Increase to the Statutory Legacy under Intestacy and Why you should make a Will
When someone dies without a Will, they are said to have died ‘Intestate’ and the ‘Intestacy Rules’ then apply to the distribution of that person’s wealth.
The Intestacy Rules govern how someone’s wealth (often referred to as their estate) will be divided on death. The rules are complicated but in a nutshell, they prioritise spouses and civil partners and children and then other blood relatives in rank priority. The rules apply to all deaths in England and Wales.
Where someone dies without a Will, leaving a surviving spouse or civil partner and no children, the spouse or civil partner will inherit the entire estate under Intestacy Rules.
Where someone dies and they don’t have a Will and they leave a surviving spouse or civil partner and children, the spouse or civil partner receives all of their personal items together with a fixed sum of money, known as the ‘Statutory Legacy’, and half of the residue (anything remaining after personal chattels and the ‘Statutory Legacy’). The children receive the other half of the residue equally between them.
The government has recently announced an increase in the ‘Statutory Legacy’, from £270,000 to £322,000. The sum takes effect from 26 July 2023, and will apply to deaths after that date.
Whilst the increase in the fixed Statutory Legacy is welcomed, this should not stop you from making a Will and/or reviewing your current Will regularly.
Many people are also unaware that unmarried couples do not automatically inherit from each other on death.
Inheriting under the Intestacy Rules could well trigger an unwelcome and unnecessary liability to inheritance tax. Everything left to a spouse or civil partner benefits from the spouse exemption for inheritance tax purposes. Having a Will has additional benefit of potential saving inheritance tax.
Having a valid Will and keeping it under review, is the only way you can effectively ensure that your hard earned wealth is distributed in accordance with your wishes, to the people you want to benefit, on your death. It can also prevent any additional stress and hardship for your friends, family members and loved ones when you pass away.
For individual advice and to understand more about the benefits of making a Will, please contact our Wills, Probate and Trusts Team.
Michelle Gavin – Head of Wills, Trusts and Probate