Death benefits were very much in the spotlight last month with a revamp of the intestacy laws in England & Wales. While this will see spouses and civil partners potentially inheriting more than before, it may not always match your intentions.
The intestacy rules determine how a deceased’s estate is divided if they do not have a valid Will. It is only married couples and civil partners who will see any benefit from the intestacy changes. There are still no statutory rules that would give the growing number of cohabiting couples a right to a deceased loved one’s estate.
From 1 October 2014, if someone dies intestate with no children, the estate will be inherited entirely by the surviving spouse or civil partner. Before the changes, a share of the estate could have gone to parents or siblings – leaving less for the spouse or civil partner.
The position for those with children has been simplified too. If someone dies intestate and leaves a spouse/civil partner and children, the spouse/civil partner will inherit three elements from the estate:
- All “personal chattels” such as jewellery, furniture and cars
- £250,000 (or the whole of the estate, if its value is less than this)
- One half of any balance left over
The remaining half share still goes to the deceased’s children. And if those children are still minors, their share is held on Bereaved Minor’s Trust until they reach age 18.
The rights under 1 and 2 remain unaltered, but the right to one half of the balance has changed. Previously, a spouse or civil partner would have only been entitled to a right to income from one half of the balance left over, with the other half ultimately passing to the children. But now they’ll receive their half share outright without creating a statutory life interest trust.
There is less ‘inheritance protection’ for cohabiting couples which makes making a Will even more important. Otherwise, your estate could end up passing to parents or siblings rather than your partner, or, it could pass directly to your children and skip your partner completely.
The new intestacy rules are a fall back provision which give improved results for some, but it is always advisable to control exactly who gets what by making a Will and keeping it reviewed.
