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Potential important changes to Inheritance Laws

By Matthew Evans Senior Associate at Hugh James.

Two draft bills published by the Law Commission could potentially change the regulations that apply to the division of the estate of a person who dies without a will. The key changes will affect spouses and co-habitants’ rights to inherit.

Currently, if a person dies without leaving a will and has a spouse or civil partner but no children or grandchildren, under the current law, the surviving spouse receives the first £450,000 of the estate and any personal property. The rest is then divided equally between the spouse in one share and the parents of the deceased in the other or, if there are no surviving parents, the deceased's siblings.

Under the proposed new law, the surviving spouse or civil partner will receive the whole estate, regardless of the value.

If a person was to die leaving a spouse or civil partner as well as children or grandchildren, current law states that the spouse or civil partner receives the first £250,000 plus personal property. The remainder is then divided with half going to the children or grandchildren immediately. The other half would then be placed in trust to provide an income for the surviving spouse for his or her lifetime. Upon death this would then pass to the children or grandchildren.

The proposed new law states, the surviving spouse will still receive a priority lump sum and the remainder is still split. The difference is that the spouse receives his or her half outright as capital, to spend as they please, rather than in trust.

Co-habitants rights to inherit will also be affected by the potential changes to inheritance laws. Currently co-habitees have no guaranteed right to inherit if their partner dies without leaving a will. If this happened they would usually have to bring a claim against the estate under the Inheritance (Provision for Family and Dependants) Act 1975. Such a claim has no guarantee of success and raises the possibility of inter family litigation and large legal costs.

The new bill states that somebody who has co-habited with a person who has died without living a will should be entitled to a part of their estate if they had been co-habiting for a no less than five years immediately prior to death or two years if the couple had a child living with them.

There are further changes predicted which, alongside the two new bills, make the provisions for when an individual does not leave a will more appropriate for the reality of today's society. For co-habitants they will be a welcome development. 

Matthew Evans, Senior Associate at Hugh James solicitors says “Recent research undertaken by the Law Commission shows that approximately 7.5 million people are living in cohabiting families, this represents roughly 15% of all families. Therefore, it is arguably very important that the law changes to provide for this considerable section of the population.”

Mr Evans continues:  “The general purpose behind the proposals is to govern the circumstances where a person dies without leaving a will.  The point that cannot be emphasised enough is that state-imposed inheritances are rarely satisfactory and, in most cases, can be easily avoided if a valid will is made. Taking this simple step enables people to decide at which point their estate passes out of the hands of the state and into their own.”

It remains to be seen to what degree the proposed changes will be adopted into law but, given the extensive consultation process that has taken place, it seems likely that, one way or the other, in the near future there will be a drastic overhaul of the inheritance laws.

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