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Amendments to intestacy and reasonable provision rules in England and Wales

Monday, 29 September, 2014

The rules of intestacy in England and Wales change this week, with the coming into force of the Inheritance and Trustees' Powers Act 2014 on Wednesday 1 October.

The main effect of the act is to abolish the life interest trust of the spouse established by the Administration of Estates Act 1925. In future, the surviving spouse of an intestate with children will get the GBP250,000 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.

Furthermore, the act provides that the spouse of an intestate without issue will, in future, inherit the whole estate.

The Law Society (England and Wales) notes that both of the new rules apply even to estranged spouses or civil partners. This, it says, makes it even more necessary for people to instruct a solicitor to prepare a will.

The Daily Telegraph quotes Matthew Evans, a partner at Hugh James Solicitors, warning that the new rules may give too much priority to the surviving spouse. This may especially be the case when there has been a second or third marriage.

There are also some changes to the definition of 'personal chattels'. The new definition covers all tangible movable property except for money, securities for money, property used mainly for business purposes, or property held solely as an investment.

The act also makes some modest amendments to the Inheritance (Provision for Family and Dependants) Act 1975. These amendments may make it easier for some cohabitants to make a reasonable provision claim under the 1975 Act.

The new wording is obscure, but essentially implies that a claimant who was being maintained by the deceased immediately before their death will no longer have to show that the deceased contributed more to the relationship in financial terms than the applicant did. This will remove the 'balance sheet test' that can currently block claims in cases of mutual dependency, typically involving cohabitants. It also removes the requirement that the deceased had formally assumed responsibility for the claimant's maintenance.

  • The new act also frees trustees to apply income and capital with more discretion than the Trustee Act 1925.

Sources