Changes made by Inheritance and Trustees’ Powers Act 2014. The government intends to bring the Act into force on 1 October 2014
1. The Act will ensure that, where a couple are married and there are no children or descendants, the whole estate passes on intestacy to the surviving spouse when one spouse dies.
2. Simplify the sharing of assets on intestacy where the deceased is survived by spouse and children. The surviving spouse takes the personal chattels (see Personal chattels: new definition) and a statutory legacy of £250,000 (as now), plus half of any balance of the estate outright*. The surviving children or other descendants take the remaining half on statutory trusts. Interest accrues on the statutory legacy from the date of death and the interest rate is the Bank of England base rate that had effect at the end of the day on which the intestate died. *No longer a life interest trust.
4. A new, more modern definition of personal chattels covers all tangible movable property except for property:
5. The new amended definition defines personal chattels as:
“Tangible movable property other than any such property which consists of money or securities for money, or property used at the death of the intestate solely or mainly for business purposes, or was held at the death of the intestate solely as an investment.”
(Section 55(1)(x), AEA 1925 as amended by section 3, ITPA 2014).
We strongly advise that Wills are updated in accordance with this new law change.
6. The Act will protect children from the risk of losing an inheritance from a parent in the event that they are adopted after the death of that parent.
7. Amend the rules that currently disadvantage unmarried fathers when a child dies intestate.
8. Remove arbitrary obstacles to family provision claims.
9. Reform trustees’ statutory powers to use income and capital for the benefit of beneficiaries (subject to any express provisions in the trust document).
Changes to the Inheritance (Provision for Family and Dependants) Act 1975
A person may qualify as being maintained by the deceased (and so eligible to make a family provision claim) if the deceased made a substantial contribution to that person’s reasonable needs other than for full, valuable consideration under an arrangement of a commercial nature (section 1(3), IPFDA 1975 as amended by paragraph 3, Schedule 2, ITPA 2014).
This means that a person claiming as a dependant under the IPFDA 1975 need no longer show that the deceased contributed more to the relationship than the applicant did. This removes the balance sheet test that can currently block claims in cases of mutual dependency.
The court must regard the matters set out in section 3 of the IPFDA 1975 (as amended by paragraph 5 of Schedule 2 to the ITPA 2014) when exercising its powers under the IPFDA 1975. A person who was maintained by the deceased immediately before the death will be eligible to claim under the IPFDA 1975 whether or not, beyond the fact of providing maintenance, the deceased had formally assumed responsibility for that person’s maintenance.
Assets held as joint tenants
The court’s treatment of property held by the deceased under a joint tenancy is governed by section 9 of the IPFDA 1975 (as amended by paragraph 7 of Schedule 3 to the ITPA 2014). Section 9 permits the court to treat the deceased’s share of this property as part of the deceased’s net estate to such an extent as the court considers to be just in all of the circumstances.
Applications under the IPFDA 1975 must be made within six months of the date that a grant of representation is first taken out for the estate, unless the court extends this limit (section 4, IPFDA 1975).
The material contained in this article is provided for general purposes only and does not constitute legal or other professional advice. Appropriate legal advice should be sought for specific circumstances and before action is taken.