Death benefits have been very much in the spotlight recently with changes to the rules regarding income drawdown and taxation.
But hot on the heels of the Government’s announcement on new pension death benefit options comes a revamp of the intestacy laws in England & Wales.
While this will see spouses and civil partners potentially getting more than before, it still may not match your intentions.
Both sets of changes highlight the importance of letting people know how you intend for your death benefits to be distributed.
This means making sure wills and pension death benefit instructions are in place and regularly reviewed because with greater inheritability of pension wealth on the horizon, this could change the size and destination of gifts you might want to leave through your will considerably.
The intestacy rules determine how a deceased person’s estate is divided if they don’t have a valid will and how certain investments are set up can dictate how they are passed on.
From October 1 this year, if a married person dies intestate and with no children, the estate will be inherited entirely by the surviving spouse or civil partner.
Before the changes, a share of the estate could have gone to parents or siblings, leaving less for the spouse or civil partner.
The position for those with children has been simplified too so that if someone who was married dies intestate and leaves a spouse or civil partner and children, the former will inherit three elements from the estate.
These include “personal chattels” or property such as jewellery, furniture and cars, £250,000 or the whole of the estate, if its value is less than this and one half of any balance left over.
The remaining half share still goes to the deceased person’s children and if they are still minors, their share is held in a Bereaved Minor’s Trust until they reach the age of 18.