The new law of Inheritance Progress, but not enough

The law of inheritance in England and Wales has changed significantly with effect from 1 October 2014 as the “Inheritance and Trustees’ Powers Act 2014” comes into force. The changes are in the writer’s view generally for the good, though much more could have been done to update and improve the current rules.

Inheritance by spouses

Firstly, the good news. The majority of married couples we advise wish their estate to pass to each other on the first death. Provision for other relatives is most commonly made on the death of the second of the couple to die. The “intestacy laws” which apply where no valid Will is left, now more closely reflect this.

Where a person dies leaving a spouse but no children or grandchildren, the whole of their estate passes to the surviving husband or wife. Before the new law came into effect, the first £450,000 was passed to the spouse in these circumstances, and the balance would be shared with other relatives.

The position where a spouse and children survive the deceased person has improved, but more could have been done. Where an estate of more than £250,000 is left, the spouse will receive the first £250,000 (and the deceased’s personal belongings), and the spouse and children will share the balance. Any minor children will receive their share at the age of 18. It is arguable that children being entitled to receive potentially large sums at the age of 18 is unwise and unhelpful.

The law has been updated to a degree however, compared to the previous position. Under the old law a spouse received a “life interest” in half of the estate over £250,000. Essentially the spouse received the income from this part, with the capital passing to the children on the second death. This unnecessary complexity has been removed.

No provision for unmarried couples

The new law disappoints in its failure to improve the position of unmarried couples. An unmarried partner will receive no share of an estate on their partner’s death, whether or not the couple have children, and however long they have lived together. Even if a couple have lived together for 20 years and have several children together, the deceased is treated as a single person, and the partner receives nothing.

A court can be asked to award a share of the estate to the partner in these circumstances. However, embarking on such litigation is likely to be costly and stressful, and the outcome will be uncertain.

It remains vital for unmarried couples in particular to ensure that a valid Will is in place at the time of death, and not to rely on automatic provision being made by law.

The 2014 Act does update the law of inheritance to a degree, but the law inevitably fails to keep pace with the variety and complexity of modern day families.

AMD Solicitors’ Private Client Department includes full members of “STEP”, the Society of Trust and Estate Practitioners, the leading awarder of specialist accreditation in this field. For advice on wills, trusts, the administration of deceased estates and all private client issues contact Claire Nelson or another member of the team on 0117 9621205, email or call into one of our four Bristol offices.

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This article is provided for general information purposes only and represents our understanding of the relevant law and practice as at the date of uploading. This article should not be relied upon as legal advice pertaining to any specific factual situation. Legal decisions should be made only after proper consultation with a legal professional of your choosing.

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