Intestacy rules threshold will change from the 26th July 2023. The statutory legacy sum will increase from £270,000 to £322,000 on the 26th July. Fiona Ashworth gives a summary of the update and why it’s so important to make a will.
In today’s society of blended families the importance of making a Will becomes more important than ever to ensure that you provide for loved ones and protect your estate for your chosen beneficiaries.
Many people living together as ‘partners’ do not really consider the major implications for them when one of them dies without a Will.
What happens if you die without a Will?
If you die without a Will then the Intestacy rules are used to decide who can inherit your estate, and the risk is that it might not be who you expected it to be. Dying without a Will can also lead to litigation where those left behind have to claim for adequate provision.
What are the current Intestacy rules?
Where there is a surviving spouse (and spouse in this article includes a civil partner) and no children, the spouse is entitled to the entire residuary estate provided they survive for 28 days from the date of death.
Where there is a surviving spouse and children, the spouse is entitled to the ‘personal chattels’ of the deceased and a statutory legacy of money or property, currently £270,000 but rising to £322,000 from the 26th July 2023, including interest from the date of death. The remainder of the estate, if any, is then divided into two equal shares, one share for the spouse and the other share to be divided between the children of the deceased in equal shares.
Where there is no Will and no surviving spouse, the distribution has to follow the statutory rules and a strict order of entitlement:
If there are surviving children of the deceased, including legitimate, illegitimate or legitimated children, and adopted children, they receive the estate upon attaining the age of 18. Step-children or foster children are not entitled under intestacy.
If there are no children, the parents of the deceased are entitled in equal shares when both are alive, or solely to the surviving parent, subject to certain rules relating to a missing father, or any other relatives on the father’s side, unless there is evidence that they are alive.
If no parents survive, siblings described as ‘of the whole blood of the deceased’, meaning siblings who share both parents, or their issue, are entitled. If a sibling has died before the intestate, leaving children of their own, these children will share their late parent’s entitlement.
If no whole blood siblings survive, siblings of ‘half-blood’, who have one parent in common with the deceased, or their issue, are entitled. The half-blood siblings may be related to the deceased through their mother or father.
If there are no siblings of whole or half blood, the grandparents of the deceased receive equal shares of the estate.
If there are no grandparents, then aunts or uncles of the whole blood, or their issue, will be entitled to an equal share of the estate.
If there are no aunts or uncles of the whole blood (or their issue), then aunts or uncles of the half blood, or their issue, will be entitled to an equal share of the estate.
If there are no aunts or uncles of the half blood or their issue, then the estate passes to the Crown, and the Duchy of Lancashire or Duke of Cornwall, will inherit. In this instance the Treasury Solicitor will have to deal with the administration of the estate.
The strict Intestacy rules can cause problems for surviving unmarried partners, particularly if they own property together that is of a higher value than the current nil rate band tax free allowance of £325,000, and inheritance tax would arise on the difference. In some instances, the house might need to be sold, not only to settle the potential inheritance tax charge, but to pay out the children who may have become entitled under the Intestacy rules. If you are married there is no inheritance tax between spouses on first death, but marriage is something that should be considered if your estate is likely to be chargeable to inheritance tax.
If sufficient provision has not been made for a partner then, if all parties agree, and all potential inheritors are over the age of 18, a Deed of Family Arrangement or Variation of the Intestacy can be entered into. This can prevent a claim through the court for adequate financial provision, if you have lived with the deceased for at least two years immediately prior to their death.
The importance of making a Will
The importance of making a Will to ensure that your family are safe and protected after your death is paramount, and should be put in place to avoid any unnecessary problems in the future.