Intestacy rule changes - Spouses to inherit £20,000 more
The amount of money that will automatically be inherited by a spouse when their husband or wife dies without a will and had surviving children or other lineal descendants, has risen by £20,000 under new rules for England and Wales.
This change, which took place on 6 February, was to take account of inflation over the last few years as the sum has not been reviewed since 2014.
When someone dies without a will, it is known as dying intestate and the rules of intestacy state that, where the deceased had children, the remaining spouse or civil partner is entitled to all of the deceased’s personal property and the first £270,000 (previously £250,000) of their estate and half of the balance. Plus, if their home was owned as joint tenants, the surviving spouse will automatically inherit their partner’s share of the property – and any joint bank or building society accounts or other assets held jointly as joint tenants.
What many may not realise is that if the estate is greater that £270,000, if there are children, only half of the rest of the estate goes to the partner - the remaining half goes to the children.
If there are no children, the spouse/civil partner will simply inherit all of the estate.
But something even more important that many co-habiting couples may not know is that unmarried partners do not inherit under Intestacy rules – even if they have children. If they have no children and their house is in the name of the deceased alone, the surviving partner could even lose their home. The number of co-habiting couples in the UK has increased by more than 25 percent over the last 10 years, to around 3.4m.
So while this increase to the initial amount that a spouse will inherit is good news, it should be viewed as a prompt to make sure that not only is an up to date will in place, but also that the estate has been reviewed to ensure that it is as tax efficient as possible – to keep the amount of inheritance tax to a minimum, so that you can pass on as much as possible to your loved ones.