The rule changes won’t affect people who die with less than £250,000 in assets but for those with more (and this number is growing with the increase in property prices), they could have a crucial impact on the people they leave behind.
The biggest change is for married couples and civil partnerships without children:-
Before 1st October 2014
Under the old rules, if a spouse died intestate and there were no children, then the first £450,000 of the estate, plus half of the rest went to the surviving spouse. The other half was split between the deceased’s blood relatives, which often meant the money went back to the parents.
For example: George dies suddenly from a heart attack leaving £750,000. His wife Olive would have received £600,000 (made up of the first £450,000 plus 50% of the rest or £150,000). George’s father has died but his mother is still alive. She would get the remaining £150,000.
After 1st October 2014
The surviving spouse (Olive in the example above) will receive the whole £750,000. Parents and aunties etc. won’t receive anything.
There are also some important changes to what happens if a married/civil-partnered couple have children:-
Before 1st October 2014
The married partner inherited everything up to £250,000 and everything above that was shared out in accordance with the intestacy rules. Firstly, the children would receive half of the balance above £250,000 immediately (or held in trust until the age of 18). Secondly, the other half would also go to the children but the surviving spouse would also have a “life interest” in the money while he/she remained alive. The life interest meant he/she could take income from the money, but not the capital.
After 1st October 2014
The life interest is abolished. The surviving married partner will inherit all of the first £250,000 and then be fully entitled to half of the remainder. The children will get half of anything above £250,000.
The Act also has made some changes to the definition of “personal chattels”. The new definition covers all tangible movable property except for money, securities for money, property used mainly for business purposes, or property held solely as an investment.
The new rules also eliminate a legal anomaly that affected adopted children. Under the old rules, if someone died leaving a child under the age of 18 who was subsequently adopted by someone else, there was a risk that the child would lose their inheritance from their natural parent. However, the new rules have closed that anomaly so there is no longer a risk of a child losing their inheritance after the death of their natural parent.
To ensure your assets are passed onto those you wish to inherit, it is essential a Will is made. If you haven’t yet made your Will, think of your loved ones and call us today on 01926 491181 for your own peace of mind.