According to a recent report from The National Will Register, it is estimated that only 44% of UK adults have made a will (https://www.nationalwillregister.co.uk/app/uploads/2023/04/The-National-Wills-Report-2023.pdf). A will is a written document whereby an individual records where their assets will pass when they die.
So, what happens to the assets belonging to the 56% of UK adults who die without a will? This is where the intestacy rules come in and there has recently been a significant change to these.
If an individual dies without a will, then the law decides where their estate will pass. Previously, for those who die without a will, leaving a surviving spouse or civil partner and children, a lump sum payment (the ‘statutory legacy’) of £270,000 passes to the surviving spouse, along with all personal effects. The rest of the assets are then split as 50% to the surviving spouse and the other 50% passes equally between the deceased’s children at the age of 18 in equal shares. There are different rules for those who die whilst unmarried as, contrary to popular belief, the intestacy rules do not recognise a “common law” spouse.
For deaths occurring on or after 26th July 2023, the statutory legacy is increasing to £322,000. Surviving spouses will have more funds available to them on death, so this may be welcome news for those who do not have a will but are concerned with current rates of inflation amidst the cost-of-living crisis. Though, given the statutory legacy is always paid first, it could result in less funds passing to their children than previously anticipated.
More importantly, it is the government that decides the level of the statutory legacy, meaning it could well change again in the future. This highlights the importance of making a will to ensure that your assets are distributed according to your wishes and to protect your loved ones from potential complications or disputes that may arise from intestacy.
Creating a will provides an opportunity to clearly state how you want your estate to be distributed, specifying beneficiaries and their respective shares. By doing so, you can ensure that your spouse, children, and any other intended beneficiaries are adequately provided for, and you can even include provisions for guardianship of minor children, charitable donations, and other personal wishes.
Ultimately, the increase in the statutory legacy emphasises the importance of creating a will. By taking proactive steps to plan for the future you can have peace of mind knowing that your wishes will be respected, and your loved ones will be well taken care of in the event of your passing.
To discuss how the changes to statutory legacy affect you and for advice on writing a will get in touch with one of our friendly team today.