Without a will
If a person dies without leaving a valid will the intestacy rules are applied to his or her estate – the estate being everything they own at the date of death minus everything they owe – to determine who is entitled to deal with the estate and to whom it should pass. Generally, the estate passes to the deceased’s relatives – but does so in a specified order of priority. The intestacy rules set out which relatives benefit and in what shares.
The intestacy rules were set out in the Administration of Estates Act 1925 but the rules changed on 1 October 2014 when the Inheritance and Trustees’ Powers Act 2014 came into force. The major changes relate to those who die married.
Intestacy: married without children
Under the new rules if the deceased left no ‘issue’ (i.e. descendents, such as children or grandchildren) the surviving spouse or civil partner inherits the entire estate. This marks a change from the old regime under which only the first £450,000 of the estate passed to the surviving spouse or civil partner, with the rest passing to other surviving relatives such as the deceased’s parents or siblings.
Intestacy: married with children
Under the new rules if the deceased leaves issue, such as children, the surviving spouse or civil partner inherits:
1. the chattels (i.e. personal effects);
2. a ‘fixed net sum’, currently £250,000 but subject to review every 5 years when it will rise in line with inflation; and
3. half of ‘the residuary estate’; i.e. half of the rest of the estate.
The children (or issue) get the other half of the residue when they reach 18 years of age. This marks a simplification from the old rules under which the surviving spouse or civil partner was entitled only to the income from his or her half of the residue and only for the duration of his or her life (after which that half of the residue passed to the children or issue).
Despite various proposals – pardon the pun – during the drafting of the legislation there remains no provision within the intestacy rules for unmarried partners and co-habitees.
The intestacy rules apply when there is an intestacy; i.e. when there is no valid will. Anyone who does not want the intestacy rules to apply to his or her estate should make a will.
Naureen Matlib, Partner, Percy Short & Cuthbert
14 October 2014