The Law Commission published their final report on "Intestacy and Family Provision Claims on Death" on 14 December 2011. The Law Commission's project on this topic began in October 2008. The Commission's final report also includes a draft Inheritance and Trustees' Power Bill and a draft Inheritance (Cohabitants) Bill to implement their proposals. The proposals primarily affect spouses, civil partners and cohabitants.
If implemented, these proposals could have far reaching consequences for private practice.
Cohabitants
The media reports relating to the Law Commission's proposals have primarily focused upon the possible implications for cohabitants under the draft Inheritance (Cohabitants) Bill. The draft Bill proposes that the right to inherit on each other's death under the intestacy rules are given to certain unmarried partners who have lived together for 5 years. Where a couple have a child together and the child was living with the couple when the deceased died, this entitlement would accrue after two years' cohabitation. The Commission appear to acknowledge the potential controversial nature of its proposals relating to cohabitants as whilst it recommended that the Government accelerate the enactment of the Inheritance and Trustees' Power Bill, it has not made the same recommendation regarding its cohabitant proposals.
Private Members' Bill
On 11 January 2012, a Private Members' Bill largely based upon the draft Inheritance (Cohabitants) Bill, received its first reading. Lord Lester of Herne Hill has introduced the Law Commission's proposals regarding cohabitants as a Private Members' Bill, and whilst no date has yet been agreed for its second reading, it is likely to bring the Law Commission's proposals to the attention of Parliament very soon.
Spouses, Civil Partners, children and trust beneficiaries
The draft Inheritance and Trustees' Power Bill has a vast number of proposals relating to spouses, civil partners, children and trust beneficiaries to name but a few.
The proposals relating to spouses include an increased entitlement for spouses on intestacy, a new definition of personal chattels, the indexation of statutory legacies and clarification that Inheritance Act claims awards are not limited by the divorce analogy. There is also a recommendation that there is a preservation of contingent interests of adopted children. There are proposed changes to the presumption regarding unmarried fathers on intestacy. Presently, when a person dies intestate, whose parents were never married to each other, there is a rebuttable presumption that the deceased was not survived by his father or anyone related through his father. The Commission consider that this presumption should not apply if someone is recorded as the father on the deceased's birth certificate. The Commission also recommends that it should be possible to make an Inheritance Act claim where the deceased was non-UK domiciled.
The Commission make a number of other proposals in relation to the Inheritance Act regarding the definition of "child of the family" and "dependants". Furthermore, the Commission recommends that the application under the Act should be made before the Grant is issued.
Importantly for Members are the proposals relating to the relaxation of Sections 31 and 32 of the Trustee Act 1925 for all trusts. This would reform trustees' statutory powers to use income and capital for the benefit of the trust beneficiaries (subject to any express provisions in the trust instrument). Crucially, the proposed amendments would apply to all Wills and trusts, not just statutory trusts on intestacy. They would apply to trusts created on or after the amendments come into force.
The Government has not yet responded to the Law Commission's proposals. We will keep Members updated once the Government indicates when it will respond to the report. To review the whole report, please click here.
We deal with a range of claims including those involving intestate estates. If you would like to discuss the Law Commission's recommendations further, please contact Fiona Lawrence, an Associate in our Private Client team, on 0117 314 5389.
This publication is for guidance only. Reliance should not be placed upon it and nor should action be taken, without obtaining advice in respect of the specific circumstances applicable. We will be pleased to provide such advice or assistance.
