Last week, I started to look at the current intestacy rules applicable (self-evidently) when a person dies without leaving a valid will. It is, as many of you will be aware, a common misconception among married couples that on death, even without a will, the surviving spouse will receive the entirety of the deceased’s estate.
In some cases, this will indeed be the position but just consider the position that will result if the deceased leaves a spouse or civil partner and issue.
The position is not then quite so straightforward and some may be surprised to learn that the surviving spouse or civil partner will often not take the lot, so to speak.
In these circumstances the spouse/civil partner takes the following provided he or she survives the deceased by 28 days:
i: All the personal chattels absolutely
ii: £250,000 (the statutory legacy), plus interest at 6 per cent payable from the date of death until the date of payment
iii: A life interest (that is the right to income) in half the balance of the residuary estate with the remainder to children
The issue takes the remainder of the residuary estate. Where the children benefiting are under age 18, the residuary estate is held on the statutory trust which is called a bereaved minor’s trust (BMT). Under a BMT, the child will become absolutely entitled at age 18.
Where there is more than one child, the children will share the remainder of the residuary estate in equal shares. Where children are adult, they will receive a proportionate share of capital immediately and a proportionate share of the capital of the life interest trust on the death of the surviving spouse/civil partner.
Since the implementation of the Trustee Act 2000, trustees of such statutory trusts in England and Wales have had wide powers of investment. When a child predeceases a parent who subsequently dies intestate, his/her share will be taken by his/her children who are living at the death of the intestate who attain age 18 or marry under that age.
What is included in personal chattels is defined in section 55 Administration of Estates Act 1925. This would normally include motor cars and accessories, garden effects, domestic animals, linen, china, books, pictures, jewellery, articles of household or personal use, musical instruments, wines and consumable stores.
Personal chattels do not include any chattels used at the death of the intestate for business purposes, or money or securities for money.
The spouse/civil partner has the right, which must be exercised in writing within 12 months of the issue of the grant of representation, to request the redemption of the life interest and receipt of the capital value instead.
Calculation of the lump sum must be in accordance with the rules and tables laid down in the Intestates Succession (Interest and
Capitalisation) Order 1977. Capitalisation of the life interest will be administratively convenient in that it can speed up the distribution of the whole estate. It should be added that, where all the issue are of full age and capacity, they can agree the share of the capital to be taken by the surviving spouse/civil partner so that the calculation under the above-mentioned regulations will not be necessary.
Where the surviving spouse/ civil partner occupied the private residence, in which the deceased had an interest, at the date of death, he or she has the right to require the administrator to appropriate the deceased’s interest in or towards satisfaction of any interest that he or she has in the intestate’s estate.
Like the right to a capital sum in lieu of the life interest, this right must be exercised within 12 months of the issue of the grant of representation. If the value (at the date of appropriation) of the deceased’s interest in the property is greater than the value of the surviving spouse’s/civil partner’s absolute interest in the estate (including the redemption value of the life interest), the surviving spouse/civil partner must pay the balance to the administrator in cash.
If the intestate’s interest, say in the private residence, was held subject to a joint tenancy, the surviving joint tenant (in most cases the spouse/civil partner) will automatically receive the intestate’s share by the right of survivorship, wholly unaffected by the intestacy provisions.
Next week, I will look at some other combinations of relatives surviving the deceased and what their rights to share in the deceased’s estate might be.