This summer, the maximum statutory legacy amount has been increased to £322,000. This is a fairly significant increase on the previous maximum amount of £270,000. The new threshold will be applied to the estate of anyone who died without leaving a Will on or after 23rd July 2023.
What are the statutory legacy rules, and when do they apply?
Statutory legacy rules apply in cases where an individual has died intestate. Someone is described as having died ‘intestate’ if they had not written a Will before their death, or if any Will they had written is not considered to be valid.
In these cases, their estate (which includes any money they left behind as well as their property and any other assets) will have to be administered according to the government’s rules. These rules are called the intestacy laws.
When an estate is administered as per the intestacy laws, only certain individuals will be able to inherit. If the person who has died was married or in a civil partnership, their spouse or civil partner will be the first beneficiary.
However, if the person who has died also had children, there is a limit to the amount their spouse or civil partner can inherit from the estate. This is called the statutory legacy limit. It exists to ensure that larger estates will be shared between the surviving spouse/civil partner and any children.
The statutory legacy limit is now £322,000. This means that if someone dies leaving an estate worth more than this, only 50% of anything over and above £322,000 would pass to their surviving spouse or civil partner. The remaining 50% would be split between the children of the person who has died.
What might this mean for estates?
Fixed thresholds in probate law like the statutory legacy limit tend to be raised from time to time to ensure they remain in line with inflation.
In this case, the significant rise may be helpful when considered in the context of rising property prices. For many estates, this may mean that it is easier for a surviving spouse to inherit their family home within the limits of the statutory legacy without it needing to be sold in order for assets to be split between them and any surviving children.
Of course, the rise in the limit a spouse can inherit will mean that the children of someone who has died will end up inheriting less than they would have done previously.
What if someone dies intestate who wasn’t married?
If someone who wasn’t married or in a civil partnership dies intestate, their estate would pass to the next person who was eligible according to the intestacy laws. After a spouse or civil partner, the next beneficiary would be children or grandchildren. If the person who had died had no surviving children or grandchildren, the estate would pass to their parents, siblings or other family members instead.
Our illustrated guide to how the intestacy rules work in England and Wales explains these eligibility rules in more detail.
Unfortunately, unmarried partners and step-children are not able to inherit at all via intestacy laws.
Is there a way to avoid this?
There is a very easy way to avoid your estate being dealt with in this way. Writing a Will means that you are able to clearly record your wishes for your estate in the event of your death.
In your Will, you can choose to leave your estate to whoever you wish, regardless of whether or not they would be eligible according to the intestacy laws. You can also choose to leave however much of your estate as you wish to your spouse or civil partner. If you leave a valid Will, your estate will not be subject to the statutory legacy limit. Once you have made a Will, it’s important to ensure that it is safely stored and kept up to date. Certain life events such as marriage or divorce can affect the validity of your Will, so please do keep this in mind. Experts generally recommend that you review your Will every two to five years to ensure it still accurately represents both your estate and who you would wish to benefit from it.
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