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Change to statutory legacy
On 26 July 2023, the law changed to increase the “statutory legacy” in intestate estates. The “statutory legacy” is the amount of money a spouse or civil partner is entitled to receive when a person dies without a Will.
What is intestacy?
When a person dies without a valid Will, they are said to die intestate. You can also die partially intestate. This happens if there is a valid Will and for some reason you cannot clearly allocate and dispose or all of the deceased’s assets. For example, some of the persons benefitting from the Will (the beneficiaries) died prior to the deceased and there is no provision in the Will to cover that eventuality.
When a person dies intestate, their estate must be distributed in accordance with the intestacy rules. These rules are much more complex and do not include any flexibility to accord with the deceased’s wishes. There is a fixed structure to follow and the outcome may not be what the deceased intended for their estate.
The rules of intestacy do not reflect modern family relationships and can result in a large(r) tax bill. This is why we always recommend a client creates a valid Will to ensure their wishes are carried out on death and so that the rules of intestacy do not apply.
How could the change to the statutory legacy impact you?
The statutory legacy is the amount a spouse or civil partner is entitled to receive when a person dies without a will (intestate), and they leave behind a spouse/civil partner and children.
On 26 July 2023, the statutory legacy increased from £270,000 to £322,000 for deaths occurring on and after 26 July 2023.
What happens in intestate estates?
For deaths which occurred prior to 26 July 2023
For deaths occurring prior to 26 July 2023, the old rules will continue to apply. If you require any guidance regarding the old rules, please get in touch.
For deaths occurring on or after 26 July 2023
For deaths occurring on or after this date, the new rules will apply. There are a few different permutations depending on the relatives the deceased left behind.
- If the deceased had a spouse/civil partner and a child(ren), the estate will be divided as follows:
- The surviving spouse/civil partner gets all of deceased’s personal effects.
- The statutory legacy passes to the surviving spouse/civil partner. This is now the first £322,000 left in the estate after payment of funeral expenses, taxes and other liabilities.
If the estate totals less than £322,000, then everything passes to the surviving spouse/civil partner.
- The remainder of the residuary estate (everything above £322,000, if any) is then divided in the following proportions:
- 50% goes to the surviving spouse/civil partner
- 50% is then divided equally between the deceased’s children (or their descendants). If any are under 18, their share is held upon trust for them until they turn 18.
- If the deceased has no children, the surviving spouse/civil partner inherits the entire estate.
- If the deceased has children but no spouse/civil partner, then the estate is divided between those child(ren) equally.
“Common law” partners, cohabitees and the intestacy rules
It is important to remember that cohabitees, often referred to as a “common law” husband or wife, have no entitlement under the intestacy rules. As a result, this change to the statutory legacy does not impact them. This is why we always recommend you make a Will to ensure that your wishes are carried out on your death.
To discuss making a Will or if you require some assistance regarding an intestate estate, please contact a member of the Private Client team at Crombie Wilkinson Solicitors at any one of our offices – York, Selby, Malton or Pickering.