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Updated Intestacy Rules

View profile for Esther Woodhouse
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The Administration of Estates Act 1925 (as amended by the Trustee Powers Act 2014) (Fixed Net Sum) Order 2023 came into force on 26th July 2023, amending the statutory legacy under the Intestacy Rules (‘the Rules’) to which the surviving spouse/civil partner is entitled to inherit from the deceased estate, where surviving children exist.

What are the Intestacy Rules?

By way of background, when someone dies without having made a Will during their lifetime they are said to have died ‘Intestate’, and the administration of their estate is dealt as a full intestacy, which contrasts with someone having made a Will who is said to have died ‘Testate’.   A partial intestacy could also arise even if a Will exists, but for some reason the Will may have failed (e.g., where there are no surviving Executors, or all the Executors have decided they wish to renounce and nobody else is appointed in the alternative).

The Rules determine who, in order of priority, can act in the administration and determines the rightful heirs, by consideration of the Family Tree.  Where there is a partial intestacy, the Rules can be useful to provide certainty and a framework, although if a Will exists the terms of the Will may still take priority, to ensure the Testator’s wishes are being honoured.

Where there are no surviving children, the residuary estate (i.e., all assets after the settlement of estate liabilities) is held for the surviving spouse/civil partner absolutely.

The Statutory Legacy applies where surviving children exist and seeks to protect the interests of the spouse/civil partner balancing their needs against the interest of the deceased’s children. In those circumstances, all personal chattels would be inherited by the spouse/civil partner as well as the statutory legacy, and ordinarily the balance of the residue would be split 50:50 with the deceased’s children.

What has changed?

The statutory legacy has been increased from £270,000 to £322,000, having last been increased on 6th February 2020.  This is a substantial increase, triggered by the increase in the consumer prices index from December 2022, which at the time was a rise of 15% above the Bank of England base rate.

Why the Intestacy Rules means making a Will is so important.

It’s staggering that around 54% of the UK adult population (68,992,721 as of 1st January 2023) are said not to have made a written Will.  This means their estates will be distributed in accordance with the Intestacy Rules. This could leave their estates to family members who perhaps would have not inherited had thought been given to a Will and very often gives rise to a risk of claim(s) being brought against their estates, thus depleting the funds available for distribution. The Rules also create a clear split of assets between the spouse/civil partner and children which may not have been the intended wish of the deceased - so why create these risks?

It is appreciated that the costs of making a Will are always important considerations and at Roythornes our Wills are bespoke to our client’s individual circumstances to ensure their wishes are adhered when the time comes for their estates to administered.

Having a Will in place gives certainty to you and your nearest and dearest and should never be underestimated how important making a Will can be.