With the Bank of England lowering the base rate to 0.1% and the current circumstances making us all consider our living costs is it time to consider a remortgage? What does remortgaging mean? A remortgage is when you change the mortgage you currently...
Shaking Up the Status Quo of Intestacy - The New Rules
If you die without a Will then you are said to have died ‘Intestate’ and your estate will be distributed in accordance with the latest intestacy rules. These rules determine who should benefit from your estate. The rules were thought to be out of date and unfair and from the 1st October 2014 the Inheritance and Trustees’ Powers Act 2014 came into force which made several changes to them.
The Intestacy Rules
If you die without a Will then the value of your estate and the identity of any surviving relatives will determine how your assets are distributed.
Married with no children
The biggest change in the intestacy rules is for married couples who do not have any children. Under the old intestacy rules, the surviving spouse would inherit the first £450,000 and personal effects outright. Thereafter, the spouse would receive half of the balance of the estate with the other half passing to the deceased’s family members in order of priority i.e. parents if they had survived, failing that to brothers and sisters. For deaths after the 1st October 2014, the surviving spouse will now inherit the entire estate outright; no longer is any provision made for other family members.
Married with children
The new intestacy rules also tried to simplify the situation where there are children. Under the old intestacy rules, the spouse would inherit the first £250,000. There was then a complicated system for the balance where the spouse was only entitled to the income of half of the balance. The capital would remain in Trust and pass to the children on the death of the surviving spouse. The new intestacy rules state that there will no longer be a Trust of half the remainder and the spouse will inherit that half outright.
Example:- David dies and is survived by his wife Jane and his son Stephen. His estate is worth £450,000. In accordance with the new rules, Jane will be entitled to £250,000 and half of the balance outright, £100,000. The remaining £100,000 would pass to Stephen.
Before the new intestacy rules were implemented many Solicitors urged for partners in unmarried relationships to be recognised by the law in certain circumstances. Despite this, the law remains unchanged and no provision has been made in the Inheritance and Trustees’ Powers Act 2014 for cohabitees. If a partner in an unmarried relationship should die without making a Will then no provision will be made for the surviving partner under the law regardless of how long the couple may have lived together. This is a scary prospect given that many of us are choosing to live together and have no intention of getting married.
Time to make a Will?
Whilst the new intestacy rules have helped to simplify matters in certain circumstances and are more in line with what people expect to happen when someone dies without making a will, my advice remains the same – make a Will!