Statutory Fixed Net Sum on Intestacy Amount Increases for Surviving Spouses
The statutory fixed net sum has increased. Why does this matter?
If you don’t have a Will, then the statutory provisions of Intestacy will determine who inherits your assets. Historically, where there was an estate where a deceased left no Will, the distribution was largely determined by whether you were a man or not. If the wife died, her husband would receive everything, but in the reverse, the wife would be permitted a share of the estate with the rest being distributed to the children. Of course, this did not apply to land, which always passed to the eldest male issue with all sorts of rules concerning “consanguinity” and various other archaic concepts.
Down the years, the law has (largely) caught up with social trends but for a married couple or those in a civil partnership who have children, the concept of dividing the deceased’s estate between the surviving partner and the children still exists. From 26 July 2023, the sums involved have changed, but the basic principle has not.
From that date, the distribution of an Intestate estate where there is a surviving spouse or civil partner and children is as follows:
- All personal chattels pass to the surviving spouse or civil partner
- Joint tenancy assets pass to the surviving owner
- The surviving spouse or civil partner receives a “Statutory Fixed Net Sum” of £322,000 (this can be made up from any assets in the estate to meet the required value)
- To the extent that there is any value in the estate above this, then it will be split as to: –
- One-half to the surviving spouse; and
- The remaining half equally between the children.
As an example, and ignoring any Inheritance Tax consequences which may occur as a result of children inheriting on the death, let us suppose that A has an estate worth £1 million and is married to B, with two children. This would lead to a distribution as follows:
- B’s Statutory Fixed Net Sum £322,000
- Balance of the estate £678,000
- One-half to B £339,000
- One-half equally between the two children £339,000
Whilst it is possible to rearrange an estate post-death by means of a Deed of Variation, if the intention is that the surviving spouse or civil partner receives all of the assets this can only be done with the consent of all of the children who may not be able to do so for various personal reasons (divorce, bankruptcy, they may be minors and so unable to consent without the Court’s approval, or they simply do not wish to join any Variation).
An Intestacy can also lead to the requirement to make a full paper application to the Probate Registry, which is a far slower process than the online application process where a Will is in existence.
Whilst the increase in the Statutory Fixed Net Sum is welcome, the best situation for all concerned is that a Will for each spouse is put in place, setting out who is to administer the estate, how the estate is to be distributed and any alternative scenarios if the best laid plans go astray, thus ensuring that the deceased’s wishes are correctly followed rather than “hoping for the best”.
Here to help
For advice Inheritance Tax planning, please contact Alastair Liddiard, Partner and Head of Trust and Estate Administration.
Please note the contents of this article are given for information only and must not be relied upon. Legal advice should always be sought in relation to specific circumstances.