News article published on: 21st October 2012
It is estimated that between half and two thirds of the adult population have not made a Will. Where someone dies without a Will, the Intestacy Rules apply. The Intestacy Rules date back to 1925 and have not been comprehensively reviewed for decades.
The Intestacy Rules determine how a deceased’s estate is distributed between his/her family members. For example, where the deceased was married and had children, the surviving spouse receives the deceased’s personal belongings, a fixed legacy of £250,000 plus a life interest in half of the remainder. The rest is split equally between the deceased’s children. Where the deceased did not have children, the surviving spouse receives the deceased’s personal belongings, a legacy of £450,000 and the remainder passes to the deceased’s parents, siblings or their descendants.
In cases where the deceased’s relatives cannot be traced, the estate ultimately passes to the Crown. It has recently been reported that Prince Charles utilised approximately £3.3m of unclaimed legacies to fund his own charities, including funding towards a private school in Scotland and the Foundation for Building Communities, which has been seen as a controversial architecture and planning group.
Clearly the current rules are outdated and do not meet the needs and expectations of modern families. The Law Commission began consulting on this issue in October 2008 and the Government has accepted their recommendations in part. As a result, the Inheritance and Trustees’ Powers Bill was introduced in the House of Lords on 30 July 2013. Some of the reforms contained in the Bill include:
- Surviving spouses / registered civil partners are to receive the deceased’s entire estate where the deceased had no children or other descendants.
- The distribution between a surviving spouse and children is to be simplified.
- Protection to be provided to children who suffer the death of a parent and who risk losing their inheritance if they are subsequently adopted.
- Fairer treatment of unmarried fathers whose child dies intestate.
- Removal of some obstacles to claimants under the Inheritance (Provision for Family and Dependents) Act 1975, for example, to make it easier for stepchildren to claim against the estate of a step-parent, and to permit claims where the deceased was domiciled, or died, outside England and Wales.
- To update the statutory powers of trustees to use capital and income for the benefit of the beneficiaries.
It has been confirmed that the proposal for unmarried cohabitants to benefit in cases of intestacy will not be implemented during this Parliament.
Despite the proposed reforms, the importance of making a Will cannot be emphasised enough. The only way to ensure your estate is administered by someone of your choice, and that your estate passes in accordance with your wishes, is to make a Will.
Osbornes can offer you a professionally drafted Will accompanied by specialist advice. To contact a member of our Private Client Team for more information please call us or fill in our online enquiry form