On 1 October 2014 new laws governing what happens to a person’s money if they die without a Will (intestate) came into force. In the biggest legal overhaul since 1925, the Inheritance and Trustees Powers Act 2014 (ITPA 2014) affects how the assets of people who die without a Will are shared between their relatives. Here, Lee Trubshaw, Partner at solicitors Bradin Trubshaw & Kirwan LLP, highlights the key changes:
Under the Inheritance and Trustees Powers Act of 2014 spouses and civil partners have new inheritance rights, as do adopted children and other family members. But same-sex couples who live together may be alarmed to discover that they still have no protection whatsoever.
The Big Change for Spouses and Civil Partners
Same-sex married couples and civil partners without children are the most affected by the new intestacy rules. Previously, if a spouse/civil partner died and there were no children, then the first £450,000 of the estate plus half of the remainder went to the surviving spouse/civil partner. The other half was divided up between the deceased’s blood relatives such as their parents or brothers and sisters, which meant that for people with significant assets, their spouse/civil partner would only receive part of the estate and may even have to split ownership of assets such as property. Under the new rules the surviving spouse/civil partner inherits the entire estate outright.
If the deceased leaves children then the estate has to be shared between the surviving spouse/civil partner and the children. Under the old law the spouse/civil partner received everything up to £250,000 and was only entitled to a ‘life interest’ in one half of the remainder of the estate – meaning that the surviving spouse/civil partner could take income from the money but could not have the capital – with the other half going to the children. From October 2014 the surviving spouse/civil partner still takes the first £250,000 but the abolition of ‘life interest’ means they may now inherit one half of the residue as capital, with any children sharing the remaining half once they reach the age of 18.
The new rules do not affect people who die with less than £250,000 in assets.
Unmarried Same-Sex Couples
It is important for gay cohabitees to be aware that the new intestacy rules do not affect them – they still get nothing where one partner dies without making a Will, irrespective of how long they have lived together. Unmarried partners are treated as single people so, for example, if one partner dies and there are children, the surviving partner gets nothing and the entire estate passes to the children. The only way to ensure that your estate goes to your partner is to either get married, enter into a civil partnership or to make a Will.
The Law and Adopted Children
Under the old intestacy rules, if a person died leaving a child under the age of 18 who was subsequently adopted, there was a risk that the child may lose their inheritance from their natural parent. The new legislation has addressed this.
Definition of ‘Personal Chattels’
The definition of ‘personal chattels’ – personal property – also changed on 1 October 2014. The old meaning was archaic and included things like carriages, linen, horses and stable furniture! Under the new rules ‘chattels’ include anything that is not monetary, business assets or ‘held as an investment’. This could still be a grey area though as people see investments, for example collectable items of value, as different things.
The Changes and Wills
Whilst the changes to the intestacy rules will help a surviving spouse or civil partner, they are no substitute for a properly drafted Will, particularly as the intestacy rules may not be the most tax efficient way to administer your estate. Also, every family situation is different and only by writing a Will can you ensure that your estate passes on to those you wish to benefit, especially important if you separate from your spouse/civil partner.
For advice on civil partnerships, same sex marriage and other legal matters contact Bradin Trubshaw & Kirwan LLP on 01543 421840 for a consultation or email firstname.lastname@example.org
If you have any legal questions for Lee email us here at email@example.com.