Is it safe to rely on the intestacy rules?

On 6th February 2020, the statutory legacy awarded on intestacy to a surviving spouse or civil partner will go up by £20,000 from £250,000 to £270,000. Every 5 years, the government reviews the amount of this legacy and increases it in line with the Consumer Price Index.

This legacy is paid when the deceased dies without a valid will, leaving a surviving spouse or civil partner AND children. In those circumstances, in addition to the statutory legacy, the surviving spouse/civil partner will also get the deceased’s personal effects ie the contents of their home and also half of what’s left after deducting the first £270,000, with the other half going to the deceased’s children at 18. If there are no children, then the surviving spouse or civil partner will inherit the entire estate.

On the face of it, this might seem quite generous, but it is not advisable to rely on the intestacy provisions in most cases because:

1. If you own your property as tenants in common and the deceased’s share is worth more than the share that will pass to the surviving spouse/civil partner, the survivor could end up co-owning with someone else, which could leave them in a difficult situation.
2. Many people intend that the surviving spouse/civil partner will inherit the entire estate, but if the estate is worth more than £270,000, then they won’t.
3. Any share of the estate passing to the children of the deceased will be subject to IHT to the extent that it exceeds the available allowances. If those children are under 18, they cannot agreed to vary the estate in favour of the surviving partner, to try and mitigate the tax.
4. There will be no choice about who will be the administrators of the estate, which is determined by statute.
5. There may be no choice over the guardians of children who are under 18 if the other parent has already died.
6. The children will inherit at 18 automatically, which many people consider to be too young, particularly if the amounts involved are substantial.
7. If there is no surviving spouse or civil partner, then the intestacy rules dictate who will inherit and in the absence of close family, it may be much more distant family who inherit, despite the fact that the deceased barely knew them or possibly didn’t even like them!
8. If you are not married or in a civil partnership, but are living with a partner, they will have no entitlement under the intestacy provisions and would have to bring a claim under the 1975 Act assuming they qualified and were in time to do so.
9. It will not be possible to benefit charities or friends without the agreement of the people who are entitled under the intestacy rules, assuming that they are over 18 and legally capable of agreeing to any such changes.
10. If you want to provide for people who are incapacitated in some way i.e. by leaving funds by which they can benefit, without leaving it to them directly, this will not happen under the intestacy rules.

It is always best to make provision for the people (and organisations) that you want to inherit by making a will – and not relying on the intestacy rules.