From 6 February 2020, the statutory legacy for the surviving spouses of those who die intestate will increase from £250,000 to £270,000. The new rules dictate that if the deceased has children, their surviving spouse will inherit receives the first £270,000 of the estate, all personal possessions and 50% of the remaining estate; the other 50% is divided equally between the children or their descendants, if a child predeceases. The change is in keeping with the government’s promise to update the intestacy rules every five years and the increase is in line with the consumer price index. This update is welcomed but it does serve as a good opportunity to highlight the shortcomings surrounding the rules of intestacy as a whole.
The intestacy rules set out who will benefit from an estate when there is no will. Many people mistakenly believe that everything will pass over to the surviving spouse but as the above scenario highlights, this is not always the case. The rules fail to account for the true wishes of the deceased and do not recognise any entitlement for unmarried partners, step-children or close friends to inherit creating the ideal foundations for post-death disputes. In conjunction with the risk of inequity, the intestacy rules can create an inheritance tax liability where there need not have been one if part of the estate passes to chargeable beneficiaries (children, grandchildren etc) instead of the whole estate passing to the surviving spouse who is an exempt beneficiaries.
The importance of writing a legally valid will with the assistance of a suitably qualified professional cannot be overstated to ensure the deceased’s wishes are recognised and to minimise conflict at a time when loves ones are grieving. It also gives an opportunity to consider any potential inheritance tax issues that may arise and to engage in mitigation planning if appropriate.
The Private Client department at Neves deal with all types of family arrangements and would be able to give comprehensive advice regarding your Wills. We’d be happy to hear from you with your enquiries and would urge everyone with an asset, regardless of their age, to make a Will in order to protect their estate for their loved ones.