1 - Intestacy Flashcards
What are a persons rights regarding the drawing up of a will?
Section 3, Wills Act 1837:
- It is lawful for every person to devise, bequeath, or dispose of, by their will, both **real estate and personal estate **they are entitled to at the time of their death, whether at law or in equity.
- This applies to any estate that would otherwise devolve upon their executor or administrator if not disposed of by the will.
What two key issues must be ascertained before determining how a deceased’s estate will be distributed?
- Whether the deceased left a valid will.
If a valid will exists, the deceased is known as a testator and the will dictates how their assets are distributed.
If there is no valid will, the intestacy rules apply. In some cases, both the will and intestacy rules must be considered if the will does not cover all assets.
- The nature of the assets owned by the deceased.
Assets capable of passing under a will or by intestacy are part of the succession estate or distribution estate.
Certain assets are excluded from the succession estate and are distributed according to specific rules.
What are the intestacy rules?
Intestacy rules apply when a person dies without a valid will or when the will does not cover their entire estate (partial intestacy).
- Testate: When the deceased’s will covers their entire succession estate. The will alone is used to distribute assets.
- Partial Intestacy: When the will does not cover the entire estate, the intestacy rules apply to the undistributed assets.
- Intestate: When the deceased dies without a valid will, the intestacy rules apply to the entire succession estate.
The personal representatives of an intestate deceased hold the undisposed of property on trust with power to sell under S.33 AEA 1925.
What is the purpose of the intestacy rules?
The purpose of the intestacy rules is to determine who inherits and what each beneficiary receives when no valid will is present, or certain assets are not covered by the will.
What is the succession estate, and when is property excluded from it?
Succession estate refers to the assets that are distributed under a will or the intestacy rules.
Excluded property: Some types of property owned by the deceased during their lifetime do not form part of the succession estate. These assets are governed by other rules and are not distributed under the will or intestacy rules.
It is possible to deal with such excluded assets before obtaining a grant of representation, allowing early distribution of some assets during the estate administration.
What are the main types of property which will **not ** pass to the succession estate and why?
- Donationes mortis causa: Gifts made in contemplation of death, which transfer ownership outside the estate.
- Discretionary pension scheme benefits: These benefits are typically paid to nominated beneficiaries at the discretion of the pension provider.
- Insurance policies written in trust: Proceeds go directly to the trust beneficiaries, bypassing the estate.
- Statutory nominations: Assets, like savings, can be nominated to pass directly to a beneficiary.
- Property held as beneficial joint tenants: Joint tenancy property automatically passes to the surviving co-owner.
- Other beneficial interests under trusts: Some trust assets are distributed per the trust deed, not the will.
Why are DMC’s not included in the estate for distribution purposes under a will?
For a DMC to be valid, three requirements must be met:
- The gift is made because the donor believes they may die imminently from a specific cause.
- The donor makes it clear that the gift is conditional upon their death, meaning the property reverts to them if they survive.
- The donor either parts with the property or with something representing ownership of the property.
Why are discretionary pension schemes not included in the estate for distribution purposes under a will?
- Discretionary pension scheme benefits are excluded from the estate because trustees have discretion over the payment of benefits. The deceased is not deemed to have any entitlement to the payment, which means it does not form part of their estate.
- Many schemes allow members to nominate a third party (e.g., via an Expression of Wish form), but this is not binding on the trustees.
- Payments are made at the trustees’ discretion, so the** benefits are not distributed** under a will or intestacy rules.
- The benefit is typically released upon production of a death certificate.
What types of Insurance Policies are/ are not included in the estate for distribution purposes under a will?
**Simple life insurance policies: **The proceeds pass to the succession estate and are distributed under the will or intestacy rules.
**Insurance policies written in trust: **The proceeds do not form part of the succession estate. The insured has no beneficial interest, and the proceeds go directly to the nominated beneficiaries.
Life policies can be written in trust in three ways:
- Under s.11 Married Woman’s Property Act 1882 for the benefit of the spouse and/or children.
- Expressly for the benefit of a nominated third party (e.g., grandchildren).
- Into an existing trust for the named beneficiaries in the trust deed.
Benefits are released on production of a death certificate.
What are statutory nominations, and how are they treated upon death re wills?
A statutory nomination allows a person to nominate a beneficiary for certain accounts, including:
- Friendly Society
- Industrial Society
- Provident Society
The amount nominated cannot exceed £5,000.
Upon the death of the deceased, the money in the nominated account passes directly to the nominee, rather than being distributed under the will or intestacy rules.
The benefit of the nominated account is released upon production of a death certificate.
How is property treated under beneficial co-ownership when distributing a deceased’s estate according to a will or intestacy rules?
Joint Tenants:
- The property automatically passes to the other joint tenant(s) by survivorship.
- It does not pass into the succession estate and therefore is not distributed under the will or intestacy rules.
Tenants in Common:
- Each tenant has a separate, divisible share in the property, which is not extinguished upon their death.
- This share will pass into the succession estate and be distributed according to the will or intestacy rules.
What considerations are important regarding the beneficial co-ownership of the family home when distributing a deceased’s estate?
Legal vs. Equitable Ownership:
- Land can only be registered at the Land Registry in the name of an individual or up to four joint tenants. It cannot be held as tenants in common at law.
- Consider both legal ownership and equitable/beneficial ownership. Determine if the legal owners hold the land legally and beneficially or if they hold it on trust.
Trusts:
- Even if the land is legally held by joint tenants, it may be held on trust as equitable tenants in common.
- An express trust declared over the land will specify equitable and beneficial ownership, and this will be clear from the register of title.
- In the absence of an express trust, an implied trust may exist. Careful consideration is needed to determine the beneficial ownership of the family home.
How is beneficial co-ownership of bank accounts treated when distributing a deceased’s estate?
**Legal Joint Tenants:
**
Bank accounts held jointly will have the account holders as legal joint tenants.
Beneficial Ownership:
Express Declaration: If the account opening documents declare the account as held as beneficial joint tenants, this declaration is conclusive.
No Declaration: If there is no declaration of beneficial ownership, consider whether an implied trust has arisen. The doctrine of presumed resulting trusts may apply here.
If one dies, the other partner will automatically inherit the whole of the money.
How do other beneficial interests in trust property affect their inclusion in a deceased’s succession estate?
- Beneficial Joint Tenants: Interest passes to surviving joint tenants by right of survivorship; does not form part of the succession estate.
- Tenants in Common: Interest survives death and forms part of the succession estate.
- Life Tenant in a Life Interest Trust: Beneficial Life interest expires on death, so does not form part of the succession estate; remainder interest (future right to receive trust capital) may survive and pass to the deceased’s estate if vested ‘in interest’ and not contingent on surviving the life tenant.
- Upon the remainderman’s death, their remainder interest passes to their estate. The trustee then holds the property for the life tenant and, after their death, for those entitled under the remainder interest (per the remainderman’s will or intestacy rules).
What is the general rule for how trust property is treated in the distribution of a deceased person’s succession estate?
**General Rule: **Trust assets are distributed according to the trust deed, not the deceased’s will or intestacy rules.
- Discretionary Trust: Death of an object does not affect distribution; trustees have discretion.
- Life Tenant: Death may trigger distribution to remainder beneficiaries, but life tenant does not control the destination.
Exception: If the deceased exercised a power of appointment in their will, they can determine the distribution of the trust assets.
