Inheritance and Trustees’ Powers Bill [Lords]

Oral Answers to Questions — Prime Minister – in the House of Commons at 4:15 pm on 26th March 2014.

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Bill, not amended in the Public Bill Committee, considered.

Third Reading

Queen’s and Prince of Wales’s consent signified.

Photo of Simon Hughes Simon Hughes The Minister of State, Ministry of Justice 4:18 pm, 26th March 2014

I beg to move, That the Bill be now read the Third time.

I am happy to be able to inform the House that the consensus that clearly prevailed in the last debate on the previous piece of proposed legislation will, I believe, prevail here. I am very happy to bring for the first time on to the Floor of the House a Bill which is small, perfectly formed, but very important and which will affect a very large number of people.

The Bill reforms certain aspects of the law of inheritance and the law relating to trustees’ statutory powers. The purpose and effect of the Bill will be to modernise and simplify this area of the law to create a fairer and more comprehensible set of rules and to make the process of administering an estate faster and easier for people at what will always be a difficult time.

The Bill gives effect to most of the recommendations made in the Law Commission’s report “Intestacy and Family Provision Claims on Death”. It will modernise and simplify not just the law of intestacy to make it fairer, but the process of administering an estate to make it faster and easier for all concerned. The Bill also makes some important technical improvements to the family provision legislation and to the statutory powers of trustees, to make sure that they, too, are clearer, more consistent and easier to apply.

A considerable amount of consultation was undertaken on the Bill—as the Law Commission would do—so it came to Parliament built on a broad consensus of support, and having been through the Lords, it now comes to the Commons. That support is very welcome. I wish to refer to the Bill’s two core proposals, briefly address the four bits of the background “scenery” to it and deal with some of the details. Slightly unusually, I am doing so on Third Reading, because as Dan Jarvis, who leads for the Opposition, and others will know, the Bill has come through a procedure which has been used only a few times in Parliament. When we deal with proposals from the Law Commission which are regarded as matters not likely to cause great controversy in the House, we have a procedure that predominantly takes place upstairs, so we have not looked at these matters in the Chamber of the House of Commons before.

The two significant proposals are that in future surviving spouses will be the sole beneficiary of an estate where somebody dies leaving no will and there are no children. Not only do we believe that is right, but the Law Commission’s research showed that a majority of people in the country favoured giving priority to a surviving spouse in those circumstances. The Bill therefore reflects public expectations by making the surviving spouse the sole beneficiary in such circumstances.

The other key issue is what happens when a person who dies intestate has surviving children. The Bill seeks to simplify the sharing of assets on intestacy in a way that is fair to those who have been closest to the deceased—so first comes the surviving spouse or civil partner, and next come any children or their children. We think that the Bill ensures that all those people will be adequately provided for in future. Removing the current requirement that there be life interest trusts will reduce costs and make the law easier to understand and apply.

Of course, we would probably never be able to pass a law that everyone in the country thought right or fair, but we hope we are legislating for the occasions when people do not leave a will in a way that most reflects what we believe they would have intended, given that we have no written evidence of what their wish would be. We hope we are reflecting the real life expectations of what somebody would want for their partner and children.

That leads me to the four short background points about why the Bill is important. Obviously, making a will is and remains the best way to make provision for loved ones and others after we have gone, but the figures are surprising. In 2011, just under 50% of the registered deaths in England and Wales were those that might be classified as intestate: where there was no written provision. First, therefore, it is important to say to people that making a will is really important. Many people do not do it and we hope that this debate and the consideration given to the Bill will remind people of the benefit of making a will.

Making or updating a will is not a complicated process. Some 480,000 people died in England and Wales in 2011, with 220,000 of those deaths leading to the personal representatives obtaining a grant of probate in respect of a valid will and 40,000 leading to letters of administration being granted. We do not know for sure whether that means that the remaining 220,000 did write anything, or even thought about writing anything. None the less that was the figure. Nearly a quarter of a million people died without any evidence of written arrangements. Therefore, with the support of colleagues and the hon. Member for Barnsley Central, with whom I am meeting formally to discuss how best to proceed, we want to add to the work already done in the voluntary and legal sectors to encourage people to make their wills.

The Government provide information on a number of websites, including gov.uk and the probate services website, to help people who are considering making a will. Other organisations also provide advice. “Dying Matters” runs an annual awareness campaign about planning for old age and death. This year it is planned for 12 to 18 May, and the theme is, “You only die once”. That was not my title, but it seems a good one.

There is also a free wills month for those over 55. It is running this month, so people need to get on with it because there are not many days left. In November, there is a scheme called Will Aid. I make no apologies for wanting to encourage people to make wills. It is the one way that we can be certain that what is done with people’s assets is what they intended to be done. It is fundamental to the law of England and Wales that the person who writes the will decides what he or she wants to happen to their property after their death, and where the law applies it will give effect to those wishes, subject only to one qualification, which is that, under the

Inheritance (Provision for Family and Dependants) Act 1975, there is a safety net for people who should have been provided for in wills but were not.

My second point has become topical in recent days, so I want to make the Government’s position and the legal position clear. There has been some press coverage on whether Islamic law or sharia law trumps English law in relation to these matters. There was certainly a headline and a lead story in one of the Sunday papers last weekend that may have alarmed some people. People in this country are free to leave their property in accordance with their preferences and beliefs. The Law Society issued to its members a practice note on sharia law succession—it was the subject of the article in the Sunday press—which indicated that there has been a demand from some solicitors and their clients for information on how to plan ahead for death in a way that complies with English law. Far from promoting sharia law as an alternative jurisdiction within our country, the Law Society is clear that it is promoting English law and English legal services. Let me say this clearly. To suggest, as one newspaper did, that the guidance means that,

“Islamic law is to be effectively enshrined in the British legal system for the first time” is both wrong and misleading.

If people wish to arrange their last will and testament in accordance with the principles underpinning Islamic law or any other faith or belief tradition, then of course they are entitled to do that, provided they comply with the law of England and Wales. They can write down how they want to dispose of their assets according to their faith view, but it is within English law, in a will that then gets implemented and is subject to rules that allow people who should have been included but have been left out to apply.

Photo of David Nuttall David Nuttall Conservative, Bury North

I declare my interest as a non-practising solicitor and as someone who has drawn up thousands of wills in the past. Does the Minister agree that there has been no change in the law? It has always been possible for solicitors to draw up wills in accordance with their instructions under English law. If they want, they can draw them up under laws of other countries, as long as they make it clear that they will be applicable in that other country, but not under English law. In so far as wills that are meant to be controlled by English law are concerned, there has been no change whatever in the law.

Photo of Simon Hughes Simon Hughes The Minister of State, Ministry of Justice

The hon. Gentleman is absolutely correct. He knows from his practice outside the House and from his time in this place that that is exactly the position. The law has not changed. The guidance does not change the law, it has not been changed elsewhere and it is not about to be changed. The Government have no plans to change it. We are simply reinforcing the clear view, implied by his question, that if somebody goes to their solicitor and says that they would like their will to be drafted in a way that reflects their beliefs about how they want to dispose of their assets, they can do so, subject to the overarching rule of English law. That often applies to the Jewish tradition, and might be the same for some Christians and people of other faiths. The law has not been changed and I want to knock on the head the assertion that the Law Society was somehow facilitating a change. The Law Society was simply ensuring that when it had had enquiries from its members about how to proceed they were given guidance, but that does not change the law one jot.

A third general point, which is important, is that people are living longer—and thank God for that. We are very lucky to have in this country a great, and growing, life expectancy. The Office for National Statistics tells us that nearly 14.5 million people in the UK are over 60, but with old age comes an increasing incidence of dementia and Alzheimer’s. According to Alzheimer’s UK, 800,000 people in this country have dementia. The Government are keen that it should be known that there is a legal facility open to people to make what is called a lasting power of attorney—an LPA—that gives an individual the opportunity to plan ahead for the time when they might lack the capacity to deal with their own affairs. We are talking not about after death, but about when people are still alive but might not have the physical or mental capacity to deal with their own affairs.

People can appoint somebody of their choice to make decisions on their behalf about their property and financial affairs or health and welfare. They can do that online through a facility introduced last year by the Office of the Public Guardian. The process is relatively simple: people are guided and prompted through each page so that the form is completed correctly. It can be printed off for signature and the LPA can then be applied for, and the fee is currently £110. It is registered as a document recognised in law.

There are 51 million adults in England and Wales, but the number of people who have made such an arrangement is small, and I hope the Bill will also remind people that one way of dealing with their affairs, for not just after they have left this earth but before, is to make provision now. The lasting power of attorney is the way to do that.

Photo of Jake Berry Jake Berry Conservative, Rossendale and Darwen

I declare my interest as a solicitor. A worrying number of people are still dying intestate. What further steps will the Government take to encourage them to make a will? Will the Minister also take this opportunity to encourage initiatives such as will week, in which people can make a will and the solicitor will donate the fee to charity? Rossendale hospice takes part in that with great effect.

Photo of Simon Hughes Simon Hughes The Minister of State, Ministry of Justice

I was going to deal with that later, but as it has been raised it seems logical to do so now. I am very clear that although the Government cannot make people do such things we have a duty to lead. At the moment, if people go on to the Government website they will be directed to places where they can receive advice about such matters, but clearly the numbers are still surprisingly low. A lot of people of all levels of intelligence—this is not a matter only for people with fewer exams and qualifications—have not written anything down, as their families discover when the time comes for them to leave.

Such programmes are run, by different organisations, across the year, and I have referred to three already. We want to make them more effective and I have started to engage with officials and my colleague in the other

House, Lord Faulks, who leads specifically on wills in the Ministry of Justice, to work together with him—

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Interruption.

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He does other things as well, but, bizarrely, lasting powers of attorney and inheritance come to me and wills go to him for reasons that are above my pay grade.

Lord Faulks and I have had a conversation. We are working together and we hope to work with our colleagues in the Department of Health, because the other part of the planning-ahead system is thinking about organ donation, and I know that the Secretary of State for Health is keen that that, too, should be better promoted. I hope that by the end of this year we will have a co-ordinated approach so that from this year on, we will have an annual, regular, clear promotion for people to make their will, to arrange lasting powers of attorney if they need to do so, and to arrange to donate their organs if they wish to do so. One of the reasons why the hon. Member for Barnsley Central and I are to meet is to try to get maximum agreement, the best ideas, the most effective systems and the easiest use of the internet so that it is as easy as possible for somebody to find the right place and use it. I am sold on the idea that this is an area in which the Government need to do more and will do more.

Photo of Jake Berry Jake Berry Conservative, Rossendale and Darwen

I thank my right hon. Friend for that answer. Will he say specifically what steps he will take to encourage charities to increase the take-up of wills? I have seen for myself that it is a hugely successful fundraising activity for local charities in Rossendale and Darwen. It is also a big public service that they are providing to people who live locally. Often, the hospice movement, which will be managing the end-of-life journey for so many people in this country, can be a good place to find that information. There is surely a role for Government to support such charities in their work to encourage the take-up of wills.

Photo of Simon Hughes Simon Hughes The Minister of State, Ministry of Justice

I apologise for not dealing with that specifically. It is a very good idea and one that the Government support. I will take on board my hon. Friend’s idea. Perhaps he would like to come and have a cup of coffee, a cup of tea or even something else, and share his experience. The more people can be encouraged, the more charities can be helped and the more organisations can feel part of owning the process to the benefit of the community, the better, so I will be as helpful as I can. That is the backdrop. I hope everyone has got the message that we would rather people did not die intestate, but we must provide for those who do.

I said that the Bill came from work by the Law Commission. Following a consultation paper that it published in 2009, it issued a report in 2011 entitled “Intestacy and Family Provision Claims on Death”, which included the draft Bill. The Ministry of Justice then carried out a public consultation. We published our response in July 2013, explaining the changes we proposed to make to the Bill. As a result of that consultative process, we are largely in agreement today.

There was a proposal to deal with the rights of cohabiting couples in intestacy. The Government have decided that it would not be appropriate to take those matters forward at present. They are not uncontroversial and raise other, wider issues. The Law Commission recognised that its work on cohabitation raised issues that do not apply specifically to the matters in the Bill. The Ministry of Justice is in the middle of a very large programme of reform of the family justice system, which I believe will be hugely beneficial, and we do not want to be distracted from that. The new family courts come into operation next month and we want to concentrate on sorting out and getting a much better service there, and on the issue of inheritance and trustees. Therefore there is no proposal to deal with cohabitees’ rights in this Session or in this Parliament.

The Bill started in the Lords on 30 July last year. The Lords took their job very seriously and I am grateful to them for being so attentive. It underwent detailed scrutiny and was amended three times in the other place. It then came to us in the Second Reading Committee upstairs and from there to the Public Bill Committee, where I believe we gave it adequate attention, although there were no further amendments.

There are two aspects to the Bill—intestacy rules and family provision. The first part deals with the division of property when somebody dies without leaving a will. The second part allows family members and dependents to apply to the court to vary the distribution, either under the intestacy rules or under the terms of a will.

Clause 1—this is the core and simple but important proposition—deals with the situation where the intestate leaves no children and has no other direct descendants. From the time the Bill receives Royal Assent—in a few weeks’ time—the surviving spouse or civil partner will be the sole beneficiary of the estate. That changes the current law. Under the current law, a surviving parent or full sibling or sibling’s children are entitled to share, after the spouse or civil partner has received the deceased’s personal effects and what is commonly called a statutory legacy—a lump sum, in this case the first £450,000. The clause will change those arrangements. The estate will go to the surviving spouse.

Clause 1 will also mean that where the intestate does leave children or other descendants, the surviving spouse or civil partner will be absolutely entitled to the deceased’s personal chattels, to a statutory sum of £250,000, and then to half of whatever remains on top of that. The other half will be shared between the children or other descendants. That also changes the current arrangements, because at the moment a surviving spouse or civil partner has only a life interest in the rest. That is complicated and it will go. Life interest trusts are really only an area of benefit to lawyers and are often a source of confusion, so they have gone. I hope that is clear. Spouses will know where they stand; children will know where they stand.

Clause 2 and schedule 1 deal with the way that the statutory legacy—the fixed net sum—is decided. It is the amount that the surviving spouse will receive where there are children or other descendants. The Bill will implement a new system whereby the Lord Chancellor will be obliged to make an order raising the level of the legacy if the consumer prices index rises by more than 15%, or at least every five years. So there is an automatic trigger when my right hon. Friend the Lord Chancellor will address whether we ought to have more given as a lump sum to the surviving spouse. That was the result of a Government amendment on Report in the other place. As to the actual level to be set—this was debated in Committee—the Bill provides that unless the Lord Chancellor decides otherwise, the level will be set according to the procedure in the Bill. It will index the statutory legacy by an amount that reflects any increase in the CPI measure of inflation. The legacy can only increase; it cannot be reduced, so in the event of no inflation or deflation, it will not go down but will stay the same.

Clause 2 gives the Lord Chancellor the power to set the level of the statutory legacy without using that mechanism, and he is at liberty to set a level equal to, or even lower than, the pre-existing figure if he wants to. If he does want to do so, he must come to Parliament and explain why he has not used the mechanism in the legislation. We hope that the benefit of that is that spouses and civil partners will have an inheritance that does not slip behind in real value with the changing value of money in this country.

Clause 3 deals with what are called personal chattels. Under the current law, the surviving spouse or civil partner is entitled to all of the personal chattels that are not disposed of in the will. That has not changed as a principle, but it is updated by the legislation. We have defined personal chattels in the Bill as “tangible movable property”—the lawyers will know exactly what I am talking about—but with three defined exceptions. The first is money, and securities for money. That is not new. The second is property used at the death of the deceased person solely or mainly for their business purposes. The words “solely or mainly” have been added, and they will ensure that, for example, if there is a vehicle, such as a van, that was used by the individual and for their business, it is treated as something that is personal as well as a business asset. The third exception, which is new, relates to property held at the death of an intestate person solely as an investment. That is a narrow exception, which would apply only to property owned as an investment and which had no personal use. We are trying to be very clear about those things that go to the spouse because they are the personal assets of the deceased person. Again, that is what the public would expect and we want to make sure that what is reasonable and normal and to be expected is what the Bill does.

The numbers in clause 4 are small in significance, but as we agreed in Committee, the clause is important as a principle. It seeks to protect the position of children who are adopted after the death of a parent. Madam Deputy Speaker, you and all colleagues will know that, very occasionally, there are tragedies in which one or both parents of youngsters are killed, and they are then often brought up by aunts, uncles, godparents, or whoever it might be. However, the will may have made arrangements on the basis that the parents will be alive indefinitely, and certainly for many years after the children become adults, or there may be no will, because it will have been a sudden event that afflicted the family. The general rule is that after adoption, a child is regarded as the legal child of the adoptive parents and has no other legal parents.

Clause 4 ensures that a child whose parent has already died before adoption will not lose, as a result of adoption, any of the rights that they had before, in terms of interest in their natural parents’ assets. It is relevant where a child is adopted as a result of the birth parents’ death. That is normally a fairly speedy process, and it is not a secret one. We are clear that we want to do what common sense and justice would want us to do, which is to make sure that no orphan child should lose the inheritance from their parents. We are sure that that is what the parents would have intended. At the moment, that is not what would happen. We are changing the law to make sure that children in that very particular circumstance are better protected. It only affects children who are adopted after the death of a birth parent, which is obviously an important distinction.

Clause 5 disapplies section 18(2) of the Family Law Reform Act 1987 in certain circumstances. Again, that is a small point, but we feel it is important to correct and modernise the law. At the moment, when somebody dies intestate and the parents were not married to each other at the time of their birth, rights do not follow in terms of inheritance. Under the proposal, the administrators of the estate may presume that the parent died first, as did any other person to whom they may be related only by virtue of the father—that might be somebody who is another parent by virtue of the Human Fertilisation and Embryology Act 2008, in very unusual circumstances. The rule discriminates against unmarried fathers. In practice, it makes it less likely that the deceased’s estate will pass under intestacy rules to such a parent.

Nowadays, it is quite usual for both unmarried parents to be identified as the parent of a child. Both are often on the register of birth so there is no longer any reason for both parents not to have equal entitlement in law. Therefore, we will disapply the presumption if a person is recorded as the intestate’s father, or as a second female parent in the specified formal register of births. In that case, the estate’s administrators will have the same responsibility to the deceased’s father or other parent as they would to any other relative entitled under the intestacy rules. The change clarifies that where somebody is recognised as a parent, irrespective of whether there is a marriage certificate, that parent should have the same right as an unmarried counterpart.

Clause 6 amends various provisions in the Inheritance (Provision for Family and Dependants) Act 1975 by way of schedule 2 in the Bill. The Government’s original intention was to create an additional ground of jurisdiction for family provision claims to enable claimants who are habitually resident in England and Wales to bring such a claim, irrespective of the deceased’s place of domicile. Scottish colleagues raised concerns about how that would operate in practice across the border, and particularly, if it could displace Scots law. The Government therefore decided that we would not proceed with the proposal. We amended the Bill in the other place and therefore, there is no change that would impact adversely on Scotland or on any other jurisdiction.

The remainder of clause 6 makes a number of changes to the procedure for family provision claims, including some amendments to the categories of people who can apply to the court for provision. There is already a rule that allows someone to go to the court and say, “I’m a family member. I need some financial help.” The Bill modernises the law so that a “child of the family”—someone who might have been adopted in practice but not formally, for example—would be treated the same as any other child brought up in the same family. Therefore, the relationship between the parent and the “child of the family” would allow the inheritance rules to apply to the benefit of that child. We believe that it would be wrong for a deserving child who was brought up by the family not to be able to inherit in the same way as someone who was formally their child, either biologically or by adoption.

Clause 6 also amends the wording of the 1975 Act, which defines a person who may make a family provision claim because they are considered to be a dependant of the deceased. Under the current law, the court has to balance the deceased’s contribution towards the needs of the applicant against any benefits flowing the other way before deciding whether the applicant can be assisted. If the applicant is found to have contributed more to the deceased than the deceased contributed to the applicant, the applicant is not regarded as a dependant. We think that this “balance sheet test” is technical and inappropriate in a modern society. Of course there has to be a link, but we understand that dependency is often mutual and that therefore someone should not be debarred from applying because there has been some benefit in the other direction.

Clause 7 makes various amendments to provisions that require certain types of grant to be left out of account when deciding the date when representation with respect to the estate of the deceased was first taken out. They are technical changes, so I do not intend to elaborate on them for the House.

The last few clauses are highly relevant to a large number of people. Clause 8 concerns a situation in which a trustee is able to use income from a trust for the maintenance, education or benefit of a beneficiary under the age of 18. It is common for a trust to be set up and for applications to be made for school fees, medical attention or for sending a child on a holiday or arranging an apprenticeship. The Bill provides that in future the amount of income that can be used for such purposes should be entirely a matter for the trustees’ discretion. Currently, there has to be an objective test of reasonableness, together with a proviso listing all the factors that trustees must consider and a specific restriction on the amount that can be paid out. We do not think that those are necessary, so clause 8 removed them. Trustees will still be governed by the need to fulfil their fiduciary duties, so beneficiaries will not lose out, but they will, following a request, have the flexibility to give to meet the need.

Clause 9 deals with a similar situation in which trustees are able to use their powers of advancement to make payments of capital to beneficiaries where that is thought necessary. Such payments are limited by the current law to one half of the beneficiary’s future share. We believe that this limit should go. In future, trustees will, if they think fit, be able to pay out the whole of a beneficiary’s share under the power of advancement. That gives trustees the flexibility they would certainly have if they were acting under a professionally drafted will or trust. Of course, payments cannot amount to more than the beneficiary’s future share. The clause was amended in the other place to make it clear that if trustees have exercised their power of advancement, the money or property given to the beneficiary can be treated either as a percentage of the overall value of the trust or according to its monetary value at the time of advancement. Trustees may expressly exercise their choice to treat advancement in that way, for example by writing it in the trust deed or by dividing up the trust fund.

The Bill is expected to receive Royal Assent next month. We intend all its provisions to come into force simultaneously later this year on a common commencement date of 1 October. The date is to be confirmed by an order made by the Lord Chancellor.

Of course, the provisions will apply only to deaths that occur after the Bill comes into force, because it is not retrospective. It is an England and Wales Bill, not a United Kingdom Bill, except for one part that repeals some technical matters. The only exceptions to its forward-looking nature are in clause 4, which deals with adoptions of children that take place after the death of a parent. The relevant date in that case is that the adoption has to take place after the Bill has come into force.

Clauses 8 and 10 also make changes that do not have the same timetable application. These are changes to trustees’ powers rather than arrangements for dealing with the deceased’s property, and they will apply only to trusts or trust interests that are created or arise after the Bill comes into force. The exception is the clarification of the powers in clause 9 that allow trustees to make non-cash advancements and to treat an advancement as a percentage of the overall value of the trusts. This provision is not governed by the timetable rule. It will apply to all trusts, including those created before the Bill comes into force, because it is a clarification of powers that exist in current law.

Some of that sounds technical, but the fundamental purpose of the Bill is to rid the law of a lot of technical restrictions. Hundreds of thousands of people still die without writing their will, and we believe that, for their families, this Bill will make life simpler and easier and lead to less conflict, less tension, and less cause for dispute. It will still be better for people to make a will, and we hope that they will, but where they do not, as I hope the House agrees, this Bill makes the law much clearer and provides for families where there is no will a much better, safer and simpler future.

Photo of Dan Jarvis Dan Jarvis Shadow Minister (Justice) 4:56 pm, 26th March 2014

I thank the Minister for laying out in some detail the Government’s position on the Bill. As he outlined, it introduces a number of logical and constructive changes to the current laws on intestacy and family provision that apply in cases where a person dies without having made a valid will. As I have said in our previous debates, these are sensible reforms and Labour Members welcome them. The Bill simplifies what is, in practice, often an over-complicated area of family law. It revises legislation that has not been reviewed for over 20 years, in some instances amending laws dating as far back as 1925. It updates rules better to reflect the circumstances of families living in 21st-century Britain, and it irons out a number of minor technical issues.

I thank the Minister for the way in which he has steered the Bill through the House and engaged with Labour Members during this process. I also thank those in the other place and all the other Members of this House who have helped to scrutinise and improve the Bill, as well as the officials, officers and staff of the House who have helped to facilitate matters. I pay particular tribute to the Law Commission. The changes we are considering today are ultimately the culmination of a project it began in 2008 and the draft Bill it published in 2011. I thank it for its work over the past five years in helping to bring us to this point.

Let me turn briefly to the substance of the Bill. I have two general comments to make and one very brief question to put to the Minister. Both my points are reflected in the case of Pablo Picasso, with whom right hon. and hon. Members will be familiar as one of the great artists of the late 19th and early 20th centuries. Forty years ago, Picasso died at the age of 91. As well as a glittering career and a substantial artistic legacy, he left behind a significant estate that included much of his artwork, five homes, and a small fortune in cash, bonds and other assets. This would become the subject of some dispute, because what Picasso did not leave behind was a valid will. It would take six years before his estate was settled. It was eventually divided up between six different heirs, and the whole case cost some $30 million.

That is not a unique case and right hon. and hon. Members will know of other, more contemporary examples, but, even though Picasso was born in Spain and died in France, the lesson is just the same for us considering laws here in the UK. In essence, matters of intestacy and family provision claims can be long and complicated processes. There are numerous cases every year and, although some of them are unavoidable, the law should be as simple and straightforward as possible and we should encourage people to avoid them altogether by making a valid will.

As I said on Second Reading, the Law Commission stated in its 2011 report on intestacy that there are

“many instances where the current law is outdated, confusing or places unnecessary obstacles in the way of those with a valid claim to share in a deceased person’s assets.”

I know that the Minister will agree that that simply is not acceptable, especially when the people who have to manage the distribution—or unsatisfactory distribution—of an estate will also be coping with the loss of a loved one at the same time. Therefore, although these are largely technical changes, we should be mindful that even the most minor of improvements to the way in which the system works could make a world of difference to those families affected. The Opposition are hopeful and confident that this Bill will resolve many of the issues and we will be looking closely at the situation.

The Minister and I are united in recognising the importance of encouraging people to make wills. As has been acknowledged many times during our debates on the Bill, its proposals will come into effect only when someone has sadly passed away without having made a will or some other sort of binding declaration. If I may restate the figures, roughly 220,000 people died in such circumstances in 2011 and the Law Commission estimates that as many as two thirds of the UK adult population do not have a will. According to a survey carried out by the National Centre for Social Research, that includes as many as a fifth of people over the age of 75 and more than 90% of young adults under the age of 25. The Law Commission has also stressed that those who need a will most are the least likely to have made one. We need to do all we can to reach out to all sections of society on the importance of this particular issue.

Discussing what to pass on after one dies is not the easiest thing to talk about, but we need to get much better at it. I know that the Minister agrees with that. As he has said, we will meet shortly to discuss that and I look forward to continuing this debate with him over the weeks ahead.

May I ask the Minister to clarify one issue? The Government have accepted almost all of the Law Commission’s recommendations for reforming the intestacy laws. However, they have not adopted rules that would have applied to the surviving partner in a co-habiting couple. The Minister has said that there are no immediate plans to address that, but it is an issue, because will-making is far less common among couples who live together but are not married. More than 2 million couples live in such circumstances, but only about 13% of them have made a will and many do not appreciate that they have no automatic right of inheritance if one of them dies without leaving a valid will.

The Law Commission set out proposals to address the situation in its draft Inheritance (Cohabitants) Bill, but the Government previously indicated that the changes would not be implemented during this Parliament. In 2011 the then Minister, Mr Djanogly, informed the House that they had no intention to focus their efforts on them at that particular time. I am mindful of the Minister’s earlier comments, but given that the Inheritance and Trustees’ Powers Bill is so close to receiving Royal Assent, will he reconsider and agree to look at that specific area prior to the next general election?

Let me conclude by repeating that the Opposition welcome the action that is being taken and we are ready to work with the Minister to help to get the reforms right, because if we can save just a few grieving families from having to go through the intestacy procedures and make life a little easier for those who have to, that will make a real difference.

Photo of Simon Hughes Simon Hughes The Minister of State, Ministry of Justice 5:04 pm, 26th March 2014

With the leave of the House, I rise briefly to answer the question asked by Dan Jarvis and to wind up the debate.

I absolutely understand the hon. Gentleman’s point about the very many people who cohabit or live together, but are not married. I am grateful to him for his prompt, because it is very important to send out from this debate and from the work that we will do later in the year—this ties in with an intervention—the message that people who live together but are not married should understand that, under the law of the land, there is no automatic transfer to the surviving partner and that they do not have the same rights. In our constituencies, we have all heard the old phrase about being married by “common law”—“a common law husband” or “a common law wife”—but it has no legal status at all.

People can perfectly properly make a decision that they do not wish to get married—that is entirely up to them—but it is much more important for them to write a will to make the appropriate provision. If they want their partner to inherit everything, they need to say so, because that does not necessarily follow under the law of the land.

On the specifics of the process, I have said that the Government have no plans to legislate on the matter in this Parliament, and that remains the case. The reason is that we are putting this Bill through Parliament to be in force by the end of the year, our reforms of the family courts are to start in April and there are many other reforms to the legal system. However, I am very conscious of the need for the Government not to run away from the issue, and for parties in the run-up to an election not to run away from it in our manifestos. It will be an issue for whoever forms the next Administration. The law is already different in parts of the United Kingdom; for example, cohabitation rights north of the border are different from those here. I accept that we must not ignore this business.

I end by thanking the Law Commission, which does an extremely good job for us in this country. I add my tributes to it for the work that it does all the time to present us with considered and measured proposals for legislation. On behalf of the Ministry of Justice, I repeat our thanks to the members of the Law Commission in general, and to the lead commissioner in particular, as well as to the staff. I also thank our staff in the MOJ and others who have made sure that the Bill is a very good piece of legislation—agreed across the House—which will stand many people in good stead. We are indebted to many people for the work that they have done. I hope that the House will now give the Bill a Third Reading.

Question put and agreed to.

Bill accordingly read the Third time and passed, without amendment.