Editor's note:  Robin Paul, partner at Withers, the international law firm, goes over some new developments on how people in England and Wales might be affected by a new Law Commission report on wills. Non-specialists should note that different rules apply in Scotland. 

Anyone can make a will and choose who should inherit their estate. However, between half and two-thirds of people in England and Wales haven't made a will. Obviously, people are more likely to make a will when they are older, or when they are ill. Nonetheless, out of the 500,000 or so deaths a year, probably more than one-third die without a will (intestate). 

What happens if you are intestate? The rules are set out in the Administration of Estates Act 1925 and have remained much the same ever since. Contrary to what many believe, the spouse (the definition of which now generally includes a civil partner) does not get everything. If there are children, the spouse gets the “personal chattels”, the first £250,000 and a life interest in 50 per cent of the rest. The children get the other 50 per cent at 18 and the assets underlying the 50 per cent in which the spouse had a life interest when the spouse dies. 

Is this fair? Should the spouse get everything (which is probably what most people think is the case anyway)? The present system of the spouse getting a life interest in 50 per cent of the excess over £250,000 is cumbersome but it does try to balance the spouse's rights with the rights of the children. 

If there are no children, but there are parents or siblings, the spouse gets £450,000 and 50 per cent of the rest outright. Again, is this right? Should the spouse get everything? 

And what if people have been living together effectively as man and wife but unmarried - in this case the "spouse" gets nothing - there is no such thing in inheritance terms as a common-law spouse. 

The law does provide for a procedure for challenging the intestacy rules where family members or dependants feel that the intestacy rules have not made “reasonable provision” for them. But the procedures can be expensive and unattractive - for instance a widow whose share of the estate is insufficient to cover the family home may have to bring a claim against her own minor children. 

It had been clear for some time that a review of the intestacy rules was necessary to reflect changing attitudes and the evolution of more flexible and complex family structures. Work on the report started in 2008 and the Law Commission published a consultation paper in October 2009. Their recommendations were published on 14 November in the form of a very comprehensive 271-page report.

The report contains makes numerous recommendations of a more or less technical nature but the main substantive recommendations relate to spouses and cohabitants. 

The first is that where a person dies intestate and is survived by a spouse but no children or other descendants, the whole estate should pass to him or her (as opposed to the current 50 per cent of the estate over £450,000 - the other 50 per cent passing to parents or siblings). 

The second key recommendation so far as spouses are concerned is that where someone dies intestate and is survived by a spouse and children, the spouse should receive, in addition to the deceased's personal chattels and a statutory legacy (currently £250,000), half of any balance of the estate outright.  This contrasts with the current position whereby the spouse receives just a life interest in that half.  While the proposal obviously impacts adversely on the rights of any children, it improves the spouse’s position considerably, makes a clean break and simplifies the administration of the estate and the family’s financial affairs going forward.

The more radical recommendations made by the Law Commission relate to cohabitants. Interestingly, these recommendations are separated from those made in the rest of the report as it is envisaged that they will be more politically contentious and indeed might be thought better combined with any amendments to the law that may be made in the future relating to the break-up of "common-law" relationships. 

Cohabitant

The main proposal is that a “qualifying cohabitant” should be entitled to benefit from the estate of a deceased partner under the intestacy rules in the same way as a spouse.

A cohabitant would be '"qualifying" if he or she had been living in the same household as the deceased's spouse (which description is discussed at length in the report) and had been so living for a period of five years ending immediately before the deceased's death, or two years if they are the parents of a child living in the same household. Interestingly, a cohabitant would not qualify if the deceased was married or in a civil partnership immediately before his or her death (co-habitation with someone other than your spouse whilst being married being viewed as a bad thing). 

The Law Commission also looked at the provisions of the inheritance (Provision for Family and Dependants) Act 1975, under which certain relatives and dependants can claim against the estate on the basis that the will does not make reasonable provision for them. The recommendations here are not as far-reaching as those relating to intestacy but tidy up a number of points, one of the more interesting being the suggestion that it should no longer be a precondition that the deceased died domiciled in England and Wales. The recommendation is that an application should also be possible in any case where English domestic succession law applies to any part of the estate (where, for instance, the deceased owned a property in the UK). 

What happens now? A protocol between the Lord Chancellor (on behalf of the Government) and the Law Commission was published in 2010 under the terms of which the Minister of Justice has to respond to the Commission within six months of publication of the report. It will be interesting to see the response, particularly to the Commission's arguably rather controversial proposals regarding cohabitants.

Of course, by far the best response to the Commission Report is to ensure that you make a will and that it is updated on a reasonably regular basis.