The Statutory Legacy sum is set to be raised from £270,000 to £322,000 later this month in the UK. The increase, which will come into effect on July 26, 2023, is being made in accordance with the Administration of Estates Act 1925 (Fixed Net Sum) Order 2020. This order sets out the methodology for calculating the Statutory Legacy sum, which is based on the average house price in England and Wales.
The current Statutory Legacy sum of £270,000 was set in January 2020. Since then, the average house price in England and Wales has increased by 18.4%. This means that the Statutory Legacy sum is now worth less in real terms than it was when it was set. The increase to £322,000 is designed to bring the Statutory Legacy sum back in line with the value of an average house.
The Statutory Legacy is a fixed sum that is paid to the surviving spouse or civil partner of a person who dies intestate (without a will) and who has children. The sum is paid out before the remaining assets of the estate are divided between the surviving spouse or civil partner and the children. The purpose of the Statutory Legacy is to provide financial security for the surviving spouse or civil partner, who may not have been financially independent before their partner’s death.
The increase to the Statutory Legacy sum is being welcomed by some, who argue that it is necessary to ensure that the surviving spouse or civil partner is able to maintain their standard of living after their partner’s death. Others have expressed concerns that the increase will be too expensive for the government and that it will not be used in the way that it was intended.
The government has said that the increase to the Statutory Legacy sum will be funded by a combination of increased taxes and government borrowing. It has also said that it will monitor the impact of the increase and make further changes if necessary.
The increase to the Statutory Legacy sum is a significant change to the law of intestacy in the UK. It is important to make a Will rather than relying on the laws of intestacy and the Statutory Legacy wherever possible.