The government has raised the amount a spouse or civil partner can inherit if their partner dies without having made a Will (or with a Will that is invalid).
As of 25 July 2023, the statutory legacy figure has increased from £270,000 to £322,000. We take a look at what this means and how the government arrived at the new sum.
What happens if you do not make a Will?
If someone dies without making a Will, their estate is said to be intestate, or without heirs. In this situation, the law provides the rules as to who will inherit, these are known as the Intestacy Rules. These rules were introduced in the Administration of Estates Act 1925 (the Act) and amended in 2014. The amendments aimed to modernise and simplify the law and create a fairer system.
If the deceased leaves a spouse or civil partner, then that partner is entitled to inherit the first £322,000 of the value of the estate. This figure is called the statutory legacy, and was recently increased from £270,000 to £322,000. In addition to this, they will inherit all of the deceased’s personal possessions.
If the deceased had children, then the remainder of the estate is divided into two. The spouse or civil partner will inherit one half (in addition to their statutory legacy and the deceased’s personal possessions), and the other half will be split between the deceased’s children in equal shares. This often means that the spouse or civil partner will inherit substantially more than the children.
Where the deceased was not married or in a civil partnership, the children will usually inherit the whole estate, in equal shares. If the deceased did not have children, the spouse or civil partner will inherit everything.
If the deceased did not have a spouse, civil partner or children, then the next relatives to inherit, in order of priority are parents, siblings and then nieces and nephews.
This is a rough overview on how the Intestacy Rules work, and their application is always dependent upon the individual circumstances of the person who has died and their family structure. You should always seek professional legal advice for absolute clarity as to who might be entitled to inherit under an intestacy.
Why has the statutory legacy sum been increased?
The statutory legacy was originally introduced to protect the interests of a surviving spouse but to balance these against the interests of the deceased’s children.
The 2014 amendments to the Act require that the statutory legacy sum is reviewed periodically to take inflation into account, with a minimum review period of every five years. The new figure is calculated with reference to the Consumer Price Index, looking at the change from the date of the previous review to the most recently available figure.
The previous figure of £270,000 was set in January 2020, meaning a review would be needed by January 2025. However, the legislation also allows that where inflation increases by 15% or more from when the figure was last set, the government is required to review it at that point.
The government must either increase the figure in accordance with the Consumer Price Index or, if it wishes to use a different method of calculation, seek Parliament’s approval.
In December 2022, the Consumer Price Index had increased by 15.023% since November 2019, the month used to calculate the January 2020 increase. Although the inflation figure fell in January 2023, it rose again in February. The government reviewed the situation and decided to set the new rate in accordance with the most recent Consumer Price Index figure available at the time.
The increase was 19%, and the legislation required it to be rounded up to the nearest £1,000. This meant an increase of £52,000, taking the statutory legacy figure from £270,000 to £322,000. The Lord Chancellor has therefore set the new figure at £322,000 as of 25 July 2023.
If you are concerned about who will inherit if you pass away without a Will or someone you know has recently passed away, and you think they did not have a Will, we would be very happy to assist. To make an appointment to speak to someone from our team of experienced Wills and Estate lawyers please call us on 01252 733 770 or email email@example.com . We can then provide you with a quote for our fees for advising you, and arrange an appointment.