Written by Roger Peters
The Inheritance and Trustees’ Powers Act 2014 (‘ITPA’) came into force on 1 October 2014 and makes various changes to the intestacy rules, to family provision claims and to trustee powers.
1. Section 1 ITPA amends the entitlement of the surviving spouse of a person who dies intestate. Where the deceased leaves no surviving children, their entire net estate will pass to their spouse or civil partner. Where the deceased leaves children, the surviving spouse will receive the personal chattels, a statutory legacy of £250,000 and one half of the residue of the estate absolutely, rather than a life interest in the residuary estate. The remaining half of the estate will pass to the deceased’s children on statutory trusts.
2. The definition of ‘personal chattels’ in section 55(1)(x) Administration of Estates Act 1925 has been amended by section 3 ITPA. The new definition includes all tangible movable property, except:
- money or securities for money;
- property used solely or mainly for business purposes; and
- property held solely as an investment (a narrow definition which only applies where there was no personal use of the property at the date of death)
3. Children who were adopted following the death of a parent will no longer lose their right to an inheritance acquired prior to their adoption. Under section 4 ITPA, an adopted child will be entitled to inherit their biological parents’ estate even if they are subsequently adopted.
4. Section 5 ITPA disapplies the presumption in section 18(2) of the Family Law Reform Act 1987 that where a person dies intestate and his parents were not married at the time of his birth, his father and anyone to whom the deceased was related to through his father did not survive him. This change applies provided that the father, whether married or unmarried, is registered as the father.
Family provision claims
The amendments to the Inheritance (Provision for Family and Dependants) Act 1975 (‘the 1975 Act’) can be found in Schedules 2 and 3 of the 2014 Act.
1. ITPA clarifies the previously ambiguous position and states that it is possible to bring a claim under the 1975 Act before the grant of representation is issued.
2. There has been a change to the definition of a person who is treated as a ‘child of the family’ in section 1(1)(d). It will now be sufficient for the deceased and the applicant to have been in a relationship akin to that of a parent and child, with no requirement for this relationship to be in connection with a marriage or civil partnership. This means that a family can consist of only the deceased and the applicant. Consequently, a single parent family would be included within the definition.
3. There has also been a change to the definition of a person‘ being maintained by the deceased’ in section 1(3) of the 1975 Act. A person may meet this definition if the deceased made a substantial contribution to that person’s reasonable needs (other than for full, valuable consideration under an arrangement of a commercial nature). This removes the balance sheet test which can currently block claims in cases of mutual dependency and means that there is no longer a need to demonstrate that the deceased contributed more to the arrangement than the applicant.
4. Section 9 of the 1975 Act allows the court to treat the deceased’s severable share in property held under a joint tenancy as part of the deceased’s net estate. ITPA’s changes permit the court to exercise this power even where the application is not made within six months of the grant of representation being issued. In addition, the valuation of the deceased’s severable share no longer has to take place at the date of death and can now be valued at the date of the hearing.
1. Section 31 of the Trustees Act 1925 (‘TA’) has been amended by section 8 ITPA 2014 so that trustees now have unfettered discretion when deciding whether and how much income to apply for the maintenance of a trust.
2. Section 32 TA has been amended by section 9 ITPA so that the statutory power of advancement now applies to the whole of a beneficiary’s interest in capital, rather than half of it. Moreover, trustees have power to advance any trust assets and not only cash.
The amendments introduced by ITPA assist in clarifying previously ambiguous provisions and are particularly beneficial to surviving spouses who are claiming under the estate of a person who dies intestate. However, the best planning still comes from having an up-to-date will.
Contact the Author
I am senior partner at Gordon Dadds, working in both private client law and charity law. I began my career at the long-gone Peacock & Goddard, as an articled clerk and then assistant solicitor, before joining Gordon Dadds in 1973. I have 45 years post qualification experience and my speciality lies in estate planning and it is the challenge of getting this right both tax-wise and for the family dynamics that I find absorbing. Outside work, I enjoy spending time with my family, travelling and visiting restaurants. When I have time, I’m also passionate about reading, particularly about English history.