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New inheritance rules come into force

New rules came into force on 1 October 2014 in relation to inheritance, which could affect those either married or in a civil partnership but who do not yet have a Will.

Under the law of England and Wales we have what is known as testamentary freedom. This means that the testator is free to leave their estate to whomever they choose. There is no forced succession as there is in other countries such as France and Scotland. As a result unfairness can arise. When somebody dies without a Will it is known as dying intestate. Their estate will be divided according to the intestacy rules. This situation should be avoided as the division is arbitrary and again, unfairness can arise.

The Inheritance (Provision for Family and Dependants) Act 1975 (the 1975 Act) aims to temper this potential unfairness by allowing dependants of the deceased to make a claim for financial provision if they have not been sufficiently provided for. Claims can be made both where the deceased died leaving a Will and where they died intestate. There are restrictions on who can claim and under what circumstances. 

The Inheritance and Trustees Powers Act 2014 amended (amongst other things) the 1975 Act and the intestacy rules. 

The following summarise the key changes:

Intestacy rules

  • Previously, the estate of a person who had died intestate married but with no children would potentially have been split between their spouse and their parents, depending on the value of their estate. Now all of their estate will pass to the spouse regardless of value.
  • Previously, the estate of a person who had died intestate, married and with children would have been split to provide up to £250,000 cash legacy to the surviving spouse, with the residue being split equally to provide the spouse with a life interest in one half and the other half to the children outright at 18. Now the £250,000 sum to the spouse is index linked and they will receive half the residue outright, rather than as a life interest.
  • Previously, when a person whose parents were not married to one another at the time of their birth, died intestate, there was a rebuttable presumption that the deceased was not survived by his father nor anyone related through his father. This presumption will not be applied if there is a person recorded as the deceased's father or as a parent on the deceased's birth certificate. This will be relevant for people who have unmarried parents or parents of the same sex.

The 1975 Act

  • The category of persons able to make a claim under the 1975 Act has been broadened. The previous category included "child of the family" which had to be in relation to a marriage to which the deceased was a party to at the time of his death. Now being a child of the family simply means that the deceased must stand in the role akin to that of a parent. Family can mean simply the child and the deceased.
  • The test of being a dependant of the deceased has been modified.  Previously the balance sheet test meant that the person making the claim had to have contributed less than the deceased. Now it simply must be shown that the deceased made a substantial contribution to that person's reasonable needs.  This is most relevant in cases of mutual dependency. Previously those people would not have been able to claim under the 1975 Act.
  • A claim under the 1975 Act can now make a claim before the grant of representation has been issued.
  • Claims under the 1975 Act must be made from six months of the date of grant of representation but the court can extend that limit. The rules have now been changed so that certain grants are not included when calculating that six month limit.  These include grants limited to settled land, grants that do not permit distribution of some of the estate and grants made outside of the UK. 

It is estimated that approximately half of the adult population in England and Wales have not made a Will. However, if the new provisions in relation to intestacy do not reflect a persons wishes, perhaps most relevant when parties have separated but not yet divorced or dissolved their partnership, then it is important to ensure that a valid Will has been drawn up.

If you would like to discuss preparing or updating a will then please contact Ruth Mason on ruth.mason@TLTsolicitors.com or +44 (0)333 006 0524.

If you would like to discuss any issue relating to separation please contact Natalie Drew on natalie.drew@TLTsolicitors.com or +44 (0)333 006 0603.

This publication is intended for general guidance and represents our understanding of the relevant law and practice as at October 2014. Specific advice should be sought for specific cases; we cannot be held responsible for any action (or decision not to take action) made in reliance upon the content of this publication.

TLT LLP is a limited liability partnership registered in England & Wales number OC 308658 whose registered office is at One Redcliff Street, Bristol BS1 6TP England. A list of members (all of whom are solicitors or lawyers) can be inspected by visiting the People section of this website. TLT LLP is authorised and regulated by the Solicitors Regulation Authority under number 406297.

by Ruth Mason

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