Distribution of Estates and Intestacy

Question 1

What is meant by the deceased died testate?

Answer 1

The deceased’s will covers their entire succession estate

Question 2

What is meant by the deceased died intestate?

Answer 2

They died without making a valid will

Question 3

What is meant by the deceased died partially intestate?

Answer 3

They deceased’s will did not dispose of all of their assets

Question 4

What assets fall outwith the succession estate?

Answer 4

• donationes mortis causa
• discretionary pension scheme benefits
• insurance policies written in trust
• statutory nominations
• property held as beneficial joint tenants
• some beneficial interests under trusts/in property held in trust

Question 5

What is needed for a valid DMC?

Answer 5

• gift is made because the donor believes they may imminently die of a particular cause
• the donor makes it clear the gift is conditional on them dying and that that the property reverts to them if they survive
• the donor either parts with the property or something representing ownership of it

Question 6

What are the three ways life policies can be written into trust?

Answer 6

• under s 11 marriage Woman’s Property Act 1882 for the benefit of spouse and/or children
• expressly for the benefit of any nominated third party eg grandchildren
• into an existing trust for the benefit of the named beneficiaries in the trust deed

Question 7

What must be done for statutory nomination accounts?

Answer 7

• Money must be in one of three accounts - Friendly Society, Industrial Society, and Provident Society
• Account nominated cannot exceed £5,000
• must be nominated person to receive money on death

Question 8

How will you know if a bank account is held as joint tenants?

Answer 8

It should say in the opening documents

Question 9

Does a beneficial life interest in a trust form part of the succession estate?

Answer 9

No

Question 10

Does a remainder interest in a trust form part of the succession estate?

Answer 10

Yes

Question 11

How long must a spouse survive the deceased to inherit under intestate rules?

Answer 11

Must survive at least 28 days

Question 12

What does issue mean in intestacy context?

Answer 12

Includes children, grandchildren, illegitimate children, legitimated children, adopted and those conceived but not yet born

Does not include step children

Question 13

What happens if the intestate leaves a spouse but no issue?

Answer 13

Spouse inherits the entire succession estate absolutely

Question 14

What happens if the intestate leaves issue but no spouse?

Answer 14

Then the issue inherit the entire succession estate on statutory trust

Question 15

What happens if the intestate leave a spouse and issue?

Answer 15

Spouse (if they survive 28 days) gets:

• all personal chattels
• statutory legacy of £322,000 plus interest from date of death to date of payment
• one half of the residue absolutely

Issue get:

• other half of residue on statutory trusts

Question 16

What is the contingency limb of statutory trusts?

Answer 16

• each entitled beneficiary must survive the intestate and reach the age of 18 in order to inherit
• if a beneficiary is already 18 or older when intestate dies, they will have a vested interest and inherit absolutely and immediately

Question 17

What is the substitution limb of statutory trusts?

Answer 17

• if an entitled beneficiary dies before the intestate that beneficiary’s own issue can inherit in their place, provided they reach the age of 18

Question 18

If the intestate leaves no spouse or issue, what is the order by which relatives inherit?

Answer 18

1) parents

2) siblings of whole blood on statutory trusts

3) siblings of half blood on statutory trusts

4) grandparents

5) uncles and aunts of whole blood (siblings of parent) on statutory trusts

6) uncles and aunts of half blood (half-siblings of parents) on statutory trusts

7) the crown as bona vacantia

Question 19

What happens if the deceased dies intestate without spouse or issue and there is more than one person in the relevant category of relations ie both parents?

Answer 19

The succession estate is divided equally amongst the members of the class

Question 20

If the deceased dies intestate, do the PRs have any obligation to distribute particular assets to particular individuals?

Answer 20

No - up to PRs to distribute as they see fit in fulfilment of the individual’s entitlements

Question 21

What does the statutory definition of personal chattels mean for intestacy?

Answer 21

Means tangible moveable property but excludes:

• money or securities for money
• property used by the intestate at their death solely or mainly for business purposes
• property held at the death of the intestate solely as an investment

Question 22

Can the spouse receive the deceased’s share of marital home if the deceased held it as sole owner or tenant in common?

Answer 22

• spouse has no automatic right to receive the deceased’s share of the marital home
• they may make an election which enables them to appropriate the home in full or partial satisfaction of their statutory entitlements
• they have the right to buy the deceased’s share of the property from the PRs using the money they would have received from the estate

Question 23

How long does the surviving spouse have to make an election for share of marital home?

Answer 23

12 months from date of grant

Election must be in writing

Question 24

What happens if spouse wishes to make an election over the marital home but their entitlement in intestacy is lower than the value they are appropriating?

Answer 24

Spouse can pay difference from their personal funds

Question 25

When is the consent of the court required for the spouse to appropriate marital home?

Answer 25

Where the home is only part of a building owned by the deceased or when the home is part of a farm or other business