How do the inheritance law changes affect you?

Tax

Julie Hutchison

1st October 2014 at 2:05pm

Rules around inheritance law are changing from 1 October 2014 in England and Wales. The consequences could be far reaching for you and your loved ones. These changes make things simpler and clearer.

Child-free married couples and civil partners

There’s an important change to be aware of if you’re married or in a civil partnership, and you don’t have children.

From 1 October, if you die without a Will, your estate will be inherited entirely by your spouse or civil partner.

Previously, some of your estate could have been automatically inherited by your parents or siblings, leaving less for your spouse or civil partner.

It’s easy to see why this change has been made as it prioritises the person you’ve chosen to spend your life with. And remember, if you would still like to leave something to your parents or siblings, you can. You just need to make a Will.

Simplifying things for married couples and civil partners with children

The main change here is that things have become simpler.

If you die without a Will and you leave a spouse or civil partner and children, your spouse or civil partner will inherit three parts of your estate:

  • Your “personal chattels” – your moveable property such as jewellery, furniture, cars and so on
  • £250,000, or the whole of your estate, if its value is less than this
  • One half of any balance left.

From 1 October, if you die without a Will, your estate will be inherited entirely by your spouse or civil partner. What’s simpler here is in the final point – in the past, you were entitled to a right to income from one half of the balance left over. The new rules mean you will get one half of the balance outright, which is less complex.

Some people may not want anything to go to their children initially, and would prefer that children only inherit once both parents are gone. The way to deal with that is by making a Will.

What if you live together?

There is less inheritance protection for cohabiting couples, but it’s possible for a cohabiting partner to make a claim on the estate of the deceased in England and Wales. The rules for this are quite detailed. Making a Will which benefits your partner will remove uncertainty about who gets what. Otherwise, you are leaving your partner to face the prospect of having to raise an action against your estate, which is a stressful and costly thing to have to do at a time when they’ve just lost you.

Take control

As I’ve written about in the past, I feel that making a Will gives you real peace of mind. The changes to the inheritance rules might improve things for some of the 61% of UK adults without a Will*. But these new rules are still Plan B – Plan A is make a Will so you have more control of who gets what.

Standard Life has a referral service, which can help you put a will or power of attorney in place.  We’ve linked with a law firm in England and Wales, and also Scotland, to make it easier for you to take the next step.  These law firms offer a fixed fee service, to give you certainty over how much it will cost.  If you’d like to use this service or request an Information Pack, call us on 0845 272 8848.

*Standard Life Wills and Trusts Research Report 2012

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