Most people assume that if we die without making a will, then everything will automatically pass to our husband/wife/partner. Actually, that may not be the case. There are specific rules about when and who your assets pass to, and unless you know all the rules, you may be surprised by what’s going to happen.
February 2020 – The intestacy rules have been updated to allow a surviving spouse or civil partner to inherit more of their deceased partner’s estate. From today the amount of the fixed sum will go up from £250,000 to £270,000. Intestacy is the rules that are in place to deal with the estate of someone who dies without making a will.
In 2014 the government fixed £250,000 as the amount a spouse or civil partner could receive under the intestacy rules. The fixed amount is what is known as the ‘statutory legacy’. This figure is meant to be updated every five years.
The increase in the amount of the statutory legacy is not retrospective. The increased legacy will only apply to deaths occurring from 6th February 2020. Up to that date, the lower amount of £250,000 will apply.
What happens to the rest of an estate over the value of £270,000? For any remaining estate value, 50% of the balance passes absolutely and equally between any children (including illegitimate and adopted children, but not step-children) and the remainder passes to the spouse.
The changes made to the intestacy rules over the last decade do very little to avoid families finding themselves in difficulty when a spouse or parent dies intestate, and co-habiting (un-married) partners are not entitled to any inheritance from their partner under the intestacy rules.
The better solution is still for everyone to make a Will. In your will, you get to choose what you leave to who. You choose who is going to be the guardian of your children, and who is going to manage money for them as Trustees. Who is going to act as your executor and deal with the administration of your estate. You decide if you want to leave gifts or residue to your non-married partner, friends, wider family members or your favourite charity. You can even choose to exclude someone you don’t wish to inherit. If you don’t make a will, the intestacy rules set by the government, is what will happen to what assets you have accrued over your lifetime. Isn’t it better to choose your own rules?