Major changes to laws governing what happens to your assets if you die without a will have come into force – and there’s bad news for common-law partners.
The changes follow the Law Commission’s findings, which show that between half and two-thirds of the adult population do not have a will, as well as concluding that those who require a will the most are the least likely to have made one.
“Despite the largest shake-up of intestacy laws since the 1920s, the new rules still give co-habitees no protection,” says Aaron Spencer, a solicitor who specialises in estate administration and planning.
“Many lawyers had been pressing for unmarried partners to have some rights over their deceased partner’s estate if they’d been living together for more than five years but the current rules remain unchanged: they get absolutely nothing.
“Now, as before, an unmarried surviving partner will not receive any inheritance. The entire estate will go to the deceased’s blood relatives, starting with children (if they have any), followed by parents, then siblings, then nieces and nephews, so it’s vital that cohabiting couples take advice about making a will.
“The biggest winners are spouses and civil partners who don’t have children,” adds Aaron, a partner with leading south east law firm Furley Page. “Previously, they had to share any assets over £450,000 with blood relatives of the deceased but now they will be entitled to everything, which means other relatives will not receive an inheritance.”
The changes also introduce significant simplification where children are involved. Prior to October 1, the first £250,000 went to the surviving spouse or civil partner with half of the remainder passing to the children and the remainder to them when the spouse died. While alive, the spouse was able to keep a ‘life interest’ in half the money above £250,000, which allowed them to spend the income but not the capital.
The new rules do away with the ‘life interest’ concept. The surviving spouse or partner still takes the first £250,000 but is now fully entitled to half of the remainder rather than having it placed in trust for them. The remaining half will be held for the benefit of the children equally as before.
The changes are also good news for adopted children. Under the old rules, if someone died leaving a child under the age of 18 who was then adopted by someone else, there was a risk that the child could lose their inheritance from the natural parent. This is no longer the case.
Amendments have also been made to the rules relating to fathers of a deceased child. Before October 1, if a father was not married to the mother at the time the child was born, he would not receive any inheritance from the child’s estate. This position has changed and he could now benefit.
The new intestacy rules may have simplified the system to some extent but they are far from perfect and rarely provide the exact outcome that was expected, warns Aaron: “Without a well-drawn will and carefully considered estate plan, complications often arise and issues surrounding things such as joint property, pensions, life policies and overseas property are not considered.
“If you want to ensure that relatives are looked after when you die, it’s more important than ever to make a will and save your loved ones additional stress at a very difficult time,” says Aaron.
“The importance of a will is often not considered until it’s too late. At Furley Page we can assist with all aspects of estate administration and planning – from preparing a will to ensure your assets are distributed according to your wishes when you die, to tax planning and asset protection for the long-term security of future generations.”
For further information and advice, contact Aaron Spencer on 01227 763939.
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