From today, the estates of people who die intestate, or without a will, are to be divided differently.
Major changes in the Rules of Intestacy, which determine what happens to a person’s estate if they die without a will, come into force in England and Wales today (Wednesday).
The major change is if a person who is married or in a civil partnership dies intestate (without a will), their entire estate will now automatically pass to their direct family.
However, couples who aren’t married or in a civil partnership and who don’t have a will still don’t automatically receive anything from their partner or spouse’s estate.
There are several key changes to the rules.
Couples with no children
Previously, in the case of couples with no children, the spouse or partner would inherit the first £450,000 of the estate plus interest, half of any remaining value and the deceased person’s personal property, known as chattels. The remainder would then go to any surviving blood relatives such as parents or siblings. Now the entire estate passes to the surviving spouse or civil partner.
Couples with children
In the case of couples with children, previously the spouse or civil partner would take the first £250,000 of the estate and all the deceased’s chattels. They would also have what’s known as a ‘life interest’ in half of any remaining balance, where they are entitled to use a property or use an income for their rest of their life. The children would take the other half. Now, the spouse or civil partner receives the half of any remaining amount as a cash sum upfront, with the rest still going to the children.
Personal property or chattels
As these laws haven’t been revised since 1925, there are plenty of archaic descriptions of what chattels might be included, such as carriages and scientific instruments.
The new laws now define chattels as “anything that is not monetary, business assets or held as an investment”. Experts say the latter definition is too ambiguous and could lead to arguments among families as to what is an investment.
Adopted children
A child can still inherit part of an estate via intestacy, even if he/she is then adopted. And a person who is “treated as a child of the family” is also able to make a claim.
The amount that can be inherited by the spouse or partner
Previously, the amount the surviving spouse or partner received when someone died intestate was fixed at either £450,000 or £250,000 depending on whether or not they had children. This is known as the statutory legacy. Now this amount will be reviewed every five years in line with the Consumer Prices Index measure of inflation and rounded up to the nearest £1,000.
The importance of making a will
While these changes are an improvement, they still don’t eliminate the need to make a will if you want to ensure your estate goes to certain people. This is obviously especially true if you’re not married or in a civil partnership or if you have partners or children from other relationships.
Making a will also means your family isn’t left dealing with paperwork of intestacy after your death, trying to second guess your wishes. In addition there’s the prospect of your loved ones paying inheritance tax on your estate if you haven’t planned properly.
Nearly two-thirds of people do not have a will, according to new research by the Co-operative Legal Services.
You can get a solicitor to write your will or do it yourself if your finances are fairly straightforward. There’s more information in our guide Making a will.
Make a digital copy of your will and other vital financial documents with our new Plans service
More on planning for the future:
How to work out how much you need to save for retirement
How to get a State Pension forecast