the reforms above, these children may only benefit greatly from their deceased parent’s estate should they be unmarried at the time of death.
A positive modernisation of the Intestacy Rules is the new definition of the terminology chattels.
The previous definition was arguably a definition that had been fitted awkwardly into modern lives, including personal belongings such as “carriages, horses and stable furniture”. The new definition is simply anything that is “not monetary, business assets or held as an investment.” A more suitable description of a person’s belongings in the 21st century. Although as with everything this definition is open to interpretation, for example not everybody has the same opinion of what forms an investment.
Although it was thought the new rules might assist people following the death of another, the reforms may in fact affect many people in detrimental ways.
Rather than Solicitors being left on foreign grounds of advising clients that they may receive greater benefit from the new Intestacy Rules, we are in fact on old ground and it cannot be said enough that the only way to ensure that your estate is distributed as you would wish is to draft a Will. A Will is a document that will ensure the division of your assets occurs in the way you would want it to and any of your loved ones benefit and are accidently excluded and equally a Will would ensure that any family members can be excluded from the Estate rather than being included by Government set laws.
Should you wish for further advice please contact Angela McGuckin of VL Lawyers on 01335 300949.