The laws dividing your assets if you don’t have a will change radically on 1 October 2014 – but common-law partners still get nothing.
The rules are staying the same: co-habitees get nothing, unless there is a will.
The biggest overhaul of laws governing what happens to someone’s money when they die without a will come into force on 1 October – and “common law” partners may be shocked to discover they still have absolutely no protection, while the children of married partners may find they are in line for less than they thought.
If someone dies without a will, there is a set of intestacy rules that determine who gets what. The rule changes won’t affect people who die with less than £250,000 in assets. But for those with more – and there’s a growing number following the explosion in house prices – it could have a crucial impact on the people they leave behind.
Ahead of the changes, many lawyers were pressing for the partners in unmarried relationships to have rights over their deceased partner’s estate if they had lived together for five years. Under current rules, co-habitees have no automatic right to receive a penny – regardless of how long they have lived together or even if they had children.
But the rules are staying the same: co-habitees get nothing.
So it remains the case that the only way to ensure that part, or all, of your estate will go to your partner is to marry them, or make a will.
New rules mean the chances of parents getting a slice of the cash have been swept away; the surviving spouse gets all
So what does change from 1 October?
The biggest change is for married couples and civil partnerships without children. Under the old rules, if a spouse died intestate and there were no children, then the first £450,000 of the estate, plus half of the rest, went to the surviving spouse. The other half was split between the deceased’s blood relatives – which often meant the money went back to the parents.
For example, John is 52 and dies suddenly from a heart attack, leaving £750,000. Under the old rules, his wife Mary would have received £600,000 – made up of the first £450,000 plus 50% of the rest, or £150,000. Let’s say John’s father has also died, but his mother is still alive. She would get the remaining £150,000.
But under the new rules, the chances of parents or more distant relatives getting a slice of the cash on death have been swept away. From 1 October, the surviving spouse will receive the whole lot, and parents and long-lost aunties won’t see a penny. In the example above, Mary will take the entire £750,000.
There are also some important changes to what happens if a married/civil-partnered couple have children. Under the old rules, the married partner took everything up to £250,000, with a complicated system for sharing out anything above that. Firstly, the children would receive half of the balance above £250,000 immediately (or held in trust to the age of 18). Secondly, the other half would also go to the children, but the surviving spouse would also have a “life interest” in the money while she remained alive. The life interest meant he or she could take income from the money, but not the capital.
Rule changes will have implications for married/civil-partnered couples who have kids.
But from 1 October, the life interest concept is abolished. The surviving married partner will take all of the first £250,000 and then be fully entitled to half of the remainder. All the children will get is half of anything above £250,000 – and have to wait until 18 years old to get their hands on it.