Intestacy: statutory legacy increases to £322,000

If you die without leaving a will (known as dying intestate), the intestacy rules set out how the assets in your estate are distributed to your family. In England and Wales, our intestacy rules are contained in the Administration of Estates Act 1925 (the Act).

If an intestate person leaves a spouse or civil partner and children or grandchildren, the Act provides for their spouse or civil partner to receive a fixed sum (known as the statutory legacy). The remainder of the intestate person’s estate, if any, is divided so that their spouse or civil partner receives half and their children or grandchildren receive the other half.

The statutory legacy was set at £270,000 in January 2020 and was next due for review by January 2025. However, due to inflation rate increases, the Government has decided to review this figure earlier. On 5 July 2023, the Administration of Estates Act 1925 (Fixed Net Sum) Order 2023 was passed, increasing the statutory legacy by almost 20% to £322,000. This new figure applies to deaths on or after 26 July 2023.

Current estimates suggest that only 35% to 40% of UK adults have made a will and so the intestacy rules apply to most estates. This increase in the statutory legacy will help simplify the administration of many estates valued at under £322,000.

Do I still need a will?

Wills are not the preserve of people who wish to make detailed, bespoke arrangements for their estate on death or for those that have complex estates. In fact, in order to ensure the simplest arrangements are effected on death, a person may need to have a will. A married couple with children will need wills to ensure that the surviving spouse inherits everything on the first death if the couple’s individual estates are worth more than the statutory legacy. A will also gives clarity and some increased administrative efficiency by nominating executors to deal with the filings and follow-up, as well as giving room to optimise the tax result of the arrangements.

If you are planning to rely on the intestacy rules, it is important to remember that the rules and/or the value of your estate may change, which could produce undesired results. Furthermore, the intestacy rules do not provide for all potential beneficiaries. For example, under current intestacy rules, the cohabitee or unmarried partner of a person who dies intestate does not benefit from the estate.

The simplest way to seek to ensure your estate passes as you wish (and potentially in a tax efficient manner) is to have a will.