Changes to the Law of Succession

Changes to the law of succession in cases of forfeiture will come into force in 2012. The Estates of Deceased Persons (Forfeiture Rule and Law of Succession) Act 2011 (“the Act”) will come into force on 1st February 2012. The Act will not apply where a death occurs before its commencement.

The Act amends the law so that:

• If a person either disclaims an inheritance, or is automatically disqualified from receiving an inheritance by the forfeiture rule, the inheritance rights of that person’s descendants will be maintained; and
• The children of a minor (i.e. an individual under the age of 18) will be able to inherit their parent’s interest in an intestate person’s estate where that parent died before the age of 18 and was unmarried or had not entered a civil partnership.

Disclaiming inheritance

The Act changes the law in circumstances when a potential beneficiary under the intestacy rules rejects their inheritance. Where a potential beneficiary disclaims his inheritance, he is now deemed to have predeceased the deceased. This allows the children of the potential beneficiary who disclaims his inheritance to inherit their grandparent’s property.

Although it is rare, a person may disclaim their inheritance. This may be for tax planning reasons i.e. if property goes straight from the deceased to their grandchild only one lot of inheritance tax will be payable, whereas if it goes via the immediate child then to the grandchild, there would be two lots of inheritance tax (note: this may also be achieved by a deed of variation).

The Act does not change the position when a legacy under a Will is disclaimed, and the provisions of the Will should prevail.

Forfeiture

The forfeiture rule provides that an offender should not benefit from his crime, and therefore a person convicted of killing another should not benefit from his victim’s estate. This applies to succession under a Will or under the intestacy rules.

Therefore, if a potential beneficiary is convicted of killing his parents, he is disqualified from inheriting. However, previously under the intestacy rules, a grandchild would only inherit if the immediate child had already died. As such, the grandchildren of the disqualified potential beneficiary is also effectively disqualified from inheriting, and the route of inheritance would be diverted. This was widely seen as punishing the innocent grandchildren because of their parent’s wrongdoing, and did not reflect the presumed wishes of the deceased person.

The Act therefore modifies this in an attempt to reflect the likely wishes of the deceased persons.

From February 2012, the disqualified person is to be treated as though they had died immediately before the deceased, permitting the children of a disqualified person to inherit the disqualified person’s share.

Children of a minor

Previously, a child of a minor would have no right of inheritance under the intestacy rules. The Act alters this so that the child can inherit his parent’s interest when the parent is under 18 and is not married or in a civil partnership.

If you would like any further information, please contact our Wills, Trusts & Inheritance Tax Planning today.