The Inheritance and Trustees’ Powers Act 2014 (the Act) received Royal Assent on 14 May 2014 and came into force on 1 October 2014. This Act made substantial changes to the manner in which a deceased person’s estate is treated in the event that he or she dies intestate (that is, if he or she dies without having made a valid will disposing of his or her property).
It also made substantial changes to the way in which claims for family provision can be made by certain family members and dependants of a deceased person (whether or not they left a will) under the Inheritance (Provision for Family and Dependants) Act 1975.
Amendments to the Intestacy Rules
Under the old intestacy rules (contained principally in Parts 3 and 4 of the Administration of Estates Act 1925), the surviving spouse or civil partner of an intestate with an estate worth over £450,000 but no issue would only have inherited all of any balance over £450,000 if the deceased had no surviving parents or siblings. Under the new rules, however, the surviving spouse or civil partner of an intestate who dies after 1 October 2014 receives the whole estate in all cases where there are no issue.
The way in which assets are distributed in cases where an intestate has died leaving a spouse or civil partner and issue has also been simplified. Under the old rules, the spouse or civil partner of an intestate leaving an estate of over £250,000 would receive only a life interest (a right to the income) in half of the remainder of the estate above £250,000. This would then pass to the issue of the deceased upon the death of the deceased’s spouse or civil partner. The other half would pass straight to the issue of the deceased on statutory trusts. The new rules simply allow the spouse or civil partner of the deceased to take £250,000, plus half of any balance above £250,000, absolutely with the other half of any balance above £250,000 still going to the issue of the deceased on statutory trusts.
The surviving spouse or civil partner is still entitled to the chattels (personal possessions) of the intestate absolutely under the new rules, however the definition of ‘chattels’ has been narrowed and now excludes any tangible or moveable property held at the death of the intestate solely as an investment.
The Act also amends rules that currently disadvantage unmarried fathers when a child dies intestate, and protects adopted children from the risk of losing an inheritance from a parent who died intestate in the event that they are adopted after the death of that parent.
Amendments to the Inheritance (Provision for Family and Dependants) Act 1975
The Act amends the Inheritance (Provision for Family and Dependants) Act 1975 so that a person may be considered as maintained by the deceased (and may therefore be eligible to make a family provision claim against the deceased’s estate) if the deceased made a ‘substantial contribution’ to that person’s reasonable needs. This replaced the previous requirement for ‘full valuable consideration’ to have been given to the dependant. This means that there is no longer need for a ‘balance sheet test’ in order to establish that the deceased contributed more to the relationship than the applicant, which can block claims in cases of mutual dependency. Furthermore, a person may be able to bring a claim if they were treated by the deceased as a ‘child of the family’ not only in respect of any marriage or civil partnership to which the deceased was at any time a party but also in respect of any family in which the deceased had a parental role.
Finally, the Act introduces the concept of a ‘single parent family’, so that an applicant can now also be treated as a child of the family even if that family only consisted of the deceased and the applicant.
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