The 2014 Inheritance and Trustees Powers Act changes some of the rules governing how estates should be dealt when somebody dies, whether or not they left a Will.
The new rules for example allow Trustees a little more discretion and they favour spouses and civil partners a little more in what they will inherit, should the deceased leave no Will.
Below is a brief guide to the key points, but if you would like further advice about your particular situation (provided in plain English!), please get in touch straightaway.
Intestacy Rules: estates where there is no Will
The act simplifies the distribution of assets where the deceased dies without leaving a Will.
For deaths after 1st October 2014:
- If the deceased dies leaving a spouse or civil partner but no issue (children or remoter descendants), then they will now be entitled to the whole estate. There is no entitlement (as previously) for the deceased’s other relatives such as parents or siblings.
- If the deceased dies leaving a spouse or civil partner and issue, then the surviving spouse or civil partner receives the following:
- Personal chattels
- A fixed sum, currently set at £250,000.00
- ½ share of the residue of the estate (previously the spouse was only entitled to a life interest)
The other ½ share of the residue will be held on trust for the deceased’s issue.
- If the deceased dies without leaving a surviving spouse or civil partner then the rules remain the same as before. Please see our intestacy rules flowchart for further information.
- There is a new more modern definition of ‘Personal Chattels’ inserted into the Administration of Estates Act 1925. Note that the new definition will also apply to Wills. However, if the Will was executed prior to 1st October 2014 then the new definition will not apply. Please contact our Private Client Team if you wish to incorporate the new definition into your Will.
The act is helpful in that it simplifies and modernises the perhaps out of date rules. However, these new rules are by no means a substitute for making a Will! Please remember for example, that the intestacy rules continue to make no provision at all for unmarried partners.
- Trustees have powers and duties by law. These duties apply unless amended by the Will or Trust Deed. Two such powers that were frequently amended were s.31 and s.32 of the Trustee Act 1925.
- s.31 provides that the trustees can apply the income of a trust fund for the education, maintenance or benefit of a beneficiary who is under the age of 18. However the act currently provides a lengthy list of things that the trustees must consider when exercising this power so as to limit the discretion of the trustee. Most modern Wills and Trusts amend s.31 to give the trustees unrestricted discretion as to how to apply the income. The new Act removes the list of things to consider ‘the proviso’ in line with modern practice.
- s.32 Trustee Act 1925 gives the trustees power to apply up to half of the beneficiary’s share of the capital of the trust fund before he/she is entitled to it. For example, if a fund is held on trust for a beneficiary until they reach the age of 25, the beneficiary is not entitled to the capital (but is entitled to income) until they reach the age of 25. s.32 allows up to half of the capital to be paid over early if appropriate. Most modern Wills and Trusts amend this provision to allow all the capital to be paid over. Again, the new act mirrors this in line with modern practice.
Whilst the changes to s.31 and s.32 reflect what most people have in their Wills, it is a welcome change so far as the intestacy rules are concerned, as the intestacy rules do not extend the powers.
Inheritance (Provision for Family and Dependents) Act 1975
Where someone has died without leaving anything (or a sufficient amount) for someone such as a close relative or dependant in their Will (or indeed where there is no provision because the deceased has died intestate), it is possible for that person to make a claim against the estate on the grounds that they have not been left reasonable financial provision. The rules are complex and each case turns on the individual facts.
Some of the key changes contained in the 2014 act are in summary as follows:
- It is now clear that you do not need to wait for a grant of probate/letters of administration before issuing a claim
- The act expressly includes as potential applicants step-children where the step-parents are not married or are single parents
- The act removes the need for the ‘balance sheet test’. An applicant no longer needs to show that the deceased contributed more to the relationship than the applicant did, this is of particular importance in cases where the deceased and their spouse/partner were dependent on each other.
The 2014 Act makes numerous other changes and whether or not these changes will affect you will depend on the individual facts of the case.
If you feel that you should make a claim against an estate or if perhaps you are an executor facing a claim against the estate, then we strongly suggest that you seek advice. Please contact us and we will be more than happy to help.
Hayley is Associate Director and Head of Wills, Probate & Trusts at Verisona Law.
Hayley has a particular interest in dealing with the administration of estates and associated tax matters. She has worked on a wide variety of cases, including some notably high value estates and she regularly provides advice to clients regarding Wills and Lasting Powers of Attorney.
Hayley is a member of Solicitors for the Elderly and the Society of Trust and Estate Practitioners (STEP).
Hayley graduated from Southampton University in 2007 with a 2:1 in Law and went on to study her Legal Practice Course at the College of Law, Guildford. This she passed with a distinction the following year.
Hayley is a fully qualified member of STEP (the Society of Trust and Estate Practitioners), meaning that she is a specialist in this area of law.
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