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Probate - The End of Life Interests for Spouses and Other Changes!

By Jane Mather

The Inheritance and Trustees Powers Act 2014 (ITPA 2014), which has a commencement date of 1 October 2014, brings about some significant changes to the intestacy procedures. It also amends some of the rules relating to claims against an estate under the Inheritance (Provisions for Family and Dependants) Act 1975 and amends the powers of a personal representative to advance income and capital to a beneficiary. These changes all amend the existing legislation.

INTESTACY RULES

The Spouse
ITPA 2014 greatly simplifies who receives what in intestacy situations:

  • If a spouse survives the deceased but does not leave any issue the entire estate will pass to that surviving spouse rather than giving a portion to surviving parents or other relatives of the deceased as was previously the case.
  • If the deceased is survived by a spouse and children or other issue the surviving spouse will receive all personal chattels and a statutory legacy of £250,000 (with interest accruing at the Bank of England base rate at death from the date of death) plus half of the residue of the estate above that statutory amount absolutely. The surviving children or other descendants will take the other half of the residue. This removes the life interest for the surviving spouse which can currently be minimal in terms of income. 

UPDATED DEFINITION OF PERSONAL CHATTELS

The Administration of Estates Act 1925 includes a list of items that are to be taken as personal chattels. This includes such random and outdated things as “Carriages”, “stable furniture” and “scientific instruments”. The new Act has updated this to simply “Tangible movable property”. However, this specifically will not include assets held for business or investment purposes. So, for example, if the deceased were a commercial pilot the plane used in his business would not pass to his wife on death intestate whereas if the plane were one owned purely for recreational purposes it would. If the deceased had bought a valuable diamond in the hope that it increase in value and be sold for a profit, this would be held as an investment and therefore would not pass to the spouse. If the diamond was bought for its beauty only then it would pass to the surviving spouse.

INHERITANCE (PROVISION FOR FAMILY AND DEPENDANTS) ACT 1975

Children
The updated law recognises that family units may come in a number of guises. ITPA 2014 now allows for an IPFDA 1975 claim to be brought by a person who was treated as a child of the deceased person regardless of whether that relationship had arisen because of the marriage of any person in that family unit or not. This includes the situation where the family unit comprises of the deceased and that person only. Where a child lives with the former partner of his parent that child will now have a right to make a claim against the estate as though he were a child of the deceased even if his own parent had passed away prior to the death of the deceased.

TRUSTEES ACT 1925

The power given to trustees to apply half of the income and capital of a beneficiary’s entitlement under a trust for the maintenance of that beneficiary has been extended by ITPA 2014 to apply to the whole of that beneficiary’s entitlement. This will apply to trusts created after the commencement date of 1 October 2014. Therefore the whole of a minor’s entitlement in an estate could be applied for their education at the discretion of the trustees/personal representative.

We have only reviewed the main changes here. To read the full Act please go to http://www.legislation.gov.uk/ukpga/2014/16/contents/enacted

To find out more about SWAT UK's Certificate in Probate and Estate Administration, click here. 

July 2014 

 

Disclaimer
This article is published with the understanding that SWAT UK Limited is not engaged in rendering legal or professional services. The material contained in this article neither purports, nor is intended to be, advice on any particular matter. This article is an aid and cannot be expected to replace professional judgment. SWAT UK accepts no responsibility or liability to any person in respect of anything done or omitted to be done by any such person in reliance, whether sole or partial, upon the whole or any part of the contents of this article.