Where there’s no will

Last month, radical changes to the intestacy rules were introduced, representing the biggest change to the intestacy laws since they were introduced in 1925.

Last month, radical changes to the intestacy rules were introduced, representing the biggest change to the intestacy laws since they were introduced in 1925.

The new Inheritance and Trustees Powers Act 2014 significantly alters the way in which the assets of those who die intestate are apportioned between their relatives.

As over half of all UK adults have not made a will, according to research by WillAid, these changes are going to affect millions of people. According to the research, not only do 56% of parents not have a will but 79% of parents with dependent children have not named guardians for them.

The new Act highlights once again the importance of making a will to ensure that your wishes are followed when you die. If you don’t and you die without leaving a will, you are said to have died "intestate" and so your assets will be distributed according to specific rules. The likelihood is that your estate will be distributed in a way that you would not have wanted. This can cause a lot of distress as well as potential unnecessary inheritance tax costs.

The biggest change being introduced relates to married couples or those in civil partnerships where there are no children. Up until now, the spouse received the first £450,000 from the estate with the rest getting split between the deceased's blood relatives. With the new rules, the surviving spouse or civil partner will receive everything, with other family members receiving nothing.

The abolition of the ‘life interest’ rule that used to apply to spouses is also a big simplification. This applies to couples who have children. Previously, the spouse of the deceased received the first £250,000 and a 'life interest' in half of the remainder, with the other half shared equally between the children. Under the new rules, the life interest approach is being abolished with the surviving married partner receiving the first £250,000 and also half of any remainder. The children will receive half of any amount above £250,000 but will have to wait until they are 18 to access any funds.

Whilst these changes improve the position for married couples and civil partners somewhat, the big issue still remains - couples who are not married or in a civil partnership. People who have lived together for years but are not married or in a civil partnership are not covered by these new rules. The WillAid research shows that almost 70% of cohabiting couples have no will, which means that on death, the surviving partner would have no automatic right to inherit. The estate could well end up passing to parents or siblings rather than their partner, or directly to any children, skipping the partner completely.

Whilst the Inheritance (Provision for Family and Dependants) Act 1975 allows a cohabitee in England and Wales to challenge the distribution of an estate under such circumstances, making a will would at a stroke remove all the uncertainty about who gets what.

This new Act is therefore a timely reminder of the importance of making a will, to ensure that your assets are distributed both as you wish and as tax efficiently as possible. Wills can also be used to express a preference for who should act as guardians for minor children in the event that both parents die. 

Intestacy has many disadvantages, so making a will, whatever your circumstances, makes sense.

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