The Inheritance and Trustees’ Powers Act 2014, which applies only in England and Wales, came into force on 1 October 2014. For non-lawyers, the most important change it makes is a rewriting of the rules for distributing an intestate’s estate, where the intestate is survived by a spouse or civil partner.
Hitherto, the rule has been that, if the deceased left a spouse (or civil partner) but no children (or grandchildren, etc), then the spouse was entitled to the first £450,000 and the balance was divided half to the spouse and half between other relatives, such as parents, brothers or sisters. But where death occurs on or after 1 October 2014, the whole estate will now pass to the surviving spouse (or civil partner).
Where the ceased is survived by both a spouse (or civil partner) and one or more children (or grandchildren, etc), the old rule was that the spouse took the first £250,000 and a life interest in half the remainder. The child then took the other half (or the children shared it), and also took the capital when the spouse’s life interest fell in.
Under the new rule, the surviving spouse (or civil partner) will still take the first £250,000, but the balance will be divided half for the spouse (outright, not a life interest) and half between the children. This means that the surviving spouse can either spend his or her half, or decide its ultimate destination, which may be an issue where he or she has children who are not also the deceased’s children (for example, children of an earlier marriage).
The surviving spouse (under both the old rules and the new) is also entitled to the deceased’s ‘personal chattels’. The Act contains a new definition of ‘personal chattels’, so that the term now excludes property held ‘solely as an investment’. The official Explanatory Notes emphasise that: ‘This is intended as a narrow exception for property held solely as an investment which had no personal use at the date of the deceased’s death. Property which had some personal use but which the deceased also hoped might maintain or increase its value, for example precious jewellery worn only occasionally, will not fall within this exception( and so will pass to the surviving spouse) even if it is held outside the home, for example in a bank for security reasons.’