New Increase to Statutory Legacy on Intestacy

Pen on written letter

From July 26th (2023), the government has confirmed an increase to the Statutory Legacy on intestacy, from £270,000 to £322,000 (fixed net sum). When someone who has children passes away without a Will (otherwise known as “intestate”), this is the value of personal possessions that the surviving spouse or civil partner is entitled to first, before the remainder of the estate is shared between the partner (50%) and the children (50% amongst all children).

This development brings positive news for individuals struggling with the cost-of-living crisis and the impact of rising inflation – however, dealing with intestacy can take months, or even years, and may mean that your estate isn’t inherited by the people you intended. So, it’s always better to plan ahead by making a Will, to give you peace of mind, and protect your loved ones from future stress and worry. Chat with our friendly team today to see how we can help, or continue reading to find out more.

Statutory Legacy Increase – How Will it Help Families?

Half of UK adults don’t have a Will, including 33% of adults aged over 55, which means they will pass away intestate. As of April 2023, the average house price in England and Wales was £286,000. This meant that if a married couple with children owned a house solely in the name of the deceased individual, the current sum would result in the spouse receiving the first £270,000, with the remainder being divided between the spouse and the children. However, with the new figure of £322,000, the revised Statutory Legacy allows the entire value of an average house to be transferred to the surviving spouse. This eliminates the need to sell the property, making the change advantageous for individuals who have failed to create a Will.

Why has the Statutory Legacy been Raised?

It’s a legal requirement for a new Statutory Legacy amount to be determined within a five-year timeframe before its expiration. The current sum of £270,000 was established in January 2020, and under normal circumstances, the next review would have been scheduled for January 2025.

But the legislation also states that if inflation increases by 15% or more from the base rate used to determine the previous Statutory Legacy, the government must conduct a review of the sum – and adjust it according to the change in the consumer prices index (CPI), or an alternative method presented to Parliament. In December 2022, the trigger point was reached when the CPI for November 2022 revealed a 15% increase compared to the CPI used to determine the previous Statutory Legacy. After another inflation rise in February 2023, the government established the new Statutory Legacy sum of £322,000 to provide certainty to families.

Reasons to Make a Will

A Will is an essential legal document that allows you to outline how you wish to distribute your estate and assets when you pass away. Failing to make a Will results in the application of intestacy laws (mentioned above); even with the expected increase in the Statutory Legacy sum, it can be a lengthy, costly process – potentially also leading to your wishes being disregarded.

Outlined below are the key reasons why you should prioritise writing your Will:

  • Control what happens when you pass away, including who will benefit and what they will receive, to avoid intestacy rules. You can even add in information about funeral plans.
  • Provide for your children financially; for example, you may wish to set up a trust so you can control when your children receive the money and how they use it.
  • Protect the family home, to give whoever you choose the right to live in property in your name, or to pass on ownership to them.
  • Avoid paying unnecessary tax; with a Will, you can reduce the Inheritance Tax liabilities on your property and assets.
  • Safeguard your partner, as unmarried partners aren’t entitled to anything from your estate unless specifically stated in your Will.
  • Name children’s guardians, in case you pass away when your children are under 18 – it also makes sure that the right people will raise your children.
  • Make gifts and donate, as without these being written into your Will, strict intestacy rules apply and are based on family connections only.
  • Reduce future disputes, as your wishes are legally written, this reduces the chance of disputes.
  • Choose who will settle your affairs; in your Will, you can name an executor to conduct your final wishes, and if you have a business, who will take over.
  • Care for your pets, by making provisions for your pets in your Will.
  • Define medical treatment; if you are too ill to communicate, your Will can include final wishes regarding medical treatment.

Can I Change My Will, and When Should I Review It?

Even if you’ve already written your Will, you have the flexibility to modify it at any time – usually in response to any changes in life circumstances. These could include the birth or loss of a loved one or the undergoing of a divorce.

The below should also trigger the writing of a Will if you haven’t already done so:

  • Buying a first home, or moving home
  • Marriage, remarriage, or divorce
  • Having children
  • Changes in finances, e.g., an inheritance
  • Starting up a business

Need to Write a Will, or Get Advice on Intestacy?

If you need professional help writing your Will or advice on the Statutory Legacy on intestacy, Mercian Accountants provides a comprehensive range of estate planning services. Our later-life experts are dedicated to understanding your unique circumstances and providing tailored solutions to meet your needs. We’ve already helped numerous families and individuals – you can message us through our online form, call 01743 562430, or email hello@mercianaccountants.co.uk.

12189 Image Size: 1200 x 900