Status: This project is complete. We await the Government's response to our recommendations
This project considered two areas of the law of inheritance and certain aspects of trustees' powers.
Intestacy
When a person dies “intestate”, that is without leaving a valid will disposing of the whole of his or her property, the distribution of any money and other assets (the deceased’s “estate”) among surviving family members is governed by a set of legal rules known as the intestacy rules.
Family provision
Whether or not the deceased left a will, certain family members and dependants may apply to court for reasonable financial provision from the estate, under the Inheritance (Provision for Family and Dependants) Act 1975 (“the 1975 Act”). This is often referred to as a claim for family provision.
These are both important areas of the law, affecting a large number of families at times of financial and emotional vulnerability. Studies suggest that between a half and two thirds of the adult population do not have a will and that those who need one most are the least likely to have made one. The intestacy rules must strive to reflect the needs and expectations of modern families. Where the rules (or the deceased’s will) fail to make adequate provision for close family members or dependants, it is important that the law does not place unnecessary obstacles in the way of a valid family provision claim.
The intestacy rules date back to 1925 and have not been comprehensively reviewed for more than 20 years (when the Law Commission last considered this area of the law). The 1975 Act has not been the subject of a full review since it was enacted.
The project
Work on this project began in October 2008. In October 2009 we published a consultation paper (Law Commission Consultation Paper No 191) reviewing the current law, discussing options for reform and putting forward questions for consultees, including provisional proposals for reform.
In May 2011 we published a supplementary consultation paper that set out broader options for reform of statutory provisions which enable trustees to distribute income or capital from the trust fund to or for the benefit of beneficiaries who are not yet entitled to take such funds outright.
We received almost 150 consultation responses from members of the public, lawyers and other professionals and organisations – including law firms, charities and professional bodies. The project also benefitted from significant new research. This included focus group research commissioned for the project (which can be downloaded below), a large-scale survey of public attitudes to will-making and intestacy, funded by the Nuffield Foundation, and analysis by HM Revenue & Customs of the value of testate and intestate estates.
Our recommendations
Our final report (Law Com No 331) was published on 14 December 2011. It sets out and explains our recommendations for reform of the law and presents two draft Bills to implement the necessary changes.
The draft Inheritance and Trustees’ Powers Bill includes reforms that would:
- ensure that where a couple are married or in a civil partnership, assets pass on intestacy to the surviving spouse in all cases where there are no children or other descendants;
- simplify the sharing of assets on intestacy where the deceased was survived by a spouse and children or other descendants;
- protect children who suffer the death of a parent from the risk of losing an inheritance from that parent in the event that they are adopted after the death;
- amend the legal rules which currently disadvantage unmarried fathers when a child dies intestate;
- remove arbitrary obstacles to family provision claims by dependants of the deceased and anyone treated by the deceased as a child of his or her family outside the context of a marriage or civil partnership;
- permit a claim for family provision in certain circumstances where the deceased died “domiciled” outside of England and Wales but left property and family members or dependants here; and
- reform trustees’ statutory powers to use income and capital for the benefit of trust beneficiaries (subject to any express provisions in the trust instrument).
The draft Inheritance (Cohabitants) Bill contains further provisions that would give certain unmarried partners who have lived together for five years the right to inherit on each other’s death under the intestacy rules. Where the couple have a child together, this entitlement would accrue after two years’ cohabitation, provided the child was living with the couple when the deceased died.
The Bill is set out at Appendix B of the final report and is drafted on the basis that the law is as it would be after enactment of the Inheritance and Trustees' Powers Bill. The text of the Bill can be read by downloading the report (available below). We have also produced an alternative version of the Inheritance (Cohabitants) Bill (also available below) which does not assume that our other recommendations are already in force.
