The New Intestacy Rules

The following is a brief analysis of the changes in the law  that affect the way in which property and assets for people  who die intestate are dealt with.

The Inheritance and Trustee Powers Act 2014 (ITPA 2014) came into effect on 1 October 2014.

‘Inheritance Law Simplified’proclaims the Ministry of Justice website, which boldly claims “the changes have been designed to speed up and modernise the process for dividing the money, property and other assets of someone who has died intestate.”

Dying intestate refers to a situation where someone dies without leaving a Will (or valid Will).

Historically, where there is an intestacy, then your estate is shared in accordance with the Rules laid down by Statute – The Intestacy Rules.

In what respect have the Rules been changed? 

Married couple – no children

Before 1 October 2014, in the case of a couple who are married, but without any children, if say the husband died first, his wife would receive the first £450,000 plus one half of the remaining estate.  The rest passed to blood relatives in order of priority, such as parents, nieces, nephews etc.

After 1 October 2014 the wife will now receive everything

Married couple - with children

Again before 1 October 2014, if a husband died leaving a wife and children, the first £250,000 went to the wife.  She would also benefit from the income from the remaining 50% until her death, when it passed to the children.

So in effect the wife received £250,000 plus a life interest only in halfthe rest of the estate, the remaining half passing to the children.

Since 1 October 2014, the life interest rule disappears, so now the wife in that example would get £250,000 plus half of the rest of the estate.  The remaining half passes to the children.

These Rules apply equally to civil partners.

The MOJ website proclaims: -

“We want to make sure that when someone dies and they haven’t left a Will, their property will be dealt with sensibly and as quickly as possible.  That is why we have made these common sense changes to modernise the law and make administering an estate faster and easier.

Whilst the change is welcome, on any view the changes are modest in nature and the position in relation to unmarried couples remains completely unchanged.

Unmarried couples

The situation remains unchanged – the new intestacy rules have no bearing on unmarried couples.  So, take for example “John and Mary”, who perhaps have lived together for many years. If John dies, Mary will receive nothing unless John has made provision for Mary in his will.

Giving the modern trend in society for couples to live together, the claims by the Ministry of Justice on its website that “the reforms bring the law into line with the expectations of modern society and will make the process easy to manage for relatives and friends” do ring rather hollow.

In fairness, the ITPA 2014 also introduces a provision which closes a loophole to make sure children who are adopted don’t lose their inheritance after their parents death.

In conclusion, do the changes under the new intestacy rules mean that there is no longer any need for people to make a Will?

The answer to that is a resounding noand people should generally speaking make sure that they have a valid and up to date Will.  And this applies particularly to couples who are not married.

Wills are often recommended for a variety of other reasons for example as part as a Testator’s Inheritance Tax planning or care home fees planning; or to make provision for friends or family they particularly want to benefit; or for the purpose of charitable giving, which can in itself have Inheritance Tax benefits.

Most Solicitors charge in the region of £100 – £150 for the preparation of a basic Will to include appropriate advice.

For advice regarding the above, please contact a member of our Wills and Probate Department at any of our offices or email enquiries@terry-jones.co.uk

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