Statutory Legacy Amount Increased in England and Wales

What Is a Statutory Legacy?

legacy

In the event of a person not having a valid will at the time of their death, Statutory Intestacy Rules set out the distribution of an estate. The “Statutory Legacy” was last changed when the Inheritance and Trustees’ Powers Act 2014 came into force on 1st October 2014.

A Law Society spokesperson explained that as many as ‘two thirds of adults in England and Wales pass away without leaving a valid will’.

Why is a Will Desirable?

When a person dies without leaving a valid will, they are said to be ‘intestate’ and this can lead to severe tensions and family disagreements amongst beneficiaries.  In the event of intestacy, standardised rules swing into action in order to regularise the situation and ensure that justice is done; the deceased’s wishes may not be fully realised.

The rules, for instance, ensure that the deceased person’s spouse or civil partner is left a ‘Statutory Legacy’ amount which will not necessarily allow the surviving spouse to remain in the matrimonial home.

The spouse is then entitled to 50% of the remainder and the other half would be distributed amongst any surviving children.

Whilst this may seem equitable and fair on the surface, many modern family structures don’t fit neatly into this particular mould. There are often step-children, co-dependants, family disagreements and particular wishes that would not be considered in this ‘one size fits all’ intestacy legislation.

Some Good News

The statutory legacy amount has not been increased since October 2014. At that time it was set at £250,000. If you are a recipient spouse, there is some good news; on 6th February 2020, the statutory legacy amount was increased by £20,000 to £270,000. This represents an 8% increase. This figure is informed by the Consumer Price Index or CPI and rounded up to the nearest £1000.

A Timely Intervention?

Welcome as this news is, it should be noted that the increase was slightly overdue. At the time of the 2014 increase, part of the legislation was that the Lord Chancellor “may make an Order by Statutory Instrument to specify the amount of the statutory legacy at any time, but must make an order at least every five years.” Partially due to the Brexit and General Election log jam, the appropriate legislation had been squeezed out from regular parliamentary time rendering it late when finally delivered. However, we should perhaps be grateful that the figure has increased at all! Within the same legislation, there is the power to reduce the statutory legacy amount!

In Summary

The new statutory legacy amount of £270,000 (February 2020) is an arbitrary amount and may well not reflect your full intentions or wishes. The only safe way to ensure your dying wishes are to be considered is to have a valid, up-to-date will in place.

By making a will you tell your executors what you wish to happen after you die. This makes it much easier for your family or friends to look after your affairs. Without the instructions contained in a will, the process can be more time consuming and stressful for those who have to administer the estate.