- New Limits on Intestacy Legacies06 February 2009
Married couples and civil partners whose spouse or civil partner die on or after 1 February 2009, without leaving a Will, are to benefit from an increased inheritance under new legislation.
When somebody dies without leaving a Will they are said to die intestate. In these circumstances their estate is distributed in accordance with statutory rules, under which statutory legacies are paid to surviving spouses or civil partners. The amount of the legacy depends on whether or not the deceased is survived by children (or their children), by parents or by brothers and sisters (or their children). In both cases what the survivor receives has increased where the deceased dies on or after 1st February 2009, as follows:-
- Where the deceased is survived by a spouse/civil partner AND children the level is increased to £250,000. (from £125,000)
- Where the deceased is survived by a spouse/civil partner AND parents or siblings but NO children, the level is increased to £450,000. (from £200,000)
Where the value of the deceased’s estate falls below the levels above, the whole estate will pass to a surviving spouse/civil partner.
Where the value of the deceased’s estate exceeds the new limits, the rules on distribution are summarised below:-
Where the deceased is survived by a spouse/civil partner AND children:-
- The surviving spouse/civil partner takes the personal chattels AND from 1st February 2009 the first £250,000 together with a life interest in half the remainder.
- The remaining half passes to the children of the deceased equally (and is paid out to them when they reach 18). The half held on life interest for the surviving spouse/civil partner is also divided equally between the children when the survivor dies.
Where the deceased is survived by a spouse/civil partner and NO children but parents or siblings:-
- The surviving spouse/civil partner takes the personal chattels AND from 1st February 2009 the first £450,000 and half of the remainder
- The remaining half passes to the parents of the deceased equally or, if they are no longer alive, to the siblings of the deceased (or their children) in equal shares.
Where the deceased is survived by a spouse/civil partner and no children, parents or siblings:-
- In this case the surviving spouse takes everything.
Where the deceased is survived only by children:-
- In this case the children take everything between them equally.
Where the deceased dies with no spouse/civil partner and no children:-
- In this case it is necessary to follow a strict list of other relatives in order to determine who takes. In the event that no relatives are found the estate passes in full to The Crown.
The impetus for change was first felt in 2005 when the Department for Constitutional Affairs (“the DCA”) issued a consultation paper, considering an increase in the amount surviving spouses receive under the intestacy rules. The limits prior to 1 February 2009 were set back in 1993. Increasingly there were complaints that the legacy was not always sufficiently large to ensure that the surviving spouse was able to remain in the matrimonial home. The DCA estimated that each year there may have been up to 9,000 estates where the surviving spouse did not receive the whole estate, and of these about 4,000 where the surviving spouse was at risk of losing the home. The DCA were, however, very aware that if the statutory legacy is too high many children would receive nothing on the death of a parent.
Whilst the increases to the legacy limits will give extra protection to married couples and civil partners whose spouse or civil partner die without making a Will, it also highlights how important it is to make arrangements for your loved ones in the event of your death. Making a Will gives you the freedom to provide for your family and friends as you wish, rather than your assets being distributed in accordance with statutory criteria under which your estate may pass to those you would not choose. In addition, making a Will allows you to create suitable trusts for assets such as life policies and investment bonds, so that the proceeds may be paid promptly and often free of tax. Making a Will ensures that the intestacy rules will not apply to those assets, and we can also advise on Inheritance Tax planning opportunities.
If you would like to speak to a member of our team about making a Will, please visit the “Wills, Probate and Tax Planning” section of our website.
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