Passing on an individual’s estate in accordance with his wishes has always been important, both in terms of ensuring that the right people receive the correct assets (or portion of assets, where these are split between multiple parties) and in terms of ensuring that the maximum value can be passed on through tax planning.
The best advice for an individual is to make a will, in order to ensure that his wishes are fulfilled and to avoid the unpleasant and often expensive resolution process that can affect loved-ones in the aftermath of a poorly planned succession.
It is estimated that more than 59 per cent of the adult population do not have a will (referred to as intestacy) and those who need one most are, in fact, the least likely to have one. At such a distressing time for those affected, having a will can help to make this time more straightforward than it might be otherwise. The last thing relatives want to be doing is making decisions, and so leaving clear instructions can be of great assistance.
In effect since 1 October 2014, the Inheritance and Trustees’ Powers Act 2014 has revised the rules that apply in England and Wales when someone dies without having made a will.
The Act details a number of changes which will apply, depending on the estate owner’s relationship situation and family arrangement at the time of death.
The changes are summarised as below;
| pre-October 2014 | post-October 2104 | |
| Married/civil partnership – NO children of any age | • First £450,000 to surviving spouse • 50% of any residue to surviving spouse • Other 50% of residue divided among any blood relatives of the deceased (parents, siblings, niece etc) | Whole estate to surviving spouse |
Married / civil partnership – HAS children of any age | • First £250,000 to surviving spouse • 50% of residue directly to children • Other 50% of residue held on life ‘interest’ trust to | • First £250,000 to surviving spouse • 50 per cent of residue directly to spouse (‘life interest’ requirement now removed) |
The former rules make reference to a life interest trust. This permitted the spouse to access any income generated by the capital sum in this portion of the estate. However, the spouse was not permitted to make any withdrawals from the capital sum which would subsequently be passed on to any offspring following the death of the spouse. One other small change is that the definition of personal chattels has been amended to refer to any tangible movable property which is not:
• Money or securities for money, or;
• Solely held for investment purposes, or;
• Solely or mainly used for business purposes.
However, the rules that are relevant to the estate of unmarried individuals remain unchanged. In this case the partners of unmarried intestates have no legal entitlement to any of the estate, even if they are financially dependant co-habitees. In this situation, there is a specific order of priority, as follows:
(1) children (and their descendants);
(2) parents;
(3) full siblings (and their descendants);
(4) half siblings (and their descendants);
(5) grandparents;
(6) full siblings of parents of the deceased – uncles and aunts (and their descendants, the first cousins of the deceased);
