Chapter 8: Will Drafting Flashcards
Validity of a Will
When a person dies it is necessary to establish how their assets will be distributed and who is entitled to inherit.
If the deceased made a valid will the assets capable of passing by will (collectively known as the ‘distribution’ or ‘succession’ estate) are distributed in accordance with the terms of the will. To the extent a will fails to dispose of all of the assets, or if the deceased did not make a valid will, the intestacy rules will determine who will inherit.
Validity of a Will
To make a valid will no specific wording or form is required and a testator (person who makes a will) can leave their property to whomever they choose (known as testamentary freedom). This is not necessarily the case in other jurisdictions, many of which require a testator to make specific provision for family members (known as forced heirship). In this module we consider the law applicable in the common law jurisdiction of England & Wales.
A testator must be aged 18 or over (s7 Wills Act 1837) to make a valid will, with exceptions for those in military service, and satisfy all of the following legal requirements:
Testamentary Capacity
A testator must be mentally capable of making a will, referred to as ‘testamentary capacity’.
The common law test for testamentary capacity is set out in the case of Banks v Goodfellow and provides that a testator must:
- Understand the nature of the act and its effects;
- Appreciate the extent of the property of which they are disposing;
- Understand and appreciate the moral claims to which they ought to give effect; and have no disorder of the mind that perverts their sense of right or prevents the exercise of their natural faculties in disposing of property by will.
Nature of Act
A testator must understand that they are signing a document that takes effect on death and disposes of their property.
A testator should be able to understand the broad effects of the will but is not required to understand every detail.
Extent of Property
A testator should have a general recollection of what they own and appreciate the approximate value of their estate and relative value of its assets.
A testator is not required to recall every item or know the precise value of each.
The test is one of general understanding rather than perfect memory.
Moral Claims
When deciding who to benefit and to what extent the testator should be able to appreciate anyone to whom they owe a moral responsibility.
In Banks v Goodfellow it was thought most testators would make provision for those “nearest to them in kindred and who in life have been the objects of their affection” but there is no requirement for the testator to leave those people anything.
Disorder of the Mind
A testator suffering from insane delusions, affecting their judgement generally or in relation to specific dispositions in the will, lacks testamentary capacity.
A testator may be suffering from an insane delusion and still have testamentary capacity provided that delusion is unconnected with and has no effect on the terms of the will.
Timing Requirement
A testator must have testamentary capacity at the time the will is executed.
However, a limited exception to this timing requirement was established by Parker v Felgate, where a testator who lacks testamentary capacity at the time of execution can still make a valid will provided they:
Had testamentary capacity at the time they gave instructions for the preparation of the will; and
The will was prepared in accordance with those instructions; and
At the time of execution the testator understood they were signing a will for which they had previously given instructions.
Exceptions to the Timing Requirement
This exception may apply where a testator’s testamentary capacity fluctuates over time (usually as a result of illness), or, an unexpected event occurs between giving instructions and executing the will which means a person no longer satisfies the test.
Fluctuating Capacity
It is possible for a testator’s capacity to fluctuate over time. This may be due to the nature of a particular illness or the testator’s circumstances.
A testator may have intermittent capacity; for example someone with dementia may have ‘lucid’ days on which it would be possible to satisfy the test for testamentary capacity and other days not.
Fluctuating Capacity
A testator may temporarily lack capacity as a consequence of a particular life event. In Key v Key the testator’s wife died a week before he made his will and the testator was found to lack capacity due to the effect of grief on his mental state.
The effect of depression and other mental health conditions which may affect the decision making abilities of a testator should be taken into account when assessing their testamentary capacity.
Golden Rule
The case of Kenward v Adams established the “golden rule”, stating that when taking instructions for a will from a client who is elderly or seriously ill a medical practitioner should be instructed to make an assessment of the testator’s capacity, and a contemporaneous record of the assessment and conclusion should be made.
The golden rule is not a legal obligation but is considered best practice. Following the rule does not confirm the testator definitely did have testamentary capacity; the purpose of the rule is to reduce the likelihood of later disputes.
Golden Rule
Complying with the rule may involve an awkward conversation with a client but this is not an excuse to avoid the issue.
The practical complications involved e.g. finding a medical practitioner willing to carry out the assessment have been acknowledged (Wharton v Bancroft) and a failure to comply will not automatically demonstrate poor practice.
Presumptions of Capacity
The burden of proof of capacity technically lies with the propounder of the will (person seeking to admit the will to probate, usually the executor). However, capacity is presumed if the will on the face of it appears rational and has been duly executed.
Anyone who wishes to challenge the validity of the will on the grounds of lack of capacity must provide evidence sufficient to raise doubt. If such evidence is provided the presumption is rebutted and the burden of proof reverts to the propounder of the will to demonstrate the testator satisfied the Banks v Goodfellow test.
The threshold to satisfy the test in Banks v Goodfellow is relatively low. A person may lack the ability to manage their own affairs and require help with day-to-day activities and still have testamentary capacity to make a will.
Relationship with the Mental Capacity Act
A general statutory test of a person’s capacity to make decisions was introduced by the Mental Capacity Act 2005.
The statutory test was intended to tie in with the common law test for testamentary capacity in Banks v Goodfellow rather than replace it.
The statutory test does not override or modify the specific common law test. The rule in Banks v Goodfellow and subsequent case law remains correct and if an application of the two tests would produce a different outcome the common law test prevails.
Statutory Wills
If a client lacks testamentary capacity they cannot make a valid will and a solicitor should not accept their instructions for the preparation of a will.
However, it is possible for the court to authorise the execution of a will on behalf of an adult who lacks capacity to make one for themselves (s.18(1) MCA 2005). The court must be persuaded there are grounds to diverge from the existing testamentary position and it is in the person’s best interests to do so.
This could be because the person has never made a will and the intestacy rules would otherwise apply, or because a change in circumstance means it is likely the testator would have reviewed his current position.
Summary
To make a valid will the testator must have testamentary capacity, know and approve of the contents of the will and comply with s.9 Wills Act 1837
Following Banks v Goodfellow a testator will have testamentary capacity if they:
Understand the nature of the act
Appreciate the extent of their property
Are aware of moral claims against their estate
Not be suffering from insane delusions affecting the will
Testamentary capacity must be present at execution (unless the rule in Parker v Felgate applies)
Testamentary capacity is presumed where the will is rational and has been duly executed
Formal Requirements
Form and Wording
To make a valid will no specific wording or form is required and a testator (person who makes a will) can leave their property to whomever they choose (known as testamentary freedom). This is not necessarily the case in other jurisdictions, many of which require a testator to make specific provision for family members (known as forced heirship). In this module we consider the law applicable in the common law jurisdiction of England & Wales.
Section 9 of the Wills Act 1837
To be valid a will must comply with s 9 Wills Act 1837 (‘WA’) which states:
No will shall be valid unless—
(a) it is in writing, and signed by the testator, or by some other person in his presence and by his direction; and
(b) it appears that the testator intended by his signature to give effect to the will; and
(c) the signature is made or acknowledged by the testator in the presence of two or more witnesses present at the same time; and
(d) each witness either
(i) attests and signs the will; or
(ii) acknowledges his signature,
in the presence of the testator (but not necessarily in the presence of any other witness), but no form of attestation shall be necessary.
It is in writing
(a) it is in writing, - Includes handwritten and typed/printed text in any language
and signed by the testator, - Any ‘mark’ may constitute a ‘signature’ if the testator intends it to be, but it is preferable for a testator to use their normal signature to avoid doubt
or by some other person in his presence and by his direction - This could apply e.g. if a testator is physically unable to sign themselves and authorises another person to sign on their behalf
Intended by signature to give effect
b) it appears that the testator intended by his signature to give effect to the will - Where the signature is at the end of a will it usually indicates the necessary intention. Signatures at the beginning or in the middle of the will can be problematic.
Two witnesses
(c) the signature is made or acknowledged by the testator in the presence of two or more witnesses present at the same time - A testator either signs in person or acknowledges the signature of the person who signed on their behalf. Two is the minimum - there is no maximum.
Physically and mentally present witnesses
Witnesses must be physically and mentally present but do not need to know a will is being signed or its terms. A minor, someone who is blind, drunk or of unsound mind should not act.
The full name, addresses and occupation of each witness should be noted in case the will is challenged at a later date and they are required to give evidence (in an affidavit) of what happened at execution or the testator’s mental state.
Role of witnesses
(d) each witness either (i) attests and signs the will; or (ii) acknowledges his signature, in the presence of the testator (but not necessarily in the presence of any other witness) - Both witnesses must sign the will in front of the testator, but it is not necessary for each witness to also sign in front of each other
Attestation
An attestation clause describes the circumstances under which the will was executed.
For example:
Signed by the above named)
[ testator ] in our joint presence )
and then by us in his/hers)
There is no legal obligation to include an attestation clause nor is any specific form of attestation required.
However, a properly drafted attestation clause raises a presumption that the will was executed in accordance with the requirements of s 9 WA (a presumption of due execution).
In the absence of, or a poorly worded, attestation clause proof of proper execution is required. Usually, an affidavit of due execution sworn by the witnesses.
Special Circumstances
If the will is executed in special circumstances (e.g. will is signed on behalf of the testator, or, the testator is blind or illiterate) the attestation clause should be amended to reflect these special circumstances and to provide evidence of the requisite knowledge and approval. The example below could be used where a testator cannot read the will.
Signed by the above named [testator] in our joint presence and then by us in his/hers all signatures having been added after this document had been read to [testator] by [name] when [testator] seemed thoroughly to understand and approve its contents.
Correct Execution of Process
It is very important for a solicitor to ensure the correct execution process is followed and failure to do so may constitute negligence. Solicitors should provide specific advice on this point and ideally arrange for the will to be executed in the office so that the process can be overseen.
Attestation: Section 15 Wills Act 1837
Under this section any gifts to an attesting witness (or their spouse) are void. Therefore, if a beneficiary, or their spouse at the time of execution, acts as a witness, the beneficiary cannot inherit under the will. A beneficiary is anyone who gains any benefit under the will.
The will remains valid but a solicitor may be negligent if they do not provide advice on the effect of s 15.
If a professional executor (who is entitled to charge for their services) witnesses a will, s 28(4)(a) Trustee Act 2000 confirms s 15 will not apply to the remuneration the professional executor will receive for acting in this role.
Attestation: Section 15 Wills Act 1837
The appointment of the beneficiary as an executor remains effective even if s 15 applies to deny them their inheritance.
If there are at least two other witnesses not caught by s 15, or if the will is subsequently confirmed by a properly executed codicil, the effect of s 15 can be disregarded; the will would be properly executed without the beneficiary (or their spouse) witnessing the will.
Summary
To make a valid will a testator must have testamentary capacity, know and approve of the contents of their will and comply with the requirements of s.9 Wills Act 1837
To comply with s. 9 the will must be in writing and signed by the testator (or by someone else on his behalf)
The testator’s signature must be made or acknowledged in the presence of two adult witnesses with capacity
Summary
The witnesses must each sign the will in the presence of the testator but not necessarily in the presence of each other
The attestation clause in a will describes the circumstances under which the will was signed.
If a beneficiary (or their spouse/civil partner) acts as a witness the will as a testamentary document remains valid but under s.15 Wills Act 1837 the gift to the beneficiary is void
S.15 Wills Act 1837 has no effect on the appointment of a witness as an executor
Knowledge and Approval
A testator must have a general intention to make a testamentary document which disposes of their property and should take effect following their death.
A testator is also required to have a specific intention to make the particular will they sign. This means they must know and approve of its contents and understand the choices they have made. It is possible to satisfy the test for testamentary capacity but lack knowledge and approval.
Practically, a testator must read their will and understand it, and by their signature intend to give effect to its terms.
Similarly to testamentary capacity, knowledge and approval must be present at the time of execution, unless the exception in Parker v Felgate applies.
Presumption
Knowledge and approval are presumed if the testator has testamentary capacity and the courts are generally cautious in accepting claims the testator lacked knowledge and approval. However, if there is evidence which raises doubt as to knowledge and approval the presumption is rebutted and the burden of proof shifts to those seeking to enforce the will to demonstrate it was present.
Note in particular that there is no presumption of knowledge and approval if:
The testator is blind or illiterate (ie unable to read the will)
The will was signed by someone on behalf of the testator
There are suspicious circumstances (e.g. the will was prepared by a key beneficiary or their relative)
Affadavit of knowledge and approval
If there is no presumption of knowledge and approval, and the attestation clause (which explains the circumstances under which the will was executed) does not address this, an affidavit of knowledge and approval would be needed when submitting the will to probate.
If the presumption of knowledge and approval does not apply, it may be possible to take steps in advance to mitigate the risk of having to prove that it was present at a later date. For example, if a client has a medical condition which renders them unable to read, or the will is written in a language they do not read fluently, the attestation clause can be drafted to reflect the steps taken to ensure the testator fully understood the document they were signing.
Undue Influence and Duress
Even where a testator has knowledge and approval, if the will was made as a result of undue influence or duress it will not be valid because the will does not reflect the testator’s true intention.
A testator may have been unduly influenced in respect of a particular gift within the will or the will as a whole.
Where the whole of the will was made as a result of undue influence with will is invalid. Where part of a will was made as a result of undue influence, the remainder may be given effect to provided that the omissions do not “upset the whole tenor of what remains”, but the court cannot add or substitute words.
What is undue influence
The key principles regarding undue influence in relation to wills were summarised in Re Edwards:
Undue influence occurs where a testator is coerced into making a will, or including particular terms, against their judgement and contrary to their true intention. The testator does not genuinely exercise choice but has surrendered to pressures they were not able to withstand.
Undue influence goes beyond persuasion. It is not unlawful to encourage someone to make a will or persuade them that certain provisions should be included e.g. by appealing to “ties off affection” or “pity for future destitution”. With persuasion the testator’s judgement is ‘convinced’.
Distinctions and Presumptions
The distinction between someone who makes a convincing argument and persuades the testator to take action, and someone who coerces a testator into a course of action, is not always clear.
There is no presumption of undue influence in relation to testamentary dispositions (which differs to lifetime arrangements) and whether undue influence has occurred is a question of fact.
Burden of Proving Undue Influence
The burden of proving undue influence lies with the person making the allegation and the court requires evidence - “It is not enough to prove that the facts are consistent with the hypothesis of undue influence. What must be shown is that the facts are inconsistent with any other hypothesis”. It is often a challenge to provide such evidence which makes bringing a successful undue influence claim difficult.
Physical and Mental Strength of Testator
The physical and mental strength of the testator are relevant when determining how much pressure would be necessary to overbear the will. A weak or ill testator may be more susceptible and for the sake of a quiet life may be induced to do anything.
Whether or not the court considers the testator’s will to be fair is irrelevant. The question is whether, in executing the will, the testator acted “as a free agent”.
Summary
To make a valid will a testator must have testamentary capacity, know and approve of the contents of their will and comply with the requirements of s.9 Wills Act 1837.
A testator must intend to make a will and intend to make the will they sign – this requires knowledge and approval of its contents.
Knowledge and approval is presumed where the testator has testamentary capacity unless the testator is blind, illiterate, someone signs on their behalf or there are suspicious circumstances.
A will (or gift within it) made as a result of undue influence will be invalid.
Undue influence requires evidence that the testator did not intend to make the will they signed. Persuasion does not amount to undue influence.
Non-Dispositive Clauses
Professionally drafted wills tend to follow a similar structure and style. Precedents from practitioner texts or a firm’s precedent bank are used to create the basic structure of the will.
When preparing a will the wording should be clear, concise and unambiguous. Colloquial and technical language (unless needed for precision) should be avoided.
Wills are traditionally drafted without punctuation.
It is common to capitalise the words which explain the purpose of the clause: e.g. I GIVE; I APPOINT.
Numbered paragraphs and the use of sub-clauses make it easier to read and cross reference.
Precedents are an aid to drafting and may not reflect what is required without amendment.
The basic overview of a standard will is shown below. This element will explain the effect of each of the clauses shown in bold. Key drafting aspects are also considered.
General Structure
Commencement
Revocation
Burial / Funeral wishes
Appointment of executors & trustees
Appointment of guardians
Specific gifts
General gifts
Pecuniary gifts
Residuary gift
Administrative clauses
Date & Attestation
Appointment of Executors
A testator is free to choose their executor. However, a minor or someone who lacks mental capacity cannot act. An executor who is bankrupt can act but may be unable to perform all PR functions and is therefore an unwise choice.
A minimum of 1 executor is required, but it is often better to appoint at least two in case a sole executor does not survive the deceased or is unwilling/unable to act. A maximum of 4 can apply for the grant of representation. If more than 4 are named in the will then power is ‘reserved’ to those who do not apply initially to apply later if any vacancy arises.
Surviving Spouse or Close Family Member
It is common for a surviving spouse or close family member to be named. The role can be complex and it is often an onerous responsibility, especially if the executor will be grieving the death of their close relative. The testator should obtain consent from the executor in advance.
Unless stated otherwise the appointment of a spouse/civil partner becomes ineffective if the testator later divorces/dissolves their civil partnership (s18A / C Wills Act 1837).
Appointment of Executors
In most cases the scope of an executor’s appointment is absolute and unrestricted. However, qualified appointments are possible. An executor’s role may be qualified by time (e.g. to take effect only for a fixed period or if they survive the testator by a certain period), location of the assets (e.g. only UK assets) or type of assets (e.g. only business assets).
Where a qualified appointment is made the drafter must ensure all of the estate will be administered and no assets passing under the will are left without an executor appointed to deal with them.
Where the executor’s appointment is qualified the grant of representation issued in their name will be similarly limited.
In most cases there will be no doubt about who is appointed but an appointment may be void if it is not clear that someone has been appointed to that role, or there is ambiguity about who is supposed to fulfil the role.
Appointment of law firm partnership
A partnership does not have a separate legal identity distinct from its partners so cannot be appointed. Instead, all of the partners (construed as profit sharing) at the date of death are appointed (‘a’ or ‘any one’ partner is void for uncertainty).
The number who should act can be limited by stating only ‘one/two’ should act. A testator can express a preference for a specific partner but should avoid a personal appointment (that person may no longer practice or work at the firm).
The example above considers that the firm in the future may change its name, merge with another, convert to an LLP or incorporate.
Appointment of LLP
A trust corporation is a specific type of corporation with authority to carry out trustee and PR roles. Law firms, banks and financial institutions may have established their own trust corporation and this will have separate legal personality from the limited company or LLP that owns or runs it. A trust corporation may be appointed as executor.
Appointment of Professional Executors
Only professional executors and trustees may charge for their time (s.29 Trustee Act 2000 (‘TA 2000’)). However, this statutory right to charge imposes some restrictions.
Rather than relying on the scope of s 29 TA 2000, professional executors and trustees (whether partners in a law or accountancy firm, an LLP or a trust corporation) will want to include an express charging power. This is commonly added as part of the appointment clause.
Any Professional Trustee is entitled to charge, and be paid, reasonable remuneration for services that the Professional Trustee or their firm provides.
Receiving payment for services under s 29 TA 2000 or an express charging clause is not a breach of fiduciary duty, either by way of making a profit from a fiduciary position or a breach of the prohibition on self-dealing/ no conflict rules.
Acting as a Guardian
A testator with parental responsibility may appoint a legal guardian for their infant children by will (s 5 Children Act 1989). Appointment by one parent would not normally take effect until after the death of the surviving parent.
Acting as guardian is a position of responsibly and the testator should obtain consent from the proposed guardian(s) that they are willing to act. A guardian is not required to accept their appointment.
Consider whether any financial provision for the guardian is appropriate e.g. a legacy to be paid only if the guardian is appointed.
Consider whether jointly appointed guardians will work together effectively.
Summary
To draft a will you should start with an appropriate precedent and insert, amend or remove clauses in accordance with the client instructions.
Most precedents follow a similar structure: 1. introductory clauses, 2. appointment of executors and guardians, 3. dispositive clauses, 4. administrative provisions, 5. execution/attestation.
Revocation, date and attestation clauses should be included to avoid confusion but a will is still valid without them.
Any adult with mental capacity may act as executor. Their appointment may be absolute or qualified.
To appoint a law firm partnership all of the partners must be appointed (then expressly limit the number). An LLP and trust corporation may appointed directly.
Most wills appoint executors and trustees in the same clause and appoint the same people in both capacities.
The administrative clauses state the powers the executors and trustees have to carry out their role. Express powers take priority over statutory and common law defaults.
Dispostive Clauses
Professionally drafted wills tend to follow a similar structure and style. Precedents from practitioner texts or a firm’s precedent bank are used to create the basic structure of the will.
When preparing a will the wording should be clear, concise and unambiguous. Colloquial and technical language (unless needed for precision) should be avoided.
Wills are traditionally drafted without punctuation.
It is common to capitalise the words which explain the purpose of the clause: e.g. I GIVE; I APPOINT.
Overview
Numbered paragraphs and the use of sub-clauses make it easier to read and cross reference. Precedents are an aid to drafting and may not reflect what is required without amendment.
The basic structure of a will is set out below. This element will consider the effect of those clauses shown in bold and note key drafting aspects for each. * Commencement * Revocation * Burial / Funeral wishes * Appointment of executors & trustees * Appointment of guardians * Specific gifts * General gifts * Pecuniary gifts * Residuary gift
Date & Attestation
Dispositive clauses By these clauses a testator directs who is to inherit their assets, what each person should receive and on what terms. The words ‘legacy’ and ‘devise’ are traditionally used to describe gifts of property. ‘Legacy’ normally refers to a gift of chattels or personalty and ‘devise’ is normally used in relation to gifts of real property (land). This element will refer generically to ‘gifts’. Items of property or cash may be given to named beneficiaries either directly and absolutely (without restriction) or subject to conditions / terms of a trust.
Traditionally, the dispositive clauses appear in the following order with non-monetary gifts first, followed by gifts of cash, and finally the gift of ‘everything else’ referred to as the residue. This element considers each of the following in turn: Specific (including gifts of chattels) General Pecuniary Residuary
Drafting of specific gifts
GIVE to [ ] my painting of Epsom race course framed in red and gold absolutely - Specific gifts are of a particular item owned by the deceased at the date of death (distinguished from other property of a similar type owned by the deceased). - A specific gift should be drafted precisely. The subject matter must be clear so the item can be identified, otherwise the clause may fail for uncertainty.
Compare a gift of “my painting” (when the testator has more than one painting) with the example above. The former is likely to be void for uncertainty. - If the testator does not own at death the item referred to in the will the gift adeems (fails to take effect) and the beneficiary receives nothing.
Specific gifts I GIVE to [ ] my painting of Epsom race course framed in red and gold absolutely
- A testator will commonly replace items such as cars, musical instruments etc. over time and when receiving instructions for a specific gift a solicitor should check the testator’s intention in the event that the original item no longer exists.
- If the testator would like the beneficiary to receive ‘something’ even if it is not possible to give effect to the original gift an alternative substitute gift can be included. For example, an alternative item or cash equivalent to take effect only if the gift of the original item does not. For example “I give to [ ] absolutely my Stradivarius violin or such other violin that I own at my death which I keep in my safe”
Collections I give to my grandchildren living at my death absolutely in equal shares all my household furniture to be divided among them as they shall agree within 6 months of my death but in default of which a division shall be made by my Executors in their absolute discretion which shall be final and binding on all my grandchildren.
- Rather than making a gift of a single item a testator may instead wish to give a collection of items. Similarly to a specific gift of a single item any collection must be clearly identified to avoid uncertainty. A gift of ‘my dressing up clothes’ may be void for uncertainty if there is no way of distinguishing these clothes from any others.
- A gift of a collection may be to an individual for their benefit or to more than one individual to be divided as they see fit (see above). Where a division is required the will should specify how agreement should be reached, a time frame for deciding on a division (e.g. 6 months from death) and state how any failure to agree within such time should be resolved (e.g. in the absence of agreement the executors should decide).
Chattels
Chattels I give to [ ] absolutely all my personal chattels as defined by section 55(1)(x) of the Administration of Estates Act 1925 A gift of a collection of chattels is a type of specific gift. Most testators will have personal possessions (chattels) which are included in their succession estate when they die. To the extent these are not to be given away as part of the general residue clause a specific clause is needed. The statutory definition of chattels (which applies on intestacy) is usually used to identify relevant assets and avoid the gift failing for uncertainty. S 55(1)(x) Administration of Estates Act 1925 defines chattels as “all tangible movable property except for money or securities for money, assets used at the intestate’s death solely or mainly for business purposes and assets held at the intestate’s death solely as an investment”
Chattels
Chattels I give to [ ] absolutely all my personal chattels as defined by section 55(1)(x) of the Administration of Estates Act 1925 and also any motor car belonging to me even though used wholly or partly for business purposes The statutory definition is usually wide enough to cover what the testator intends but may exclude items the testator would not expect. It includes vehicles, modes of transport and pets. It excludes:
Money or securities for money Items used solely or mainly for business purposes Items owned solely as an investment A gift of chattels as defined by s 55 may therefore need to be amended to include or exclude certain items (see in bold above). A will signed before 1 October 2014 which refers to s.55(1)(x) will be interpreted with reference to the previous definition (not covered by this module). The date of death is not relevant.
Chattels
Chattels I give to [ ] absolutely such of my personal chattels as defined by section 55(1)(x) of the Administration of Estates Act 1925 as are not hereby or any codicil hereto otherwise specifically disposed of A specific gift, or a gift of a collection, usually disposes of items that fall within the general definition of a personal chattel.
Where a will contains specific gifts and also a gift of chattels as defined by s 55 there would be a conflict if both clauses attempted to give away the same items. To avoid this, specific gifts of items/collections appear before the gift of chattels in a will, and the gift of chattels is drafted to cover only the items that have not already been given away (see words in bold above).
Specific Gifts
Specific gifts of land It is important to first consider whether a clause dealing with the testator’s real property is actually required. Property owned as joint tenants passes outside of the succession estate and is not distributed under the terms of the deceased’s will (or intestacy). Instead, the property will pass automatically to the surviving co-owner under the law of survivorship. If this reflects the intention of the testator no provision within the will is required.
Property owned solely by the testator, or jointly as tenants in common, is included within the succession estate and will pass in accordance with the deceased’s will (or intestacy). If a testator wants this property to be given to a sole beneficiary of the residuary estate, no specific provision within the will is required. If the testator has no particular beneficiary in mind to receive the property and is happy for it to be sold as part of the administration (with sale proceeds being distributed according to the terms of the will) no specific provision within the will is required.
Wants to give away a property to a specific beneficiary
If a testator wants to give away their interest in a property to a particular beneficiary(ies) then the usual considerations regarding specific gifts should be addressed: The property must be identifiable. The full address and registered title number should be used. The clause should expressly state what will happen if that property is no longer owned by the testator when they die. Should a specific alternative property be given? Or should the gift be of the testator’s “main residence on the date of my death”.
Additional matters should also be considered which include: * The property must be capable of passing under the will so if owned as joint tenants the joint tenancy will need to be severed. * A solicitor should check whether any third party interests affect the property and/or if the testator holds the property on trust for anyone else. If the property is owned jointly as tenants in common and the testator wants to leave their share to someone other than the surviving co-owner the testator needs advising on the rights of the co-owner.
Tax Advice
- The testator should be given tax advice regarding the Residence Nil Rate Band. * If the property is subject to a secured charge/mortgage the testator will need advice relating to the repayment of any outstanding loan and who should be liable for this. * If the testator does not want to make an outright gift and instead plans to leave the property on trust
e.g. conferring a right of occupation or an interest in possession, then practical considerations should be considered. Who will have a right to occupy? Should they pay rent? Can they veto a sale? Who pays the expenses associated with upkeep? * If the property is being left to more than one person the terms of their joint ownership should be clear.
General Legacies
General legacies I GIVE to [ ] a Hasselblad Lunar camera free of tax and costs of transfer absolutely * A general legacy is a gift of property which is not distinguished from property of a similar type – e.g. “a” rather than “my”. * A general legacy does not normally fail because the PRs would have to buy the specified property if it was not part of the estate at death. Check with the testator that this is in accordance with their wishes. * Most pecuniary legacies (gifts of cash) are general in nature e.g. “I give £1,000 to [ ]”.
Demonstrative Gifts
Demonstrative Gifts I GIVE to [ ] the sum of five hundred pounds (£500) to be paid from my Rochdale Building Society Account absolutely * A demonstrative legacy is a type of general legacy (most often pecuniary in nature) which the will directs should be paid out of a specified fund. Such a gift will not fail if there are insufficient assets in the specified fund.
Instead, if the specified fund has ceased to exist or is inadequate then the beneficiary is entitled to receive what is left in the fund and to have the balance of the legacy paid as a general legacy. * It is unusual to see this type of legacy in practice. The gift is of the same value whether or not it comes from a specific account and the account itself would rarely have sentimental value.
Pecuniary Gifts
Pecuniary Gifts I GIVE to [ ] the sum of five hundred pounds (£500) free of tax and absolutely * A pecuniary legacy is a gift of money. * It can be specific (‘my £300 in the safe in the garage”) or general (see above). * The clause will often contain the amount of the gift in numbers and words in case there is an error when typing a numerical figure.
Residuary gifts
- A residuary legacy is a gift of all of the testator’s property (capable of passing by the will i.e. the ‘succession estate’) which has not already been disposed of under the will or any later codicil. * Usually it is the largest part of the deceased’s estate and can be the most complex to draft as commonly there are substitutional gifts and age contingencies included and/or trusts created.
- If clauses disposing of the residue are not properly drafted there may be a partial intestacy. You will now consider the drafting of residue clauses in more detail….
Residuary Gifts
I GIVE all the assets I can dispose of by will subject to the payment of my debts and funeral and testamentary expenses and all legacies given hereby or by any codicil hereto (‘my Residuary Estate’) unto….. (a) My spouse absolutely but only if she survives me by twenty-eight clear days (b) If clause (a) fails for any reason I GIVE my Residuary Estate to my trustees to hold on trust as set out in clause [ ]”.
Key elements of the clause
Let’s look at the key elements of this clause: “I GIVE all the assets I can dispose of by will” - these words ensure no items are left out i.e. it is a gift of “everything” subject to the payment of my debts and funeral and testamentary expenses and all legacies given hereby or by any codicil hereto - By these words debts, legacies, funeral and administration expenses (including tax liabilities) are paid from the estate and what is left over forms the residue available for a beneficiary. NB: without such express direction a statutory order re payment of debts and legacies is followed (‘my Residuary Estate’) unto….. ‘Residuary Estate’ should be defined for ease of reference later in the will.
Residuary Legacy
- The residuary legacy may be given directly to beneficiaries (see (a) above) or a trust may be imposed (see (b) above).
- A trust should generally be imposed where: o a beneficiary is given a life interest in the residue to a discretionary trust of the residue is to be set up to the residue is given to more than one person o there are contingent or minor interests In each case the clause should be drafted incorporating the trust to cover a declaration of the trust and the terms of the trust itself.
Substitution Provisions
You will frequently see a substitution provision included to take effect if the primary gift fails. For example, clause (b) above is a substitution clause as it only comes into effect if clause (a) does not.
Example 1: I GIVE my Residuary Estate to my nephews to be shared as follows: (a) 1/3 to my nephew JACOB WHITE (b) 1/3 to my nephew DARREN WHITE (c) 1/3 to my nephew CHARLIE WHITE If Darren died before the testator, clause (b) would fail. In the absence of any express substitution this results in a partial intestacy (of Darren’s 1/3).
Example 2: I GIVE my Residuary Estate to such of my three nephews JACOB WHITE DARREN WHITE and CHARLIE WHITE as survive me and if more than one in equal shares If Darren died before the testator only Jacob and Charlie survive the testator. The residue would therefore be shared equally between them both. There would be no intestacy.
Residuary Gifts
Residuary gifts If an asset given by an earlier gift in the will fails, the subject matter of the gift will usually pass under the residue clause instead (i.e. as an item that has ‘not already been given way’). The original beneficiary may be disappointed but it does not usually result in a complex administration. However, the failure of a residuary gift, or part of it, results in a partial intestacy. This creates additional and unnecessary administrative complications for the PRs and is likely to result in a distribution that is not what the testator intended.
To reduce the risk of this, professionally drafted wills tend to: avoid giving separate parts of residue (Example 1) and instead use clauses similar to Example 2; create express substitution clauses in the event that original gift does not take effect; and/or use an ultimate gift over clause (sometimes referred to as a disaster clause) where the testator specifies who their estate should pass to in the event of all other gifts failing. A gift to a charity is a common choice of ultimate beneficiary.
Summary
- Particular care should be taken when drafting specific gifts because if the item is no longer owned by the testator when they die, the beneficiary will receive nothing (unless a substitution clause has been included).
- The gift of residue will usually be more complex than other gifts as it should include a definition of the property, explain what items will be paid out of residue, and often trusts are created.
- The failure of a specific, general or pecuniary gift, in the absence of any express or implied substitution, means the subject of the gift would be distributed under a clause giving away the chattels (if relevant) or fall within the definition of ‘residuary estate’ and pass under the residue clause.
- The failure of the residue clause (or any part of it) will usually give rise to full or partial intestacy.
Will Drafting: Construction
Rules of Construction
The role of the solicitor is to draft a will that complies with the client’s needs and instructions. If the wording of a clause is not absolutely clear the courts will construe the meaning based on various rules of interpretation.
It is important that you understand the general rules included in this element to ensure your drafting does not fall foul of them and to appreciate why express words clarifying a testator’s intention should be used.
The rules of interpretation are particularly important in relation to the clauses within the will which dispose of the testator’s property.
This element will consider:
Date from which will speaks
Relieving provisions
Survivorship provisions
Date from which the will speaks
There are particular rules that apply to determine the date on which the subject matter or object of a gift should be ascertained where the wording in the will is not definitive.
The rules for the following will be considered:
Property
Collections
People
Property
General Rule
Unless a contrary intention is shown, the will speaks from the date of the testator’s death in respect of identifying the subject matter of a gift by virtue of s.24 Wills Act 1837 which states:
Every will shall be construed, with reference to the real estate and personal estate comprised in it, to speak and take effect as if it had been executed immediately before the death of the testator, unless a contrary intention shall appear by the will.
Contrary Intention
A contrary intention can be demonstrated by the use of words such as ‘my’ (as you would see in a specific legacy), ‘now’, or ‘at present’ when describing a gift. These words make the date of execution of the will the relevant date.
In both examples below the car the testator owned when they executed the will (not when they died) would be the subject matter of the gift. The second clause is preferable as it states this expressly.
Drafting Contrary Intention
I GIVE to [ ] my car absolutely
I GIVE to [ ] the car that I own at the date of my will
It is because the use of the ‘my’ is construed to be a contrary intention to the general rule in s 24 Wills Act that specific gifts have a significant risk of failure.
The gift will adeem if the testator no longer owns that car when they die and the beneficiary will receive nothing unless there is an express substitutional gift.
The beneficiary will not therefore receive any car (i.e. a replacement asset) that the testator did own at their death, or a cash alternative, unless this was expressly provided for.
Collections
If there is a gift of a collection which is capable of growing the will speaks from the date of death notwithstanding the use of ‘my’.
For example, ‘my stamp collection’ or ‘my chattels’ would be gifts of collections and would be construed to mean those items included in the collection at the date of death.
Collections
A holding of shares would be treated in the same way e.g. a gift of ‘my Tesco plc shares’ will be taken to mean the number of shares owned at the date of death.
Instructions should be taken from the testator as to whether he intends the gift to be of the collection owned at the date of the will or to include any items acquired in the future. This should then be expressly provided for in the drafting
People
To identify the person(s) who should inherit under a clause the will is deemed to speak from the date of execution, unless the wording in the will shows a contrary intention. The rule in s.24 WA does not apply.
Where a gift is given to a class of beneficiaries e.g. ‘my grandchildren’ a testator should state expressly when the beneficiaries will be determined e.g. does the testator mean grandchildren alive when the will was executed / when the testator dies / all grandchildren including those born after the testator dies? Without express wording the ‘class closing’ rules apply and the class closes when the first beneficiary in the class obtains a vested interest.
The execution of a later codicil republishes the will it amends and under the general rule people are identified with reference to the date of the codicil. A gift to ‘my nurse’ in a will would refer to the nurse at the date of a later codicil not the will.
Relieving Provisions
Relieving provisions deal with such matters as who should bear the burden of taxes, charges (e.g. mortgages), expenses and costs. Such provisions should be expressly stated to avoid confusion but in the absence of express wording there are general rules which apply.
Rules for the following will be considered:
Inheritance tax
Expenses & Costs of transfer
Charges
Inheritance tax
Relieving provisions
In the absence of any express provision an individual gift in a will is made free of inheritance tax (‘IHT’) and IHT would be payable out of the residue as a general testamentary expense.
For the avoidance of doubt it is standard practice for legacies to be drafted expressly as free from tax and for the residuary estate to bear the burden of such tax even if it is not strictly legally necessary.
If the general rule does not reflect the testator’s wishes the testator can oust the general rule by stating a gift is to bear its own inheritance tax.
Expenses/cost of transfer
In the absence of any express provision specific beneficiaries bear the burden of the:
cost of delivery of the item of property to them
expenses incurred since the date of death in preserving the item or ensuring its upkeep
The testator may prefer these costs to be paid out of the residuary estate and if so, the gift should be stated to be ‘free of’ expenses and / or costs of transfer.
Charges
Where property is subject to a secured debt / charge e.g. a mortgage over a house the personal representatives will need to consider whether repayment of the debt linked with the charge is a cost of the estate.
The general rule set out in s.35 Administration of Estates Act 1925 (AEA) is that unless the will shows a contrary intention, the asset charged bears liability for payment.
The beneficiary will therefore inherit the property subject to the charge.
A testator can expressly relieve the property of the charge. It would then become a general debt of the estate to be paid out of residue.
Note that a general direction in the will to pay debts and expenses from the residue of the estate is insufficient to oust the effect of s.35.
Effect of the mortgage production policy
The testator should consider the effect of any mortgage protection policy. Is it intended that the proceeds of the policy are to clear the mortgage and the beneficiary to receive the property free of the charge? Or is it intended that the policy proceeds should form part of the general estate and the beneficiary to receive the property subject to the mortgage debt?
As well as checking the intention of the testator the terms of any policy should also be checked carefully as the lump sum may not even fall within the succession estate e.g. the policy proceeds may be payable directly to the lender, or may pass to the surviving joint owner if the policy was in joint names.
Section 21 Administration of Justice Act 1982
Where the meaning of a will or clause within it is unclear or ambiguous it is possible for the courts to rule on how it should be constructed.
The court has the power to determine the effect of a will and the overriding principle regarding construction is that the intention of the testator should be given effect to.
The court’s role is to determine the meaning of the words within the will and what the testator intended by these, not to look behind the will to identify any other ‘real’ intention. Extrinsic evidence (i.e. evidence that is not from the will itself) may in some circumstances be permitted.
Under s 21 Administration of Justice Act 1982 extrinsic evidence may be submitted in the following circumstances:
(a) If the will or any part of it is meaningless;
(b) If the language used in any part of it is ambiguous on the face of it;
(c) If the will is ambiguous in light of the surrounding circumstances.
Extrinsic evidence is used to help with construction of the will. Evidence is not used to vary or contradict the language used by the testator in the will.
Survivorship Provisions
Generally, in order to take a gift under a will a beneficiary must merely survive the testator, even if only for a short period of time. If the beneficiary predeceases the testator the gift will lapse (subject to s.33 Wills Act 1837). There is no equivalent of the 28 day survivorship period for spouses/civil partners imposed under the intestacy rules.
Consider the following situations:
Two deaths occur within a short period of time, e.g. T died 2 weeks ago leaving all of their assets to W and W died last week.
Two deaths occur in circumstances where the exact order of death is uncertain, e.g. both T and W die in a road accident.
With (ii) the commorientes rule applies. Under s.184 Law of Property Act 1925 there is a presumption that the eldest died first so if T is older than W, W is deemed to have survived T.
In both situations W’s estate would consist of all property received from T and W’s own property. The following problems can therefore arise:
Following problems can arise
There will be two administrations (with attendant costs and delay) of the property which passes from T to W – once in T’s estate and then in W’s.
The first to die, T, loses control over the ultimate destination of their property as all of the assets will pass under W’s will/intestacy.
There may be an increased IHT liability if the same assets are taxed in both estates.
Order of death unknown
If the order of death is unknown s.4 Inheritance Tax Act 1984 treats the deaths as simultaneous. For IHT purposes neither inherits from the other and the estates are taxed separately. Property which in fact passes from the first to die to the second to die is not taxed again in the second estate. NB: Section 4 does not apply if the order of deaths is known but there may be relief from double taxation if Quick Succession Relief applies.
To avoid the problems and potential confusion regarding two deaths which occur together or in very close succession an express survivorship clause can be included in the will.
Survivorship Clause
A survivorship clause in a will is one which states that in order to take a particular gift the beneficiary must survive the testator by a specified period of time. A beneficiary who survived for less than the specified period would not be able to take the gift and it would pass to whoever was next entitled to the property under the terms of the will.
I give my Residuary Estate absolutely to my spouse if he survives me by more than 28 days
The survivorship period normally used is 28 or 30 days, as longer periods can be administratively inconvenient.
Where one spouse has very little or no assets and the couple’s combined estate is above the nil rate band, equalisation of assets is recommended if their wills contain a survivorship clause for non-tax reasons to try and minimise potential IHT costs.
Summary
A will speaks from death in respect of the items given (s.24 WA) unless a contrary intention is shown. The word “my” demonstrates the requisite intention and that item is identified with reference to the property owned at the date of the will
Unless otherwise expressly stated:
Items that comprise a collection are identified at the date of death
People are identified with reference to the date of execution
Summary
A gift in a will is made free of IHT
A specific gift is made subject to expenses and costs of transfer
A gift of property subject to a charge bears the liability of that charge (s.35 AEA)
There are no deemed survivorship requirements for gifts under a will. Express survivorship clauses are often used to avoid unnecessary cost and complication
Gifts to Issue
When a testator wants to include gifts for their issue (meaning children / grandchildren and further lineal descendants) there are particular considerations to take into account.
Does the testator want to make a gift to an individual or make a class gift?
Is the gift to be vested or contingent?
What does the testator want to happen if a beneficiary pre-deceases?
What does a gift to children include?
A gift to children includes illegitimate (born to unmarried parents), legitimated (born to unmarried parents who later marry) and adopted children. However, a stepchild is not included unless the interpretation of the will is clear this was intended. There are particular rules for children conceived but not yet born at the relevant date, and children born as a result of fertility treatment, but these are beyond the scope of the module.
Naming
When drafting gifts to issue the beneficiaries can either be named individually or the gift can be drafted in favour of a group identified by reference to their relationship with the testator.
Compare the following
I give absolutely to my son X and my daughter Y the sum of £100
I give absolutely to each of my children the sum of £100
Unless there is a particular reason to name individuals if additional children may be born after the will is executed, and the testator would want those children to benefit, it is usually appropriate to draft a gift to ‘children’ as a class.
Class Gifts
Where a gift is given to a group of beneficiaries who meet a general description such as ‘children’ or ‘grandchildren’ these are referred to as class gifts.
Each member of that class is entitled to inherit. However, in the absence of express wording to clarify, it can sometimes be difficult to identify with certainty which individuals will be included within a class until there is no possibility of further people being born who meet the definition.
The courts have developed rules of construction known as the ‘class closing rules’ to provide certainty and enable distribution.
General Rule
The general rule is that a class closes (i.e. the beneficiaries within the class are identified and no one born subsequently can qualify) when any one member of the class first becomes entitled in possession. For example:
I give £300 to be shared equally between my grandchildren who reach the age of 21
Class Gifts
When the first grandchild reaches 21 the class of ‘grandchildren’ would close (this may be after the testator’s death). If the testator has grandchildren born subsequently these grandchildren would not be included.
If no contingency applies (or at least one of the class has already satisfied the contingency when the testator dies) the class closes on the date of death, provided there is at least one person who satisfies the definition e.g. one grandchild in whom the gift can vest.
I give £300 to be shared equally between my grandchildren alive at the date of my death and who reach the age of 21
Class gifts
The application of the rules can be complex and it is preferable to avoid them and to create certainty by expressly stating when the class closes.
In the example above the personal representatives would be able to identify exactly which beneficiaries should inherit with reference to the date the testator died.
If a testator did want to provide for grandchildren born after his death this should be clearly provided for in the will.
Vested interests
A gift vests if it is given outright and absolutely and there are no conditions which must be met. For example:
I give £1,000 absolutely to each of my children alive at the date of my death
If the testator’s children were aged 15 and 19 when the testator died both would have a vested interest even though one of them is a minor (under 18). Vesting is not about age. If a minor with a vested interest dies before attaining the age of 18 the gift belongs to them and will pass into their own estate.
Vested Interests
However, where a vested gift is made to a minor the gift would be held on trust until the child attains 18 because a minor cannot give a good receipt for capital.
It is sometimes possible for a child aged 16 or 17 to give good receipt but only if there is an express clause within the will permitting this.
Contingent Interests
A contingent gift is made where a beneficiary will have to satisfy a condition before they inherit. When the condition is satisfied the interest vests. The most common contingencies are a requirement to survive the testator by a specified amount of time or the beneficiary attaining a certain age.
I give £1,000 to such of my grandchildren alive at my death who reach the age of 21
If a grandchild died after the testator but before the age of 21 they would not have satisfied the contingency, and unlike with the vested interest, their estate would not be able to claim the property and the gift would lapse. In effect, the gift would fail.
Vested or Contingent
Whether a gift should be made vested or contingent is relevant to any dispositive clause within a will.
However, contingent gifts are most commonly used:
where gifts are made to the testator’s issue.
in relation to the residuary estate (although if a legacy is quite large the testator may also want to specify an age).
If a gift to children is to vest absolutely at an age later than 18 the testator should be advised of the associated tax implications.
Pre-decease testator
If a beneficiary dies before the testator a gift to them in the will fails (lapses).
Consider the following:
I give to my niece the sum of £100 absolutely
I give my Residuary Estate to my nephew absolutely
If either the testator’s niece or nephew pre-decease the testator the gifts to them would lapse. The consequence of this depends on the type of clause. If a pecuniary legacy lapses (gift to the niece) then the money that would have been given ends up in the residuary estate. However, if a gift of the residuary estate lapses (gift to nephew) then a full or partial intestacy is created
Substitutional gifts
A testator should consider what they would like to happen in the event of a gift lapsing. It is common for a substitutional gift to be specified.
I give absolutely to my niece X the sum of £10,000 but if she has died before me to her daughter Y
As a lapse of the residue clause will give rise to intestacy most professionally drafted wills include substitutional gifts of the residuary estate.
I give my Residuary Estate to my wife but if she has died before me then I give my Residuary Estate to such of my children who survive me and if more than one in equal shares
Substitutions where children pre-decease
When considering gifts to children, the most common substitution is in favour of the testator’s grandchildren i.e. the children of any child that has predeceased the testator. An example is shown below with substitution element in bold.
I give my Residuary Estate to such of my children who survive me and if more than one in equal shares provided that if any child of mine shall have died during my lifetime leaving a child or children then any such child or children (meaning in either case a grandchild or grandchildren of mine) as shall attain the age of 21 years shall take by substitution and in equal shares if more than one the share of my residuary estate which their parent would have taken had he or she survived me and attained a vested interest
The terms of the original and substitutional gifts will vary depending on the testator’s wishes. In this clause an age contingency of 21 is attached to the substitutional gift.
Section 33 Wills Act 1837
In the case of gifts in a will to the testator’s issue, if there is no express substitution clause, s.33 Wills Act 1837 (set out below) may apply to prevent the gift lapsing where:
33 (1)
(a) a will contains a devise or bequest to a child or remoter descendant of the testator; and
(b) the intended beneficiary dies before the testator, leaving issue; and
(c) issue of the intended beneficiary are living at the testator’s death,
then, unless a contrary intention appears by the will, the devise or bequest shall take effect as a devise or bequest to the issue living at the testator’s death.
S.33(2) includes a similar provision but in relation to class gifts to children/grandchildren.
Section 33 applies where:
There is a will containing a gift to the testator’s issue (child or other lineal descendant)
the intended beneficiary dies before the testator leaving issue of their own who are living at the testator’s death
The effect of s 33 is to enable the gift to be shared equally between the issue of the deceased beneficiary, provided no contrary intention is expressed in the will.
For example, T’s will contains a gift to T’s child (A).
A pre-deceases T leaving children of their own (B and C) who are alive at T’s death.
S 33 means B and C take the share A would have taken had A survived T (1/2 of A’s share would pass to each of B and C).
Substitution where s 33 would apply
It is good practice to include substitution provisions expressly for clarity even if s 33 would otherwise apply to achieve the same result.
Where s 33 applies and the original gift is contingent (e.g. to a beneficiary at 21) it may be unclear whether s 33 imposes a similar contingency on the substitution. It is therefore preferable to provide expressly what the terms of any substitutional gift should be.
Substitution where s 33 would apply
It is important to appreciate that s 33 only applies to gifts to issue of the testator (whether to a named child or remoter descendant, or a class gift consisting of children or remoter descendants). However, it does not operate in relation to any other gifts. For example, a gift to a sibling who has predeceased will lapse and s 33 will not apply to enable nieces and nephews to inherit. Therefore, express wording is needed if this is the testator’s intention.
Excluding Section 33
Section 33 will apply unless excluded by the wording of the will or the will otherwise indicates a contrary intention. If a testator does not want s.33 to apply it is important that this is clearly stated.
It can be difficult to know whether a will has expressed a contrary intention if there is no mention of s.33. For example, if a class gift to “such of my children who survive me and if more than one in equal shares” is included in a will and one child has predeceased, should s.33 apply to that child’s share? Or does the wording of the gift intend to override s.33 and ensure the estate would be shared between only those children who survive? The answer is not always clear and it is a matter of construction on an individual basis.
Ambiguity should be avoided by drafting to exclude s.33 and impose any substitutionary effect expressly.
Charities & unincorporated associations
If the testator wishes to leave a gift to a club, institution, charitable organisation or other unincorporated association the drafter must have regard to the following:
The organisation should exist and a full name and address (plus registered number of a charity) should be used to avoid doubt over the identity of the intended beneficiary.
Consider whether the organisation has registered charity status (there are inheritance tax implications).
Express Provisions
Express provision should be made for the organisation subsequently changing its name, amalgamating with another organisation or ceasing to exist.
Provision should be made for who can give valid receipt (it is common to name the treasurer). In the absence of express provision all members or potential beneficiaries would need to give a receipt which is not practical.
I GIVE to [ ] of [ ] (registered charity No.) (‘the charity’) absolutely £6,000 for its general purposes provided that:
if at the date of my death the charity does not exist or is subject to a winding up order my Executors shall pay the legacy to such another charitable body having the same or similar objects
the receipt of the treasurer or other appropriate officer for the time being of the charity (or of any substituted charity) shall be a good discharge to my Trustees
For gifts to charities
For gifts to charities, the testator should decide what they wish to happen if the charity ceases to exist or is subject to a winding up order. If the testator wants the gift to be given only to the named charity and/or not made if the charity is subject to a winding up order then ensure this is expressly stated. See example above.
A charitable gift stated to be for general charitable purposes results in the application of the cy-pres doctrine - under s 62 Charities Act 2011 the gift can be given to a different charity with a similar purpose where the original gift cannot be given effect. See example above.
Summary
When drafting gifts to the testator’s issue consider whether a class gift should be made or gifts to named individuals. If a class gift is made express wording should be used to state when the class closes.
Vested interests are absolute. Contingent interests arise where a beneficiary must satisfy a condition before their interest vests. Many testators will include an age contingency in any gift to a child / grandchild.
If a beneficiary dies before a testator a gift to them will lapse.
Summary
With regards gifts to the testator’s issue, s. 33 Wills Act 1837 imposes an implied substitution in favour of the children of any issue who pre-decease. It is better to expressly exclude s.33 and expressly include substitution provisions which reflect the testator’s wishes.
When drafting gifts to charities and other unincorporated associations express provision should be made with regards who can give receipt for any gift.
When drafting a charitable gift the effect of the cy-pres doctrine should be considered and the wording of the clause should make the testator’s intentions clear.
