Given that the law regarding intestate succession dates back to 1925 and the rules allowing certain individuals to claim provision on death date back to 1975 (under the Inheritance (Provision for Family and Dependants) Act 1975) unsurprisingly the Law Commission´s view is that the inheritance law needs to be brought up to date to meet the needs and expectations of modern families.
Despite the fact that under English law individuals are free to leave their estate as they wish under their Will (there are no forced heirship rules such as those which apply in certain European countries as well as in Scotland), every year tens of thousands of people die without a Will.
Intestacy
The key proposals with regards to intestacy are as follows:-
- It is provisionally proposed that where a person dies intestate survived by a spouse but no descendants, the whole estate should pass to the spouse, whether or not there are other family members living. This would mean that the surviving spouse would no longer have to share the estate with parents or brothers and sisters of the deceased.
- Where there are also surviving children or other descendants, the Commission recognises that the position is more complex. However, given the current limits (ie the surviving spouse being entitled to everything up to maximum of £250,000 with the amount over this figure divided and shared with the children) in practice apparently at least 9 out of 10 surviving spouses inherit the whole of the estate and it is only in the wealthiest 10% of estates that children are likely to inherit anything. In view of this, one reform option that is suggested is to give the surviving spouse the whole estate in every case. However, when similar reform was recommended in 1989, it was not implemented because of concerns that some children would be disinherited, particularly where a parent had remarried.
- The Commission recognises that there are valid concerns about children inheriting and therefore they suggest a number of options for reform on which they want to consult. The options are:-
- no change to the current law;
- reform to eliminate the need for the expense and complexity of life interest trusts; and
- a reform that takes account of whether the surviving spouse owned the family home jointly with the deceased.
Co-habitants
The next set of proposals concerns co-habitants. At the moment, where a couple live together without getting married or forming a civil partnership and one of them dies, the survivor has no automatic right under the current intestacy rules to inherit any part of the deceased´s estate. This is the case no matter how long they have lived together and even if they had children together. In some circumstances a surviving co-habitant can go to court to challenge distribution of a deceased partner´s estate under the family provision legislation.
The Commission recognises that having to go to court will often be emotionally and financially draining. They therefore propose to reform the intestacy rules so that in some circumstances a surviving co-habitant can share in a partner´s estate without having to go to court. The Commission poses the questions which co-habitants should qualify for inclusion under the proposed rules and what they should receive. The provisional proposal is that couples who have had a child together, or have lived continuously as a couple for more than five years, should have the same rights on intestacy as spouses.
The next proposal considers childless relationships of less than five years. The provisional proposal is that where a couple have lived together for more than two but less than five years, the survivor should be entitled to half of the share of the estate that the surviving spouse would have received.
Other areas highlighted for potential reform include:-
- trusts for children on intestacy and the effect of adoption on the child´s entitlement
- family provision claims by adult children
- the distinction made in the intestacy rules between full brothers and sisters and half brothers and sisters
- the criteria to be met by dependants applying for family provision, and
- family provision claims where the deceased did not have his permanent home in England or Wales
Comment
It is surprising that in this day and age there are still huge numbers of people who have not made a Will and who believe that on their death their spouse would inherit everything. Whilst there is no substitute for a well drafted Will, it is encouraging that the law makers are considering reform of the existing rules.
The full set of documents can be found on http://www.lawcom.gov.uk/intestacy.htm
This article is believed to be accurate but is not intended to provide a basis of knowledge upon which advice can be given. Neither contributing or sponsoring organisations, Technical Connection Ltd, the CII or the PFS or any of the officers or employees of these organisations accept any responsibility for any loss occasioned to any person acting or refraining from action as a result of the material included in this bulletin. Any opinions expressed are those of the author or authors and not necessarily those of the CII or the PFS.
© Personal Finance Society and contributors
Source:
This article was originally published at http://www.cii.co.uk/knowledge/pfsprotection/2009_12PROTF.php
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