Reform Of The Intestacy Rules, Inheritance Claims And Trustees' Powers

On 30 July 2013, the Government introduced the Inheritance and Trustees' Powers Bill to Parliament. The Bill makes reforms in three main areas:-

to the Intestacy Rules in England and Wales (the rules that apply where an individual dies without leaving a valid Will); to the rules for individuals who want to claim against a deceased person's estate under the Inheritance (Provision for Family and Dependants) Act 1975; and to trustees' statutory power to advance assets to a beneficiary from a trust under s. 32 of the Trustees Act 1925. Our previous update on the draft legislation provides a summary of the main provisions (which you can view here). In brief these are:-

  1. Intestacy Rules

Under the current Intestacy Rules, where the deceased leaves a surviving spouse and children, the spouse receives the first £250,000 of the estate and one half of the remainder on a life interest trust. Under the proposed reforms, the spouse will be entitled to their half of the remaining estate outright, not under trust. Where the Intestacy Rules apply and the deceased dies without children, the spouse at present must share the residuary estate with the deceased's parents or full siblings (and their descendants). Under the proposed reforms, the spouse will receive the whole of the estate. The reforms to the Intestacy Rules in particular are welcome, and bring the rules into the 21st century . We would, however, always advise you to make a Will rather than rely on the Intestacy Rules. This way you can control to whom your assets pass, choose the executors who will administer your estate, and take advantage of any tax planning opportunities. 2. Inheritance (Provision for Family and Dependants) Act 1975 claims

The categories of applicants who can make a financial claim against a deceased person's estate under the Inheritance (Provision for Family and Dependants) Act 1975 is to be extended to anyone treated by the deceased as a child of the family but who is not the deceased's child by marriage or civil partnership. The...

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