Changes in the Rules Surrounding Intestacy?

The current rules surrounding dying without a will (or “intestate”) are complicated to say the least.  In fact it is a subject that’s attracting attendees to seminars we’re holding at our Ludlow office, where we’re endeavouring to make this difficult subject relatively easy to understand.

So of course, I was interested to learn about possible changes to the Rules of Intestacy, and that Professor Elizabeth Cooke from the Law Commission, spoke on BBC Radio 4’s Money Box programme at the weekend, about these proposals. 

The Law Commission’s consultation document on proposed reforms is not due to be published until the end of February 2010. However, it seems that, if the Law Commission proposals were implemented in full, the effect would be a major change in succession law in England and Wales for both married and unmarried couples. When I mention married couples, I am also referring to Registered Civil Partners.

I know I am in danger of labouring the point. Nevertheless, I am staggered at just how many people really do believe that if something happened to them, all of their estate would just automatically pass to their spouse or partner.  As I say, the rules are complicated but (depending on the value of your estate and/or your matrimonial status) a close surviving relative, who has had no contact with you, could presently have a valid claim on your estate where you have left no Will.

Currently, if you have children and your free estate is worth no more than £250,000, your surviving spouse will inherit everything. Over £250,000 and very complex rules (often involving trusts) have to be considered. 

Interestingly, Professor Cooke states “our statistics show 90% of estates fall below that £250,000 limit."  Her view is that the complexity should be abandoned completely where there are no children so that (where there is no Will in place) the estate – whatever its size – passes to the surviving spouse. She also thinks that the complexity of the trust (or sharing) arrangements should be reduced where there is a surviving spouse and children.

But, the most radical proposal has to be that which would see co-habiting couples who had children or who had co-habited for more than 5 years being treated as if they had been married.  At present, surviving co-habitees are entitled to nothing under the Intestacy Rules.

In this day and age with fewer people marrying, it is probably the case that the Intestacy Rules need to be reviewed.  . Whether the proposals will be adopted in full remains to be seen. Many will think that they go too far. My personal view is that the state should support those who commit to marriage or registered civil partnership and that these reforms, were they to be implemented in full, would undermine that support. Of course, others may welcome a more simplified approach.

One thing is still certain - we should not be complacent about planning ahead. I believe that in many ways these proposals would make it even more important to consider who you want to inherit your assets, whether these are financial, jewellery or family heirlooms.  The only way to ensure your wishes are followed when you die is to make a valid and legal Will.