The Inheritance and Trustee’ Powers Act came into force on 1 October 2014 and amends the Administration of Estates Act 1925, the Inheritance (Provision for Family and Dependants) Act 1975 and the Trustee Act 1925. The Act was the culmination of work carried out over six years by the Law Commission. Not all of the Commission’s recommendations have been taken up by the Government.
A Summary of the Reforms
The Law Commission stated that the existing law of intestacy and family provision was ‘outdated, confusing and placed unnecessary obstacles in the way of those with a valid claim to share in a deceased person’s assets’.
The Main Reforms
• Children whose parent has died are now protected from the risk of losing an inheritance in the event that they are adopted after the death of the parent.
• If one of a couple who is married or in a civil partnership dies intestate, their assets will now pass to the surviving spouse in all cases where there are no children or other descendants.
• Where the deceased is survived by a spouse and children or other descendants, the sharing of assets is simplified.
• Claims for family provision by dependants of the deceased and anyone treated by the deceased as a child of his/her family outside the context of marriage or civil partnership, have been simplified.
• There has been a relaxation of time limits.
• Amendments have been made to the provisions which previously disadvantaged unmarried fathers in the event of a child dying intestate.
Where a person dies intestate and leaves a spouse but no children or other descendants, the spouse is entitled to the whole estate and the personal chattels.
Where there are children or other dependants, the surviving spouse is entitled to £250000 together with any chattels, and half of the remaining estate outright as opposed to this being taken as a life interest trust as under the previous legislation. The children and or other dependants share the other half of the remaining estate. This share is taken in the form of statutory trusts.
The Government rejected the Law Commission’s recommendations to bring the rights of cohabiting couples in line with the treatment of cohabitants on separation.
The old intestacy rules still apply so that where a couple live together and are not married or in a civil partnership and one of them dies, the other has no automatic right to inherit any part of their partner’s estate.
However a claim for family provision from the deceased’s estate can be made where the surviving cohabitant has lived with the deceased for a qualifying amount of time.
The definition of Personal Chattels has been modernised and simplified. It applies to wills or codicils executed after October 2014 but not retrospectively.
Personal Chattels are now defined as ‘tangible moveable property other than any such property which consists of money or securities for money, or property used at the time of death of the intestate solely or mainly for business purposes or was held at the death of the intestate solely as an investment.’
This new definition is vaguer than the previous one, for instance, it is uncertain as to whether intellectual property comes within the definition. The result could be an increased number of legal arguments, higher legal costs and a reduction in the overall value of the residuary estate.
It is advisable that a person’s chattels are clearly defined in any will.
Family Provision Claims
Family members and dependents can apply to the court for family provision, that is reasonable financial support from an estate where the application of the intestacy rules does not allow for the needs of close family or dependents.
The Law Commission recommended amendments to the 1975 Act which stated that for a family provision claim to be made, the deceased had to have died ‘domiciled in England and Wales’. This resulted in a considerable amount of litigation in order to establish where the deceased was domiciled. The Commission recommended that a family provision claim could be made where the deceased left assets governed by English succession law. However this was rejected by the Government and so the provisions originally enacted in the 1975 Act remain.
The rules relating to who can make a claim for family provision are broadly similar to those in the 1975 Act. Possible claimants include a child of the deceased, the spouse or civil partner of the deceased, a person who has lived in the same household as the deceased and as the civil partner of the deceased for 2 years immediately prior to the death, a former spouse or civil partner of the deceased who has not remarried or entered into another civil partnership, a person (not a child of the deceased) who, in relation to any marriage or civil partnership to which the deceased was at any time a party, or otherwise in relation to any family in which the deceased at any time stood in their role of a parent, was treated by the deceased as a child of the family, will be considered as a child of the family for the purposes of making a claim for family provision. This provision is a broader definition to the one in the 1975 Act and concerns have been raised around the concept of the deceased having acted as a parent ‘at any time’. This gives the potential for a much larger number of applicants to make a claim.
The concept of child of the family has also been extended to include single parent families. In addition a claimant could be any other person who immediately before the death of the deceased was being either wholly or partly maintained, by the deceased. The definition of maintenance was given as, ‘the deceased was making a substantial contribution in money or money’s worth towards the reasonable needs of that person, other than a contribution made for full valuable consideration pursuant to an arrangement of a commercial nature.’
The 2014 Act allows for a claim to be made before a grant of representation has been issued. This was not the case prior to 2014.