The Intestacy Rules set out a fixed order of inheritance for family members where a deceased person dies without making a Will. The Rules have not been updated for over 20 years and have been much criticised for being out of date.
On 14 December 2011 the Law Commission published its report on the Intestacy Rules for England and Wales. The report recommends far-reaching changes to the current Rules and is designed to modernise the law in this area.
The most important changes to the Intestacy Rules are summarised below.
Spouses
The main changes affect the interest of the "surviving spouse", by which I mean the deceased's husband, wife or civil partner.
At present, where there are no children or other descendants and the deceased's estate is worth in excess of £450,000, the surviving spouse is only entitled to a limited share of the estate. This involves a legacy of £450,000, all personal chattels, and one half of the remainder. The other half passes to the deceased's parents, or failing them, is held for the surviving brothers and sisters.
The Law Commission has recommended that the surviving spouse receives the whole estate outright, as this is deemed to be what the majority of couples would want to happen in the circumstances.
Where the deceased has children, the present Intestacy Rules allow the surviving spouse to have a legacy of £250,000, all personal chattels and a "life interest" in one half of the remainder. The other half is held for the deceased's children. A "life interest" is a restrictive form of entitlement and does not allow the spouse full beneficial ownership.
The Law Commission recommends getting rid of the "life interest" and allowing the surviving spouse to have their share of the estate outright. This will simplify the law in this area and allow the spouse the freedom to deal with their share of the assets as they choose.
Cohabitants
At present, the Intestacy Rules do not give rights to anyone living in an intimate relationship with the deceased but who was not married to him or her ("a cohabitant"). This is deemed to be unreflective of modern relationships and can result in difficulties after the death.
The Law Commission has recommended that cohabitants receive a portion of the deceased's estate on the condition that the couple has either (i) been living together for a minimum of five years or (ii) been living together for a minimum of two years and have a child together who lives in the same household. This change is expected to be welcomed, although there is likely to be some debate over the conditions.
What now?
The Government will now comment on the Law Commission's recommendations and we await a date for their response and approved draft legislation. Although, if adopted, the new Intestacy Rules will be a marked improvement on the current position, it does not alter the fact that our advice to our clients is always to make a Will rather than rely on the Intestacy Rules. A valid Will overrides the Intestacy Rules and gives you the freedom to choose who benefits from your estate. Please see our bulletin "Why make a Will" for more information.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
