No Will? Rules Changes From October 2014

Posted by on Jul 11, 2014 in Legal Services | Comments Off on No Will? Rules Changes From October 2014

No Will? Rules Changes From October 2014
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Intestacy laws, those that govern where your estate will go if you die without a will, are being updated and come into force on the 1st October, 2014. Depending upon your circumstances, they will either have a dramatic affect on your estate (the money and property you leave behind) or will make almost no difference to you, but which?

The new rules are from the Inheritance and Trustees’ Powers Act 2014 (ITPA 2014) and include details of how your intestate (no valid last will and testament) estate is to be distributed and how Trustees will be able to distribute income and capital to the appropriate beneficiaries.

The changes apply only to individuals who are domiciled in England and Wales, when they die, and do not apply to Scotland or Northern Ireland at this time.

First; the intestacy rules

Deceased, married, but without issue (children, grandchildren etc.)

Current rules: spouse, civil partner, parents and siblings may all share

New rules: spouse or civil partner inherit all absolutely

Deceased, married, with children

Current rules: spouse inherits all chattels absolutely, plus a life interest in possession in half of the statutory legacy (£250k)

New rules: spouse inherits all of the personal movable property plus half of the statutory legacy (£250k) absolutely

A life interest means that you get use of it during your lifetime, but are expected to pass it on when you die. Absolutely means you get it all now -without exception; completely; wholly; entirely.

How ‘chattels’ will now be defined

Personal items which are called personal property in law, replace the word ‘chattels’ and the old Administration of Estates Act, 1925. Here is the way in which the description will change:

Current definition of ‘chattels’

carriages, horses, stable furniture and effects (not used for business purposes), motor cars and accessories (not used for business purposes), garden effects, domestic animals, plate, plated articles, linen, china, glass, books, pictures, prints, furniture, jewellery, articles of household or personal use or ornament, musical and scientific instruments and apparatus, wines, liquors and consumable stores, but do not include any chattels used at the death of the intestate for business purposes nor money or securities

New definition of ‘chattels’

Tangible movable property, other than any such property which—consists of money or securities for money, or was used at the death of the intestate solely or mainly for business purposes, or was held at the death of the intestate solely as an investment.

It will be important to check and update your will, particularly if you are expecting investment assets to fall within the chattels section of your will, because from October, they will not appear in that segment. Where you expect your investment assets to fall within chattels, you risk them moving to the residue clause in your will, and they may end up in the wrong hands.

Powers of appointment -Trustees

Trustees will now be free to distribute all of the trust’s assets rather than half of beneficiary’s presumptive share. Also, they will not be obliged to consider further, the beneficiary’s wider set of circumstances, when they decide whether to pay out income from the trust. You may need to revisit your will to check your trustee appointments and to ascertain whether your requirements will still be met after 1 October, 2014.

Update your advice

It is important that your last will and testament takes account of these changes, before you may become affected by it. Take the appropriate tax and legal advice now, for the new rules to work for you.

Unmarried couples will still be sidelined

The rules will still not take into account the financial aspects of people who live together as a couple, but are not married. It is in these circumstances that a will is required immediately, as the law will virtually cut out the other partner, if you should die without a valid will.

The chart below is valid until 30th September, 2014.

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