The statutory legacy on intestacy has been increased by the government. From July 26, 2023 when a person passes away without writing a will, and leaves behind a spouse and children, the spouse will now be entitled to a statutory gift of £322,000 (up from £270,000), along with personal property and half of the remaining estate. The other half of the leftover money will go to the children.
In England and Wales, harsh inheritance regulations known as the rules of intestacy take effect when a person passes away without a valid will. Unfortunately, 33% of persons over the age of 55 in the UK do not have a will, which means they will pass away intestate.
The Administration of Estates Act of 1925 lays out the intestacy laws and specifies who exactly inherits under it, sort of like an order of priority. The closest family members are mentioned first, followed by those who are far away, and ultimately the Crown.
The intestacy laws do not support contemporary family structures. For instance, they don’t allow for unregistered and unmarried partners. They do not recognise stepchildren, despite the fact that they frequently have a legitimate claim, and only recognise natural and adoptive children for the purposes of inheritance.
The average cost of a home in the UK was £285,861 as of May 2023. If a married couple with children possessed a home that was only in the name of the deceased person, accordingly the spouse would receive the first £270,000 of the current amount and the remaining amount would be split equally between the spouse and the children.
However, the amended Statutory Legacy now permits the whole worth of a typical house to be transmitted to the surviving spouse with the increased threshold of £322,000. As a result, there is no longer a need to sell the property, which benefits those who have neglected to make a Will.
What does intestacy mean for the relatives that are still alive?
- Sharing assets with the surviving spouse may not be desired if the children are not all from the same marriage/relationship, especially if it involves sharing a home or rental income.
- If the estate is substantial, the portion going to the children can be subject to inheritance tax. Joint assets, which automatically go to the survivor, are excluded from this. Where there are no surviving offspring, everything belongs to the surviving husband. Children will inherit everything equally if the decedent is the only survivor.
- If there are no surviving spouse or children, the estate is first divided among the remaining parents. If there are no parents, then siblings are next; if there are no siblings, then aunts and uncles from both the maternal and paternal lines, or their offspring (i.e., cousins, etc.), are next.
- Couples who live together do not automatically have the right to inherit from each another. If they had been living together for at least two years they would be entitled to file a court application for a provision out of the estate. This is not a simple and a very expensive process, so it is essential for cohabiting couples to create a Will.
- If a single individual passes away with a partner but no will, the law may require that their estate pass to their parents. However, kids will still inherit legally and be required to participate in the estate administration if the parents are divorced or if one of them may have been absent.
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