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Changes to the Intestacy Rules – CII AF1, AF5, J02, R03 and R06

Changes to the Intestacy Rules – CII AF1, AF5, J02, R03 and R06

What happens to a person’s estate when he or she dies without having a will in place? Well, from 1st October 2014, the rules are changing. Read on to learn what changes are being made to the intestacy rules. This is useful information for CII AF1, AF5, J02, R03 and R06 candidates.

At long last the intestacy rules are changing.  Following consultation the Inheritance and Trustees Powers Act 2014 will take effect from 1st October this year.

Current rules state that if a spouse is survived with children, then the spouse gets £250,000 plus all the personal belongings and a life interest in half of the remaining estate.  The children are entitled to the other half at age 18.

The personal belongings and the amount of £250,000 is not changing, but instead of just receiving an income from half of the remaining estate, the surviving spouse can now have this outright.  The children will still inherit the other half on reaching age 18.

If there are no children, then currently a spouse receives £450,000 plus personal belongings and half of the residue and the parents or siblings receive the other half.  From October the spouse will receive the whole estate and the parents/siblings will get nothing.

Make a Will!The other improvement is that the statutory amounts will be reviewed at least each 5 years and will rise in line with CPI.

The new rules are a definite improvement but the advice has not changed and that is – make a will!

The new Act almost makes amendments to Section 31 and 32 of the Trustee Act 1925.

Section 31 allows trustees to apply income for the maintenance, education and benefit of a beneficiary – the trustees will be able to pay out as much of the income as they think fit.

Section 32 allows trustees to apply capital – but only up to half of a beneficiary’s ‘presumptive share’ – the new legislation states that the trustees can pay the whole amount out to a beneficiary and it can be in assets as well as cash.

The new rules will not be tested by the CII until January 2015.

Links to the appropriate exam resources are: