What is the Statutory Legacy and How Does it Impact Me?

Today the Statutory Legacy which is payable on an intestacy is increasing to ￡322,000.

We asked Jo Caddoo, our Partner, and Head of the Private Client team what this means in practice and why you need to consider what this may mean for you and your family.?

What is a Statutory Legacy?

A Statutory Legacy is a legally specified sum of money given to the surviving spouse or civil partner of someone who has passed away intestate.?

Many people incorrectly assume if someone dies intestate their estate will automatically pass to their spouse or their civil partner.?This is not the case, and the Intestacy Rules will dictate how much a surviving spouse or civil partner will inherit.?

When does a Statutory Legacy apply?

When someone passes away without leaving a valid Will they are deemed to have died intestate and their estate will be governed by the Intestacy Rules.?These Rules set out who is entitled to deal with the late person’s estate, who inherits the estate, and the sums they inherit.?This is all fixed within the Intestacy Rules.?

What has changed?

The Intestacy Rules previously provided if there were children of the family who survived the intestate person then the surviving spouse or civil partner would receive a Statutory Legacy of ￡270,000, all personal possessions, and half of the remaining estate. The other half of the of the remaining estate would be shared equally between the children.

As of today, 26th July 2023, the Statutory Legacy has increased from ￡270,000 to ￡322,000. The other provisions of the Intestacy Rules remain the same.

Why has the amount of Statutory Legacy changed?

The change to ￡322,000 (which is an increase of ￡52,000 from the previous rate) is designed to?provide surviving spouses and civil partners with increased financial provision and security. The statutory legacy sum is reviewed every five years and the increase is to take into account the increased cost of living and needs of surviving spouses, and civil partners.?

Why do I need to worry about this, isn’t the increase good news?

Whilst an increase in the level of the Statutory Legacy is welcomed, surviving spouses and civil partners can still find they are not properly provided for under the terms of the Intestacy Rules. In real terms, the increase probably does not take away all the issues which a surviving spouse or partner may face. This is something which was probably never considered or intended by the person who has passed away intestate. They did not expect to leave difficulties behind for their loved ones.

It is also important to understand what is deemed to be part of your estate which would pass under the Intestacy Rules and how this would affect your surviving spouse or civil partner.?

It is also very possible there will be tax implications if your entire estate does not pass to your surviving spouse or civil partner. These may be decisions which you have consciously made when considering your estate if you have made a Will, but they could be forced upon your surviving spouse or civil partner if the Intestacy Rules take over. The law is deciding what happens, rather than you, irrespective of the consequences this may mean your spouse or civil partner may have to live with.?

Are there any other traps for me to be aware of?

Probably one of the most common misconceptions is what happens when someone dies when they are not married or in a civil partnership. A Statutory Legacy only applies to couples who are married or have a civil partnership.

A ‘common law spouse' is not recognised in law. Therefore, even if you have been together for many years, cohabit, have children together, and treat each other as ‘spouses’, your partner will not receive the Statutory Legacy and would not benefit under the intestacy rules unless you are married, or have a civil partnership.?Length of relationship, ties and bonds together do not ‘trump’ the Rules. Your estate would instead pass to your legal next of kin. This could be children, parents, siblings, or other, remoter relatives.?It all depends on who survives you.

How can I fix this?

The only way to make sure your estate is dealt with in accordance with your wishes and to prevent ‘the law’ determining what will happen is to make a Will. Our specialist team at Rollasons can help you make sure you have thought about all the issues which are important to you and you have made provisions which look after your family and loved ones and don’t leave problems behind when you die.

Contact Jo Caddoo or the team to make your Will and discuss your wishes with us [email protected], 01327 301 771