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Changes to intestacy rules

With effect from 1 October 2014 the rules governing intestacy – how an estate is distributed when a person who has died has not made a will – have changed.

Firstly, if the person who has passed away has a surviving spouse/civil partner and children (or remoter issue), the surviving spouse or civil partner will receive the first £250,000 of the estate plus half of any remaining assets. The other half of the remaining assets will be shared equally among any children, which is a significant change as before 1 October 2014 the children would have inherited all of theremaining assets over the first £250,000.

Secondly, if the individual who has passed away is survived by a spouse or civil partner but has no children (or remoter issue), the entire estate will now go to the surviving spouse or civil partner. Prior to 1 October 2014 the spouse or civil partner would have only received the first £450,000 plus half of the excess over £450,000 – the other half of the excess went to blood relatives in an order set by inheritance tax laws (first in-line being parents or siblings).

The third change is the definition of personal chattels – personal belongings of the deceased which pass to the surviving spouse or civil partner. These now exclude assets held solely as an investment with no personal use at the date of death.

As a reminder, where an unmarried person dies intestate (without a will) their entire estate goes to their closest blood relative. Where there is no such relative the entire estate goes to the Crown.

If you would like to discuss inheritance tax planning in more detail do not hesitate to contact us.

John Poulter