Dying Without a Will: Updates in the Intestacy Rules

A study released by Investec Wealth & Investment Management earlier this year found that almost two-thirds of UK adults have not written a will – and that, of those that have, almost a third have let them become out of date. From October 1st, new rules governing intestacy – dying without a will – come into effect. It is the first time they have been altered since the 1970s, and underline the importance of having a fully up-to-date will. The reforms will principally affect estates worth over £250,000.

Under existing rules, when there are no children the surviving spouse or civil partner inherits the first £450,000 of an estate, along with half of the balance, with the other half going to blood relatives, in accordance with an established order of precedence: parents first, followed by siblings, nieces and nephews, and any other distant relatives.

Revisions in the Inheritance and Trustees’ Powers Act 2014 amend the amount that a spouse or civil partner is entitled to where they are no children involved. Surviving spouses will now inherit the entire estate, rather than see a portion being distributed to blood relatives. In instances where there are surviving children, the spouse will receive the first £250,000 plus half of the remaining assets – with the other half shared equally among the children.

The intestacy reforms close some loopholes but not others

“Personal chattels” – the belongings of the deceased – will automatically pass to the surviving partner; however, the definition has been updated to include assets which are not held for business or investment purposes, creating the potential for legal challenges over “grey areas” such as art collections or wine cellars.

Nick Gartland, a senior financial planner at Investec, described the reforms as “a step in the right direction”. However, others have criticised the reforms for not ironing out certain perceived injustices in the law. Long-term unmarried partners, for instance, even those who have children with the deceased, will have no entitlement on an estate where there is no will.

The reforms do close other loopholes though – birth children adopted following their parent’s death will now be able to make a claim on an estate under the Inheritance (Provision for Family and Dependants) Act 1975.

The importance of having a will

Andrew Caplen, president of the Law Society, commented “The changes to the intestacy rules serve as a reminder of the importance of having a will. Dying without a valid will not only means your final wishes may go unheeded, but a financial and emotional mess is left for your loved ones to sort out. This need not be your final legacy”.

He added “We urge people to use a qualified, insured solicitor because they are trained to spot and address the issues that could lead to trouble later”.

Dying without a will could create a raft of problems for those left behind. Many assume that their estate will automatically go to their closest family, but if you die ‘intestate’ (without a will), that may not necessarily be the case. Your heirs may not receive what you wish to pass onto them, or your assets could be reduced through inheritance tax.

If you still haven’t finalised your last wishes or would like to write a new will, want to leave money in trust for a young relative, or are struggling with probate issues, call us on 01494 790002. Alternatively, email us at estatemanagement@ibblaw.co.uk.