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The Intestacy Rules set out who gets what from your estate. As from February 2009, the Government increased the level of the ‘statutory legacy’ (provided for by the Intestacy Rules) for married couples and civil partners, after concerns that the previous level was too low.
If you die without making a will (known as ‘dying intestate’), then your estate will be shared out under the Intestacy Rules as set out in the Administration of Estates Act 1925. These rules define who deals with, or administers, your estate and who benefits from it.
The person who will administer your affairs is your closest living relative, chosen in order from husband, wife or registered civil partner; children or their descendants; parents; brothers or sisters or their descendants; etcetera, or finally the Crown (the state) if you have no relatives. Those that benefit from the estate are determined in the same way.
Under the new proposals, if you have a husband, wife or civil partner and children when you die intestate, then your partner receives your personal belongings and the ‘statutory legacy’: the first £250,000 (up from £125,000) of your estate. The remainder of the estate is then split in half, with half going to your children if they are 18 or over, and the other half being put in trust for your partner’s lifetime. The partner receives the interest from the trust fund during their lifetime, with the original amount passing to the children when the partner dies.
If you have no children, then your partner will receive your personal belongings and the statutory legacy of £450,000 (up from £200,000). The rest of your estate is split in two, with half going to your partner, and the other half to your parents, or if they have already died, your brothers and sisters or their descendants.
In cases of cohabitees dying intestate, if you have children, then they receive your full estate; your partner will receive nothing. If you have no children, then everything goes to your parents. If they have already died, then everything will pass to the next closest living relative in the same order as described above for administering your estate.
The increases in the statutory legacies provide extra protection for your spouse or partner should you die intestate. But the change to this area of law also serves to bring into sharp focus the importance of making a Will to ensure that your possessions and assets are distributed as you would wish, and to make sure that your loved ones are properly provided for. A Will negates the need to rely on the Intestacy Rules to decide the final destination of your assets on your behalf.
In addition to the pre-determined destination of your estate, dealing with the administration of someone who died intestate is often more complex, lengthy and expensive. For example, if your brothers and sisters cannot agree on who will be in charge, then they must apply to the Court to decide who will take responsibility. This process is complicated, costly and will take time to resolve.
The best way to avoid having to rely on the Intestacy Rules, and decide for yourself how and to whom your estate passes, is to work with a solicitor to draft a will. This will ensure that your wishes are set out in a legally compliant and tax-efficient way, and with Probate Litigation on the rise, this can help to identify potential problems and advise you on ways to address them.
Please contact William Marriott of Meadows Fraser in respect of any issues arising from this article by either telephone (01932 852057) or email him at williammarriott@meadowsfraser.com