A new Bill for estates without Wills, but the sure-fire solution is an effective Will

The Government has issued a draft Inheritance and Trustees' Powers Bill which will abolish the spouse's life interest trust that is automatically established on a death in intestacy (where there’s no Will or the Will falls short and does not deal with all the assets in the estate) under the existing laws of England and Wales.

Currently, if the deceased is survived by a spouse and children, the surviving spouse receives only the first £250,000 of the estate. The balance is divided in two, with one half held for the surviving spouse on a life interest trust, that is the right to income only or rent free occupation in the case of a property in which the surviving spouse chooses to live, and the other half passing to the deceased's children outright at 18.

Understandably this formula can create very unfair results and inevitably can spill over into direct conflict between the surviving spouse and children, particularly when the children are from the deceased’s previous relationship.

One potential remedy available to the surviving spouse, in the absence of agreement,  is to make a claim against the estate on the basis that the deceased has not made reasonable financial provision; an Inheritance Act claim. Again, this is likely to doom any on-going relationship between the spouse and children.

The new Bill provides the surviving spouse with the £250,000 statutory legacy, the deceased's personal chattels and half the balance of the remaining estate outright. Children or other descendants share the other half of the balance at 18.

The other significant change is that the deceased's parents and siblings are removed as potential beneficiaries on intestacy. As the law stands, if the deceased had no children and the estate is worth more than £450,000, the spouse has to share the estate with the deceased's parents and full siblings or their descendants. Under the terms of the new Bill the whole estate will always pass to the surviving spouse.

The draft Bill also widens the right to bring Inheritance Act claims against an estate, as above, where the deceased was domiciled outside England and Wales. The class of potential claimants is also extended to anyone treated by the deceased as a child, whether or not there was a marriage or civil partnership, and a person who was being maintained by the deceased immediately before the death will no longer have to show that the deceased contributed more to the relationship in financial terms than the applicant nor that the deceased assumed that responsibility.

Lastly, the trustees' statutory powers to apply income and capital are extended; these are otherwise restricted in intestate estates.

Of course, the best advice is to ensure that you have a valid Will and that you keep it updated regularly. You should also take advice, as necessary, in relationship to anyone who may have a claim against your estate.

The law and practice referred to in this article or webinar has been paraphrased or summarised. It might not be up-to-date with changes in the law and we do not guarantee the accuracy of any information provided at the time of reading. It should not be construed or relied upon as legal advice in relation to a specific set of circumstances.

The Legal 500 - The Clients Guide to Law Firms

UK Chambers logo

Best Companies - One to watch logo

Cyber Essentials Certification Logo