Inheritance Trustees Powers Act 2014

Tuesday, 03 February 2015

The Inheritance Trustees Powers Act 2014 came into force on the 1st October 2014 and made various changes to the Intestacy Rules and Trustees Powers.

The intestacy rules are governed by s46 Administration of Estates Act 1925 and are strict rules governing how an estate is to be distributed if there is no Will in place. The order in which the rules apply depends on which relatives survive the deceased.

Surviving spouse/civil partner and issue surviving
Administration of Estate Act 1925
Spouse would receive the first £250, 000 statutory legacy plus interest at 6% per annum from the date of death until payment, the deceased’s Personal Chattels and half of the remaining estate on a Life Interest Trust. This allows the spouse to use the income from the amount but not the capital sum. Upon the death of the spouse the share would pass to the children. The Children would receive the remaining half of the estate immediately.

Inheritance Trustees Powers Act 2014
ITPA 2014 has amended this for deaths on or after the Act comes into force by removing the life interest on the half share of the estate to the spouse, thus providing them with more of the estate and reducing the potential entitlement to the children. The interest on the statutory has also been reduced to 0.5 % rather than the previous 6%. Surviving spouse/civil partner and surviving parents or brothers and sisters of whole blood



Administration of Estate Act 1925
The spouse would receive the first £450, 000 as a statutory legacy plus interest at 6% from the date of death, Personal Chattels and half of the remaining estate.
If the parents are alive they shall receive the remaining half of the estate. If both parents have predeceased then the remaining half of the estate shall pass to the brothers and sisters of the whole blood.



Inheritance Trustees Powers Act 2014
ITPA 2014 has amended this section for deaths on or after the Act comes into force. The spouse shall receive the entire estate. Therefore, the parents or brothers or sisters shall not be entitled to receive anything in this situation.


Personal Chattels – s55 (1)(X) Administration of Estate Act 1925
The definition of Personal Chattels under s55 (1)(x) AEA 1925 was rather lengthy and dated, including such items as horses, carriages and stable furniture.



ITPA 2014 has amended this definition to “tangible moveable property, other than any such property which consists of money or securities of money or was 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”.

Trustees Powers
S31 Trustees Act 1925gives Personal Representatives (PR’s) the power to make payments from the income of an estate to the parent or guardian or for the minor beneficiary’s maintenance, education and benefit. The PR’s are required to consider the ages and needs of the minor, the amount of funds to distribute which would be reasonable in the circumstances and any other Trust funds available. If another fund is available then then a portion of each funds should be used.



S8 ITPA 2014gives Personal Representatives (PR’s) the power to make payments from the income of an estate to the parent or guardian or for the minor beneficiary’s maintenance, education and benefit. The PR’s are required to consider the ages and needs of the minor, the amount of funds to distribute which would be reasonable in the circumstances and any other Trust funds available. If another fund is available then then a portion of each funds should be used.



S8 ITPA 2014 removes the requirement for the PR’s to take into account the age and needs of the minor, the amount that would be reasonable in the circumstances or any other Trust funds available. Therefore, considerably widening the powers of the PRs.



S32 Trustees Powers Act 1925 allows PR’s to advance up to one half of a beneficiary’s entitlement to him for his advancement or benefit. Any advancements made to the beneficiary are to be bought back into account when the estate I distributed.



S9 ITPA 2014amends this for deaths on or after the Act comes into force and removes the half limit, therefore giving the PR’s the discretion to pay out the whole of the capital of a beneficiaries share for his advancement and benefit.