Here we revisit the statutory rules of intestacy and the importance of making a Will in spite of promising draft legislation which seeks to give unmarried cohabitants rights on intestacy.
Earlier this month the Inheritance (Cohabitants) Bill (“the Bill”) was introduced as a Private Members’ Bill for the second time by Lord Lester of Herne Hill. The Bill, which is virtually identical to the draft Bill published by the Law Commission in December last year, seeks to provide new rights for a particular class of cohabitants on intestacy and extend their existing rights to make statutory claims for reasonable financial provision.
A person dies intestate if he or she dies without leaving a valid Will disposing of the whole of his or her property. In such circumstances, the distribution of any property owned by the deceased is governed by a set of legal rules known as the intestacy rules. This basic legal framework sets out the entitlement of family members to the deceased’s estate.
At present, if a person dies intestate leaving a surviving spouse or civil partner and children and the value of the estate exceeds £250,000, then the spouse or civil partner will inherit all the deceased’s personal belongings, the first £250,000 of the estate outright and a life interest in half of the remaining estate. The other half of the residue will pass to the children (or grandchildren by substitution) in equal shares. The life interest enables the surviving spouse or civil partner to receive the benefit of one half of the residue during his or her lifetime. Essentially, the survivor is entitled to the income generated by half of the remaining estate during his or her lifetime but does not have a right to the capital itself. Instead, the capital passes to the children in equal shares on the death of the surviving spouse or civil partner.
If the estate is worth more than £450,000 and there are no surviving children but the deceased was survived by other close relatives such as their parents, brothers, sisters, nieces or nephews, then in addition to the deceased’s personal belongings the surviving spouse or civil partner will inherit the first £450,000 of the estate together with one half of the remainder outright. If the estate is worth less than £450,000 the spouse or civil partner will receive the whole estate.
Where the deceased does not leave a surviving spouse then the children of the intestate person will inherit the entire estate regardless of how much it is worth. The estate passes to deceased’s close relatives in the event that there are no children, but if there are no such surviving relatives then the Crown will inherit the deceased’s estate. This is known as bona vacantia.
Evidently, married couples will obtain the best protection through making Wills since the intestacy rules do not always provide a favourable outcome for the survivor, who may end up sharing a substantial part of the estate with other relatives if there are no children. Nonetheless, however inadequate the intestacy rules may appear, there is at least some automatic provision for married couples in the absence of a valid Will. Currently, unmarried cohabitants have no right to inherit under the rules of intestacy. If a deceased cohabitant fails to make a valid Will then his or her surviving partner’s only hope is to apply to court for reasonable financial provision from the estate. As always, litigation can be costly and protracted which makes it a particularly unappealing option to pursue during a time of bereavement.
The draft Inheritance (Cohabitants) Bill contains provisions that would give certain unmarried partners who have lived together for 5 years the right to inherit under the intestacy rules. Where the couple have had a child together, this entitlement would accrue after 2 years cohabitation if the child was living with the couple when the deceased died. Although these new provisions have been endorsed by the Law Commission, it is unknown how and when the government will substantively respond to these recommendations. Even if the Bill is approved it may well be some time before the proposed legislative changes are actually implemented, so it is essential for unmarried couples wishing to make provision for each other on death to plan carefully by making Wills and ensuring that they are reviewed regularly.
If you require any further information about the issues raised in this article please contact Ian Bradshaw (firstname.lastname@example.org), or any other member of Goodman Derrick LLP’s Private Client team on 0207 404 0606.
This guide is for general information and interest only and should not be relied upon as providing specific legal advice.
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