Farsight Financial Planning

Financial Blog
By Dominic Bowers, 01/12/2014
a black plastic calculator
a black plastic calculator
Recent studies suggest almost 67% of adults have no will in place to decide what happens to their estate should they die. Such people are ‘intestate’ and if that is you the rules governing how your estate will be dealt with on your death have changed.

The Inheritance and Trustees’ Powers Act [2014] came into effect in England and Wales on October 1st 2014. In summary, the main changes you need to be aware of are:

1. If you’re married or in a civil partnership with no children of any age:
· Old rules: i. The first £450,000 went to your surviving spouse.
ii. 50% of any remaining went to your surviving spouse.
iii. The other 50% was divided amongst any of your blood relatives (so parents, siblings, nieces, nephews, etc.).
· New rules:
i. The whole estate goes to your surviving spouse.

2. If you’re married or in a civil partnership with children of any age:
· Old rules:
i. The first £250,000 went to your surviving spouse.
ii. 50% of any remaining went directly to your children.
iii. The other 50% was held on life interest* trust to your spouse and then passed to your children when your spouse died.
· New rules:
i. The first £250,000 goes to your surviving spouse.
ii. 50% of any remaining goes directly to your spouse (with no life interest requirements).
iii. The other 50% goes directly to your children.

* Life interest refers to your spouse having access to any income generated by the fund but has no access to the capital value. The capital was passed to your children on the death of your spouse.

The situation if you are the partner of an unmarried intestate hasn’t changed which means that you are not entitled to inherit any of the estate even if you are co-habiting at the time of death. In such circumstances the order of priority relating to distribution of an estate where the deceased is unmarried remains as follows:

  • Children (and their descendants).
  • Parents.
  • Full siblings (and their descendants).
  • Half siblings (and their descendants).
  • Grandparents.
  • Full siblings of the parents of the deceased - uncles and aunts (and their descendants, the first cousins of the deceased).
  • Half siblings of parents of the deceased – half uncles and half aunts (and their descendants).
  • The Crown.

We would always recommend that you make a will to accurately reflect your wishes and, where you have a will in place, make sure you keep it updated to reflect life-changing occurrences such as deaths, divorce and re-marriage.