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The new rules of intestacy

pen and paper Making a Will is never going to be one of the easier things to tick off your “to do” list. No one wants to contemplate death, let alone pay a solicitor for the pleasure of doing so. And this is why so many people put it off, even when the consequences of not doing so are incredibly costly.

I have lost count of the number of friends and acquaintances who, knowing what I do for a living, have said: “Oh yes we must do our Wills,” and then never actually do. Deciding who to appoint as guardians for children or as executors can be hard even if it is fairly clear who you would like to inherit. For many it leads to a sort of superstition, as if by thinking about death they will somehow make it happen.

The fact is though death happens anyway regardless of whether or not someone is fully prepared and in some cases this can have devastating consequences because sadly many people are not aware of what will actually happen to their assets if they do not make a Will.

Those who die without a Will are said to die intestate and the rules of intestacy determine who gets what and in what proportion. As of 1 October 2014 the rules have changed with the coming into force of the Inheritance and Trustees' Powers Act 2014.

Under the previous rules the spouse or civil partner (where there were also children) was entitled to the first £250,000 plus a life interest in half of the residuary estate (i.e. that which was left after the payment of tax and administrative expenses). The children would get the other half of the residuary estate and would also get the first half after the death of the surviving spouse.

That has now changed so the spouse takes both the £250,000 plus half the residuary estate absolutely. The children share the remaining half of the residuary estate. If the estate is worth less than £250,000 the spouse takes everything. Where there is a spouse or civil partner but no children the spouse takes everything, whereas previously they only had the first £450,000.

There is no provision for cohabitees and the spouse or civil partner will take even if they were separated so for those who live together without being married having a Will is vital. However there is some good news for cohabitees in that the new act also brings in some changes to the Inheritance (Provision for Family and Dependents) Act 1975. This is the act under which claims can be brought against an individual’s Estate after death. In the past cohabitants have had to show that the deceased was contributing more financially to the relationship than the party making the claim. In future the fact that a couple were mutually financially dependent should be sufficient.

Unlike many countries, in England and Wales we have complete testamentary freedom, so we can leave our money to whomever we please – even the proverbial cats’ home. However your assets won’t necessarily go to who you want unless you take steps to ensure that you have made a correctly executed Will.

By Angharad Lynn, 29th October 2014.