Statutory Legacy Sum Raised to £322,000 in 2023
The government has raised the amount a spouse or civil partner can inherit if their partner dies without making a Will. Obviously you should have a will that reflects your current circumstances and wishes. As of 25 July 2023, the statutory legacy sum was raised from £270,000 to £322,000. We take a look at what this means and how the government decided on the new sum.
What happens if you do not make a Will?
If someone dies without making a Will, their estate is said to be intestate, or without heirs. The Rules of Intestacy set out who is entitled to inherit in order of preference. These rules were introduced in the Administration of Estates Act 1925 (the Act) and amended in 2014. Amendments to the Act aimed to modernise and simplify the law and create a fairer system.
If a spouse or civil partner is left a legacy by the deceased, the partner is entitled to inherit the statutory legacy sum. This was previously £270,000 and is now £322,000. In addition to this, they inherit all of the deceased’s personal possessions.
If the deceased had children, the remainder of the estate is divided into two. The spouse or civil partner inherits one half along with the statutory legacy sum, and the children share the other half equally. Often this means that the spouse or civil partner inherits substantially more than the children.
Where the deceased was not married or in a civil partnership, the children share everything. If the deceased did not have children, the spouse or civil partner inherits everything.
If the deceased had no spouse, civil partner or children, then the legacy passes to the next relatives to inherit. These are parents, siblings, then nieces and nephews, in order of priority.
Why has the statutory legacy sum been increased?
The statutory legacy was originally introduced to protect the interests of a surviving spouse. Balancing these against the interests of the deceased’s children.
The 2014 amendments to the Act requires that the statutory legacy sum is reviewed periodically to take into account inflation. There is a minimum review period of every five years. The new figure is calculated with reference to the Consumer Price Index. Considering the change from the date of the previous review to the most recently available figure.
The previous figure of £270,000 was set in January 2020, therefore meaning a review would be needed by January 2025. However, the legislation also allows that where inflation increases by 15% or more from when the figure was last set, the government is required to review it at that point.
Government must increase the figure in accordance with the Consumer Price Index. Alternatively, if it wishes to use a different method of calculation, seek Parliament’s approval.
In December 2022, the Consumer Price Index had increased by 15.023% since November 2019, the month used to calculate the January 2020 increase. Although inflation fell in January 2023, it rose once again in February. The government reviewed the situation and decided to set the new rate in accordance with the most recent Consumer Price Index figure available at the time.
The increase was 19%, and legislation required it to be rounded up to the nearest £1,000. Thus meaning an increase of £52,000, the statutory legacy sum raised from £270,000 to £322,000. Accordingly, the Lord Chancellor has set the new figure at £322,000 as of 25 July 2023.
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