New Words For Intestacy & Probate – And New Meaning

Increasingly, people are not making wills, or taking steps to ensure that their possessions and assets are settled and passed on after their death. The result is pain and heartache for those left behind.

If that happens, the person is declared to be intestate. That is defined as someone dying without a will, or having an invalid will. The person’s possessions and property will be disposed of in accordance with law, and administered by a court appointed executor or administrator. Some experts and commentators predict that intestacy numbers will rise over time. Whether that proves to be accurate or not, those future cases of intestacy will be handled under new updated rules, after intestacy was altered under recent legislation.

The Inheritance & Trustees Powers Act (2014) (ITPA) came into force in October 2014, bringing with it reform to the laws surrounding intestacy, amongst other provisions. Admittedly, though, the Act did not reform intestacy rules too greatly. Previously, if the deceased left both a spouse and children, they received split between them the deceased personal property, and a Statutory Legacy of £250,000. The remainder of the deceased’s estate was divided in half, with 50% going to the surviving spouse under a trust, and 50% to the children.

Under ITPA, though, the surviving spouse still received the same Statutory Legacy, and the personal chattels – and 50% of the estate outright. The 50% remainder is now divided amongst the surviving children or descendants under a life trust.

Where ITPA fails, however, is in addressing the issue of the deceased having remarried, perhaps several times. Further, what of children from those prior marriages? As divorce becomes less of a stigma, society has seen an increasing number of divorces. It is exactly the same with people marrying again – in some cases repeatedly. Indeed, the new rules dismally fail to address the matter of cohabitation.

According to Office of National Statistics, the numbers of cohabiting couples are only on the rise. Culturally and socially, it is becoming increasingly common and accepted for people to live together in long term, stable relationships- – but remaining unmarried. Much such couples often raise children together, or have property or similar assets in their joint names – but are still unmarried.

Whatever society might think, the law still resolutely fails to recognise such couples and relationships. Currently, the legal provisions set out in  Kernott v Jones [2011] and Stack v Dowden [2007] are the only legal protections that such  unmarried couples have. Even senior judges (notably Lady Hale) admit that those protections are not sufficient. In this instance, ITPA definitely missed an opportunity to address this, and to give unmarried, long term couples some degree of legal protection and afford them legal rights.

Aside from the slight alterations in dividing up the deceased’s estate, the term popular in equity and probate of “personal chattels” also was given a new meaning. Under Section 3, personal chattels are now defined as:

 “Tangible movable property other than any such property which consists of money or securities for money, or property used at the death of the intestate solely or mainly for business purposes, or was held at the death of the intestate solely as an investment.”

Section 3 updates the archaic thinking of the Administration of Estates Act (1925), which defined personal chattels previously. Now, Section 3 encompasses more types of property, and more modern types of property. Further, the nature of ‘property’ is (deliberately?) not specified in ITPA – which admittedly s both a hindrance and a great help when determining matters of probate. Quite clearly, this gives court appointed executors greater scope when disposed of the assets of the intestate, as the definition of a ‘personal chattel’ is now wider, and covers more.

An interesting definition was made in ITPA regarding such personal chattels. Previously, gifts and possessions such as wine collections, stamp collections, and similar were considered chattels. As such, they could be gifted, Under ITPA, the slight but subtle changed is that those and similar items can only be considered chattels (and therefore be gifted) if they were not held as an investment, but rather as personal property. Now, before such property is gifted, or handed on to relatives, it has to be determined that it was no an investment. For some things, that could take some proving either way – and more probate litigation. During that time, the value of the “investment” could rise or fall, potentially unfairly for those involved in the litigation.

Such reforms were cautiously welcomed by private client lawyers. Many felt that the new provisions did not go far enough regarding reforming intestacy. The reforms are very subtle, and quite technical, and seemingly cause more issues without addressing existing concerns.

Of such is the power or words and writing. Having received Royal Assent, the Inheritance & Trustees Powers Act (2014) is now law, and binding upon probate and intestacy proceedings. Whatever reservations probate and equity might have, intestacy proceedings (and some related private matters) now have to disposed of in line with the wording of the Act. Whatever interpretation lawyers choose to give to the provisions of the Act – the wording itself is now law, and has to be followed, however questionable that might be.