Overview

The Inheritance and Trustees’ Powers Bill [HL] modifies the rules governing inheritance in England and Wales, primarily concerning intestacy (dying without a will) and the powers of trustees. It simplifies inheritance distribution for surviving spouses/civil partners, updates the fixed net sum calculation, clarifies the definition of "personal chattels," and alters trustee powers regarding income application and advancements.

Description

Intestacy and Surviving Spouses/Civil Partners:

The bill significantly alters intestacy rules. If an intestate leaves no children, their entire estate goes to the surviving spouse/civil partner. If children exist, the spouse/partner receives personal chattels absolutely, a "fixed net sum" (indexed to inflation), and half the remaining estate; the other half goes to the children. The interest rate on the fixed net sum is tied to the Bank of England rate.

Fixed Net Sum:

The bill replaces the existing Family Provision Act 1966’s mechanism for determining the fixed net sum with a new system indexed to the Consumer Prices Index. The Lord Chancellor will periodically adjust this sum based on inflation, with parliamentary oversight.

Definition of Personal Chattels:

The bill refines the definition of "personal chattels" to explicitly exclude money, securities, and items used primarily for business or investment purposes.

Adoption and Contingent Interests:

The bill clarifies the inheritance rights of adopted persons, particularly concerning contingent interests in a deceased parent's estate.

Presumption of Prior Death:

The bill amends the presumption of prior death in cases of uncertainty regarding the order of death between individuals, using official birth records for clarification.

Amendments to the Inheritance (Provision for Family and Dependants) Act 1975:

The bill broadens the definition of "child of the family" and clarifies the requirements for "maintenance," providing more detailed criteria for court consideration in financial provision cases. It also extends court powers to include varying trusts for the applicant's benefit and allows courts to assume an order has been made when assessing estate reduction due to debts or liabilities.

Trustee Powers:

The bill increases the flexibility of trustees in applying income for beneficiaries' maintenance and in exercising the power of advancement, broadening their authority regarding capital distribution.

Government Spending

The bill is unlikely to have a significant direct impact on overall government spending. The changes relate to the distribution of private estates, not government funds. Indirectly, changes to inheritance laws might marginally influence tax revenues depending on estate values and distribution methods.

Groups Affected

Groups affected include:

• Surviving spouses/civil partners: May receive a larger share of the estate under intestacy rules.
• Children of the deceased: May receive a smaller share if a surviving spouse/civil partner is present.
• Adopted individuals: Receive clarity on their inheritance rights.
• Trustees: Will have enhanced powers regarding income and capital distribution.
• Applicants under the Inheritance (Provision for Family and Dependants) Act 1975: Could benefit from the broadened definitions and court powers.

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