2. Intestacy, and Property Passing Outside the Will or Intestacy

Question 1

In what two situations will the rules of intestacy apply?

Answer 1

1. Deceased died without making a will, or at least a valid will (a whole intestacy)
2. Deceased’s will does not dispose of all of their property, e.g., gifts or gift of residue fails.

Question 2

For a spouse to receive their beneficial entitlement, for how long must they survive the deceased?

Answer 2

At least 28 days.

Question 3

What is the spouse’s entitlement where there are no issue, i.e. children?

Answer 3

The entire estate

Question 4

What are the spouse’s three entitlements where there are issue?

Answer 4

• Personal chattels
• £322,000
• Half the residue absolutely

Question 5

What is a spouse with issue’s other option with regard to the matrimonial home?

Answer 5

They can opt to take the matrimonial home (or deceased’s interest in it if they were tenants in common) in satisfaction their entitlement to the three things in the previous card (chattels, 322k, half the residue), and the children will take the residue (after IHT)

If the property is worth more than the entitlement, the spouse must pay this equality money to the estate

Question 6

What is the list of eight beneficiaries who will take intestate property if there is no spouse, and how is this dealt with?

Answer 6

As soon as a beneficiary falling a category in the below list is identified, subsequent beneficiaries are ignored:

1. Issue of the intestate on statutory trusts
2. Parents (equally if both alive)
3. Full brothers or sisters on statutory trusts
4. Half brothers and sisters on statutory trusts
5. Grandparents (equally if both alive)
6. Full uncles and aunts on statutory trusts
7. Half uncles and aunts on statutory trusts
8. The Crown as bona vacantia

Question 7

How will members of a class of beneficiaries take their share, and what are the two conditions, one of which is required?

Answer 7

They will take their shares equally, as long as they:

1. Reach 18, or
2. Marry before 18

Question 8

What does on statutory trusts mean?

Answer 8

It means that all classes, except for parents and grantparents, take the parent’s share per stirpes, i.e. through the root, assuming the parent’s share.

Question 9

What happens if a potential beneficiary (i.e. a beneficiary with a contingent interest) who was living at the intestate’s death, but dies before their interest vests?

Answer 9

Their issue take the deceased parent’s share.

Question 10

What happens if a potential beneficiary (i.e. a beneficiary with a contingent interest) who was living at the intestate’s death, but dies before their interest vests, and they have no issue?

Answer 10

The estate will be administered as if that beneficiary has never existed.

Question 11

For the purposes of intestacy, who are deemed to be an adopted child’s parents?

Answer 11

The adoptive parents. Not the natural parents.

Question 12

Although the intestacy rules apply whether or not an individual’s parents were married or not, what does the law presume if a person dies intestate and their parents were never married?

Answer 12

The law presumes that the father has predeceased the intestate child, unless there is evidence to the contrary or the father is on the birth certificate

Question 13

On to Property passing outside the will or intestacy:

Can the rules discussed here be varied by the terms of the will?

Answer 13

No, they are strict

Question 14

In an intestacy situation, what are the six categories of property that do not form part of the deceased’s succession estate and are therefore not payable to personal representatives?

Answer 14

1. Property owned as beneficial joint tenant
2. Life assurance policies
3. Some pension scheme death benefits
4. Nominated property in savings schemes
5. Life interests in trust property
6. Gifts where donor has received a benefit

Question 15

Why does property owned as a beneficial joint tenant not pass under intestacy and to whom does it pass?

Answer 15

It passes to the other joint tenant automatically under the right of survivorship

Note that this obviously does not apply to tenancies in common, and may be the subject of a wrong answer choice

Question 16

Why do life assurance policies not pass under intestacy?

Answer 16

Life assurance policies are held on trust for or assigned to beneficiaries of the policy

Question 17

What is the monetary threshold which must not be exceeded for property in a savings scheme to be transferred to a chosen beneficiaries and be excepted from the estate?

Answer 17

£5,000.

Question 18

Why do life interests not pass under intestacy?

Answer 18

Because a life interest vests in the remainder upon the death of the life interest holder.

Question 19

Even though property owned under a joint tenancy, life interests in trust property, and gifts with reservation of benefit do not form part of the estate for succession purposes, for what purposes are they considered part of the estate?

Answer 19

Inheritance tax