Inheritance rules set for reform

Measures designed to amend how an estate is divided where someone has died without making a will have taken a step towards becoming law.

The Inheritance and Trustees’ Powers Bill was introduced into the House of Lords on 30 July, implementing many of the reforms recommended by the Law Commission in a report in 2011. It will now be debated in the Lords on 22 October.

With research suggesting that between half and two-thirds of the adult population do not have a will, the Bill is designed to reform intestacy laws so that they better reflect the needs and expectations of families.

Under intestacy law, the money and other assets of someone who has died without leaving a will are distributed to surviving family members in a strict order and in defined proportions.

Whether or not the deceased left a will, certain family members and dependants may apply to the courts for reasonable financial provision from the estate – known as family provision – and the Bill also introduces reforms in this area. Its measures include:

  • where a couple are married or in a civil partnership, assets will always pass on intestacy to the survivor where there are no children or other descendants
  • simplifying the sharing of assets on intestacy where the person who died was survived by a spouse and children or other descendants
  • protecting children from the risk of losing an inheritance from a parent who dies if they are adopted after the death
  • amending rules that disadvantage unmarried fathers when a child dies intestate • removing obstacles to family provision claims by dependants of the dead person or anyone treated by them as a child outside the context of a marriage or civil partnership
  • permitting family provision claims in certain circumstances where the deceased dies while domiciled outside England and Wales but leaving property and family or dependants here.

However, the Government has decided not to implement a draft Inheritance (Cohabitants) Bill, also based on Law Commission recommendations, that would have given certain unmarried partners the right to inherit on each other’s death under the intestacy rules after living together for five years or, where they have a child, after two years, providing the child was living with them at the time of the death.

While the reforms are useful, there will continue to be many situations where the rules do not result in a division of the estate in line with that which the deceased person might have desired and many families could be spared a great deal of emotional and financial distress if more people were simply to make a will.

A will ensures that your estate will be distributed as you want it to be – not as the intestacy rules dictate – and makes it less stressful and more straightforward for family members to settle your affairs at a difficult time. Making a will is not an expensive exercise and the cost involved represents one of the most important investments you can make in your family’s future financial security.

For more information on making and revising a will, please visit our website or contact one of our fee earners.