From Wednesday 26th July, the government is changing the ‘Statutory Legacy’ sum from £270,000 to £322,000, which means if a person dies without a Will, in addition to being entitled to their personal effects, their spouse or Civil Partner will automatically receive up to £322,000 worth of assets from the deceased’s estate, with the remaining sum split 50/50 between the surviving spouse/Civil Partner and any children.
What if we don’t have children?
If there are no children then the surviving spouse/Civil Partner will automatically inherit everything. But this is only applicable to those who are married or in a Civil Partnership, and doesn’t include cohabiting couples.
Why does Statutory Legacy only apply to married couple or those in a Civil Partnership?
Despite many people believing this to be the case, there is no such thing as a ‘common law spouse’ and therefore, you don’t have the same rights married couples or those in a Civil Partnership.
Without a Will in place, you and your loved ones are unprotected, and instead of following your wishes the distribution of your estate at the point of death, will be determined by fixed rules under UK law.
Is the increase is Statutory Legacy a good thing?
For estates worth less than £322,000, the surviving spouse/Civil Partner will inherit it all. For estates over the new threshold, a split in inheritance could lead to issues for those left behind.
If the deceased owned the family home in their sole name, subject to the value, this new statutory legacy threshold could lead to surviving spouses or Civil Partners being forced to sell the property to release sums due to their children, or including children on the deeds, potentially limiting what the surviving partner can do with the property down the line.
It’s worth noting that the rules of intestacy use an arbitrary system to prioritise distribution of assets, which is limited to: spouse/Civil Partner, children, parents, siblings, grandparents, aunts/uncles, and therefore doesn’t take into consideration step-children, or other dependents you may have.
The only way to guarantee they are included in your estate is to prepare a will.
Could someone dispute the Statutory Legacy?
With the cost of living crisis and an increasing number of second marriages, blended families and unmarried couples, an estate that is distributed under intestacy (without a Will) is more vulnerable to costly challenges and claims from dependents, or those who were given promises of inheritance.
For example, children often feel aggrieved if the home they grew up in is left solely to their step-parent, and likewise surviving cohabiting partners can be forced to effectively challenge the intestacy rules by bringing a claim against their late partner’s estate, if it means losing half of their home to their deceased partner’s children.
Making a Will is something every adult should consider, to protect their loved ones in the future.