“The Inheritance and Trustees’ Powers Act came into force in October this year. It affects how intestate estates are distributed and how trustees can distribute income and capital to beneficiaries and apply to persons living in England and Wales at the time of death” advises Lee Young, Wills & Tax Partner.
Under the old rules if a husband died without a Will in place, and had no children, the surviving wife received the first £450,000 of the estate. She would also receive half of the remainder and any personal effects. The other half then passed to members of the husband’s family in a strict order – parents first, then siblings and then nieces and nephews. If there is none of these living, only then would the wife receive the entire estate. The same rules applied to civil partners. Under the new rules, where there are no children, the entire estate now passes to the wife.
There is also a simplification of the situation where a husband or wife dies and the couple do have children. Under the old rules if, for example, the husband died first the surviving wife received the first £250,000 of the estate, personal belongings and a life interest (the right to income) in half of the remainder. Under the new rules the wife will receive half of the remainder absolutely instead of just the life interest. The remaining assets will still pass to the children, the children inheriting at 18.
Under the Act trustees generally will have greater freedom to distribute trust assets. They will be able to distribute all, rather than half, of a beneficiary’s presumptive share in the assets and will not be obliged to consider the beneficiary’s wider circumstances when deciding whether or not to pay out income.
The technical definition of personal chattels has also been modernised from its old 1925 definition. This shouldn’t mean that Wills already in place will need to be altered but they should still be reviewed nonetheless. It is important to bear in mind that dying without a Will still causes additional distress and delays for your family.