The Inheritance and Trustees Powers Act 2014 comes into effect on 1st October 2014.
The Act changes the way in which the assets of people who die without Wills (known as 'dying intestate') are shared between their relatives.
The old rules stated that should a married person (or someone in a civil partnership) die leaving no children but with assets over £450,000, their estate should be shared between their spouse and their surviving relatives.
The Act has swept this away, ensuring that in such cases, where there the deceased had no children, the surviving spouse will inherit the entire estate.
If the deceased leaves children, the estate has to be shared between the surviving spouse and the children.
Previously the surviving spouse was entitled to the first £250,000 of the estate absolutely. If the estate exceeded £250,000, the surviving spouse took an income for life from one half of residue with the remaining half passing equally to the deceased's children.
The Act now provides for the surviving spouse to retain the first £250,000 and one half of anything left over absolutely, not just the income. The remaining half of the estate over and above £250,000 will still pass equally to the deceased's children.
Under the new legislation the fixed sum of £250,000 (the statutory legacy) will be reviewed every five years and will rise in line with the Consumer Price Index.
The Inheritance and Trustees Powers Act 2014 changes the existing rule which states that if a child whose parents were not married at the time of their birth dies without a Will, the child's estate is distributed as if the child's father and his family died before the child.
This rule will no longer apply from 1st October as long as the father's name is on the birth certificate.
The Act also ushers in changes which may make it easier for those financially dependent upon a deceased person to claim support from a deceased person's estate.
Although these changes bring the rules governing intestate estates into the modern age, the law will still decide where your assets go in the event of your death if you do not make a Will.
If you wish to discuss your own estate planning in light of these changes, please contact either Angela Smith or Jill Latimer on 0161 665 3502.