Where there is a Will
Published: 26 February 2015
On 1 October 2014, the Government’s Inheritance and Trustees’ Powers Act (“the Act”) came into force. The aim of the Act is to reform:
- The Intestacy Rules
- The rules for individuals who want to claim against a deceased person’s estate and
- Trustees’ statutory power to advance assets to a beneficiary from a trust.
Out with the Old: Intestacy Rules relating to the Old Legislation
Where a person dies without having made a valid Will (whether a UK or a foreign Will) they are said to have died "intestate" and the Intestacy Rules apply to their estate.
Under the Intestacy Rules, if the deceased left a surviving spouse and children, the surviving spouse received all personal chattels, the first £250,000 of the deceased’s estate outright and a life interest (i.e. an entitlement to income only, not capital) in half of the remainder (if any). The children were entitled to the other half of the estate equally outright.
If the deceased died without leaving children, the surviving spouse received £450,000 and shared the remainder estate with the deceased’s parents (if living) or siblings (and their descendants).
In certain circumstances, some family members and dependents could apply to the court for a share of the deceased’s estate under the Inheritance (Provision for Family and Dependants) Act 1975. But it was only possible to bring such a claim where the deceased died domiciled in the UK.
In With the New: the New Legislation
A summary of the main reforms include:
Where the deceased leaves a surviving spouse and children, the spouse now receives all the personal chattels (as before) the first £250,000 of the estate and one half of the estate outright (i.e. not just an entitlement to the income from the one half share).
Where the deceased leaves a surviving spouse and no children, the spouse will receive the whole of the estate and no longer has to share the estate with the deceased’s parents or siblings.
Note: There are no reforms in respect of additional rights for an intestate person’s long-term unmarried cohabitee. As before, there is no provision in the Intestacy Rules for unmarried cohabitees or friends. The whole of the deceased’s estate will pass to his or her children, or, if none, to his or her parents or siblings.
Claims over the Estate
The rules have been extended to allow anyone treated by the deceased as a child of his or her family, but who is not the deceased’s child by marriage or civil partnership, to be able to make a claim over the deceased’s estate.
The rules have been extended in certain circumstances where the deceased was habitually resident in the UK but domiciled outside of England and Wales and left property and family members or dependants here. Someone who is "habitually resident" is described as "someone who is living in the UK for a settled purpose as part of the regular order of his or her life". This is a controversial measure as it will mean that the UK courts have power to make orders regarding overseas assets which may or may not be enforceable in the country concerned. There is also a risk of conflict through dual consideration.
The Trustees’ powers to advance assets to beneficiaries to (broadly) establish them in life, have also been extended by the Act. They can now advance up to 100% of a minor beneficiary’s share of trust assets before adulthood, instead of 50% under the old powers.
Trustees also have new powers to allow them to advance assets other than cash.
The Benefits of Having a Current Will in Place
A Will allows a living person to:
- control who their estate and assets pass to following death;
- decide on the amount of money to be distributed rather than the government determining to whom and how much;
- pass any amount of money with no maximum figure to the beneficiary;
- give away assets to people outside of the family;
- choose the executors they want to administer their wishes in the Will ; and
- to take advantage of any estate planning opportunities.
The Rules and Powers within the new Act, still fall short of ensuring that your autonomous wishes to provide for your loved ones is fully complied with or at all. The importance of having a Will (preferably updated when there is any major change in circumstances) cannot be overstated.
The contents of this article are intended for general information purposes only and shall not be deemed to be, or constitute legal advice. We cannot accept responsibility for any loss as a result of acts or omissions taken in respect of this article.