The New Intestacy Rules from 1 October 2014

Q:    What do Picasso, Jimi Hendrix and Abraham Lincoln all have in common?

A:    They all died Intestate.

A copy of one of Picasso's classic pieces hangs in a meeting room at our Shrewsbury office

Pablo Picasso died in 1973 at the age of 91. He left behind a fortune in assets that included artwork, five homes, cash, gold and bonds. It took six years to settle his estate which was eventually divided amongst six heirs at a cost of $30 million.

Jimi Hendrix died in 1970 but the battle over his estate raged on for more than 30 years because he left behind no Will regarding the distribution of his estate. To further complicate matters, the estate of musicians and other artists continue to generate money long after their deaths.

Abraham Lincoln has the distinction of being the First President to be assassinated as well as to die intestate. The irony is that he was a lawyer himself!

I guess the moral of these stories is that, famous or not, everyone should have a Will. Leaving behind a Will can save your family a lot of heartache and a lot of money.

If you die without making a valid Will, the Intestacy Rules apply. These dictate who administers your estate, who inherits from the estate and how much they will receive. It is almost certain that these rules will never reflect your wishes about how you would like your estate to be divided. They also do not deal with your estate in the most tax efficient way.

On 1 October 2014 the current Intestacy rules will alter.

At the moment, if you die without a Will and leave a spouse or registered civil partner and children, your spouse will receive a statutory legacy of £250,000, all your personal belongings and a life interest in half the residue of your estate. The life interest for the spouse is an arrangement where they are entitled to income from the fund for their lifetime but not capital. The capital drops down to your children (if they are then 18) when your spouse dies. Your children are entitled to the remaining half of the residuary estate at the age of 18.

The new rules will simplify things a bit. If you die without a Will from 1 October 2014, your spouse will be entitled to a statutory legacy of £250,000, your personal belongings and one half of your residuary estate outright. The remaining half of your residuary estate will go to your children when they are 18.

What if you are married or in a registered civil partnership and you have no children?

Presently, if you die without a Will, your spouse will receive a statutory legacy of £450,000, your personal belongings and half of the residue of your estate outright. Your parents would then receive the remaining half of the residuary estate outright. If neither or your parents survive you, your siblings will receive the remaining half of your residuary estate outright.

From 1 October 2014, if you are married or in a registered civil partnership, have no children and do not have a Will, your spouse gets everything. Parents and siblings will get nothing in these circumstances.

These reforms mean that a larger proportion of an estate passes to a surviving spouse outright and the removal of a complex trust structure. That is generally pretty welcome news. But what happens if someone was married more than once and the surviving children from a first or second marriage ultimately inherit a smaller pot of money?

Moreover, these changes to the Intestacy Rules do nothing for your life partner if you are not married to them or their registered Civil Partner. Without a Will in place they receive nothing, either now or from 1 October. It really is essential then that, for your own and your family’s peace of mind, you make a Will.

A Will ensures certainty and sees that your wishes are carried out. Talk to an expert about your estate and how you want everything to be divided up. Our private client team can guide you in producing the best Will to meet your individual needs and objectives. Without a Will the rules of Intestacy apply regardless. Nobody over 18 is ever too young, smart or powerful to make their Will. Call us now on 01743 280280.