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I’ve got some exciting news for you – as of 26th July 2023, the rules of intestacy have changed. Stop the presses!
Don’t actually stop the presses, it’s not as exciting as it sounds. But it’s definitely worth knowing – especially if you don’t have a Will in place yet.
What are the rules of intestacy?
I think I can safely assume you know what a Will is, but just to avoid any doubt: it’s a legal document that lets you decide who gets your stuff when you die. With a Will, you get to choose who inherits your possessions. But not everyone has a Will.
If you die without a Will (known as dying intestate), your estate is subject to the rules of intestacy. The Government decide who inherits your stuff. It’s basically a list of your closest blood relations in descending order. They go down the list until they find the closest living relative, and that’s who gets your stuff. This graph should make it a bit clearer for you.
If you’re married or in a civil partnership, your spouse will always get the bulk of, if not all, of your assets. According to the old rules of intestacy, a spouse always inherits the first £270,000 of their partner’s estate. This is known as the statutory legacy sum. If the estate is worth £270,000 or less, the spouse gets everything.
If the estate is worth over £270,000, then the value exceeding £270,000 is split between the spouse and children – 50% to the spouse again, with the other 50% divided equally between the children. If you don’t have children, everything goes to the spouse.
But the rules of intestacy are changing!
As of 26th July 2023, the statutory legacy sum has changed.
The sum your partner is automatically entitled to is being raised from £270,000 to £322,000.
So, say you have a spouse, two children, and you die intestate with an estate worth £600,000. Under the previous figure (£270,000) your spouse would inherit the first £270,000, then 50% of the remaining sum. They’d end up with £435,000 (£270k + 50% of the remaining £330k). That would leave £165,000 to be split evenly between your children, so they’d get £82,500 each.
Under the new figure (£322,000) your spouse would inherit £322,000, then 50% of the remaining sum. They’d end up with £461,000 (£332k + 50% of the remaining £278k). That would leave £139,000 to be split evenly between your children, so they’d get £69,500 each.
The flowchart now looks like this:
How will the changes to the rules of intestacy affect me?
The changes to the rules of intestacy aren’t exactly earth-shattering, but they’re worth knowing. They could have some knock-on effects that might impact you.
Obviously it means that if you die intestate, your spouse will inherit a higher share of your estate (at the expense of your children). If you don’t have children or aren’t married, the changes won’t affect you in that regard.
Interestingly, the changes might mean that the spouse of someone who dies intestate has a reduced Inheritance Tax bill. In most cases, when passing on to a spouse or civil partner, the statutory legacy sum is exempt from Inheritance Tax. With the changes, a spouse is entitled to the first £322,000 of their partner’s estate tax-exempt.
While that’s undoubtedly a good thing, it doesn’t really change the fact that you still need a Will. It’s the safest way to make sure your nearest and dearest are provided for once you’ve died.
The rules of intestacy are a last resort. You shouldn’t leave it up to the Government to decide where your stuff goes when you die. They don’t take personal circumstance into account and they go by the exact letter of the law.
It’s handy to know that your spouse would inherit the first £322,000 of your estate tax-free, but what good is that if you haven’t married yet? What if you’re married but you’ve split up and haven’t officially divorced? What if those you consider family aren’t related to you by blood?
Regardless of the fact the rules of intestacy are changing, you need a Will. And, luckily for you, we’re more than happy to help you make one. Just give us a call on 0330 229 0331, drop us an email on email@example.com, or click the button below. One of our experts will be able to talk you through all your wants and wishes, meaning that your stuff goes exactly where you want it to go – not where the rules of intestacy decide for you.