On the 6th February 2020 the new Statutory Legacy on Intestacy came into force.
What are the intestacy rules?
The intestacy rules are statutory rules that determine who receives your estate if you die without a Will.
How is the Statutory Legacy applied?
The Statutory Legacy is the amount your spouse or civil partner will receive if you die without a Will and are survived by your spouse or civil partner and children.
The Statutory Legacy has risen from £250,000 to £270,000.
If you own assets worth more than £270,000 when you die, then your spouse or civil partner will receive all your personal belongings and the first £270,000. Any assets over and above this will be split into two equal shares as to half to the spouse or civil partner and half equally between the children who will inherit at the age of 18.
In addition the spouse or civil partner will inherit any assets that were jointly owned as Joint Tenants. If the asset was jointly owned but as Tenants in Common, then the deceased's share will pass in accordance with the intestacy rules.
For many families, despite this rise in the Statutory Legacy, the distribution of an estate in accordance with the intestacy rules can result in an unsatisfactory outcome.
A typical scenario is where the matrimonial home is owned by one spouse and valued at more than £270,000 (or their share in it is worth more than £270,000 under a tenancy in common). In this scenario there is a risk that some of the property could pass to the children, possibly to the detriment of the surviving spouse. Whilst in this scenario the children could take legal advice to take the necessary steps to secure the surviving spouse's financial security, if those children are step children (i.e. children from a previous marriage of the deceased spouse) they may not be as willing to co-operate.
It should also be borne in mind that the intestacy rules only apply to spouses and civil partners, and that co-habiting couples are not protected under the intestacy rules.
So what can you do?
The easiest solution is to make a Will.
A solicitor will be able to advise you on the clauses to include in a Will to protect both your spouse and children.
By including a life interest trust in your Will you can protect your share of your matrimonial assets for your children whilst also ensuring your spouse is protected for the rest of their lifetime. This approach ensures both sides of the family are provided for and not left with the unsatisfactory provision from the intestacy rules.
Planning for the future is not always pleasant, but putting legally binding arrangements in place now can prevent stress and expense for your loved ones in the future.
Our Private Client Team have been recognised as one of the leading private client departments in the region by Legal 500 UK, and are able to prepare a Will and Lasting Power of Attorney for you that reflects your personal wishes and requirements.
In addition to these services, we also offer related expert estate planning, tax and trust advice.
This article was written by Claire Buttress, Senior Associate in the Private Client Team at Pinney Talfourd LLP Solicitors. The contents of this article are for the purposes of general awareness only. They do not purport to constitute legal or professional advice. Specific legal advice should be taken on each individual matter. This article is based on the law as of February 2020.