On 5 July 2023, the government passed the Administration of Estates Act 1925 (Fixed Net Sum) Order 2023, increasing the current Statutory Legacy in cases of intestacy from £270,000 to £322,000. The legislation came into effect on 26 July 2023, and the rules apply to deaths after that date.
What is intestacy?
When a person dies without leaving a valid Will, they are deemed as having died intestate and their estate will be distributed in accordance with the rules of intestacy.
The intestacy rules in England and Wales also apply where a person leaves a valid Will, but it does not distribute their entire estate, i.e., money, property, and possessions.
How does an individual die intestate?
A person may die intestate if they:
- Did not make a Will;
- Revoked a will that they had made by either:
- physically destroying the Will with the intention of revoking it; or
- marrying or entering into a civil partnership after making a Will. Please note, if your Will contains a clause that you are making it with the intention of marrying or entering into a civil partnership with a particular individual, your Will may still be valid.
- Made an invalid Will.
What are the rules of intestacy?
The rules of intestacy set out who will be responsible for (i) administering an individual’s estate and (ii) who will be entitled to inherit their estate.
The Administration of Estates Act 1925 set out the rules of intestacy. The order of priority under the rules is that it starts with the closest family members such as the spouse or civil partner and children, moving to the most distant relatives and if there are no surviving family members or friends, ending in the Crown.
What is the Statutory Legacy?
The Statutory Legacy is the sum the surviving spouse or civil partner is entitled to inherit if an individual dies intestate.
The current rules provide in the first instance (for deaths on or after 6 February 2020):
- The whole Estate will pass to your surviving spouse or civil partner where there are no children.
- Where there is a surviving spouse (including civil partner) and you leave children:
- your spouse or civil partner receives a statutory legacy. The sum of this legacy has increased from £270,000 to £322,000 with effect from 26th
- your spouse or civil partner will also receive all of your personal possessions.
- your spouse or civil partner will receive 50% of the remainder of your estate.
- your children will receive the other 50% of the remainder of your Estate, divided equally between them. If any of those children are under the age of 18, their inheritance will be held in a Trust.
What does this mean for you?
Your spouse will receive a larger sum from your estate before your children receive their share.
If the value of the net estate is worth less than £322,000, your surviving spouse is entitled to everything. However, if the value of the estate exceeds £322,000, it will be shared equally between the surviving spouse and children.
It is worth noting that unmarried partners have no automatic entitlement to inherit the estate under the intestacy rules, even if they lived with the deceased as if they were married.
Why has the Statutory Legacy increased?
The Statutory Legacy has increased in line with the Consumer Price Index (CPI). It is vital to make a Will to ensure that your estate passes in accordance with your wishes and passes to the people you want to benefit.
If you would like to make a Will or have any queries about the changes to the Statutory Legacy, please contact our Private Client team on 01932 852 057 or by emailing email@example.com