distribution of estates and intestacy

Question 1

What is testacy?

Answer 1

If the deceased’s will covers their entire succession estate, they are ‘testate’. Only the will is relevant when determining how to distribute their succession estate.

Question 2

What is intestacy?

Answer 2

A person who dies without making a valid will is said to have died ‘intestate’. The intestacy rules apply to their entire succession estate.

Question 3

What is partial intestacy?

Answer 3

If the will does not cover the entire estate, the deceased is ‘partially intestate’. The will is followed but the intestacy rules apply to any remaining property.

Question 4

What types of properties won’t pass to the succession estate?

Answer 4

1. Donationes mortis causa
2. Discretionary pension scheme benefits
3. Insurance policies written in trust
4. Statutory nominations
5. Property held as beneficial joint tenants
6. Some other beneficial interests under trusts & property held in a trust

Question 5

Simple way to remember the properties that won’t pass to the succession estate?

Answer 5

Dirty
Draculas
In
Spooky
Pink
Outhouse

Question 6

What is a donationes mortis causa?

Answer 6

A donatio mortis causa (‘DMC’) is a gift made in contemplation of death. i.e. death bed gift

Question 7

What are the three requirements of a valid Donationes mortis causa?

Answer 7

1. The gift is made because the donor believes they may die imminently of a particular cause.
2. The donor makes it clear that the gift is conditional upon them dying, and that the property reverts to them if they survive.
3. The donor either parts with the property or something representing ownership of it.

A gift in the form of a cheque to a ‘donee’ only takes effect once it has been cashed and the funds have cleared by the bank.

Question 8

Are nominations of a third party to receive benefits of a discretionary pension binding on the trustees?

Answer 8

Such a nomination is not binding on the trustees. As payment is entirely at the discretion of the trustees, the deceased is not deemed to have any entitlement to any payment from the scheme.

Question 9

what are the two relevant insurance policies?

Answer 9

1. simple/normal life insurance policies
2. insurance policies written in trust.

Question 10

Will the proceeds of a simple life insurance policy pass to the succession estate?

Answer 10

Yes.

Question 11

If the benefit of the policy was written in trust for another person, will it pass under the succession estate?

Answer 11

No. The insured has no beneficial interest under the policy. The proceeds belong to the beneficiaries nominated in the policy and vest on the insured’s death.

Question 12

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

Answer 12

1. Under s.11 Married Woman’s Property Act 1882 for the benefit of spouse and/or children.
2. Expressly for the benefit of any nominated third party, eg grandchildren.
3. Into an existing trust for the benefit of the named beneficiaries in the trust deed.

Question 13

What account can a person make a statutory nomination?

Answer 13

1. Friendly Society
2. Industrial Society
3. Provident Society

Question 14

What is the maximum amount nominated for a statutory nomination?

Answer 14

The amount nominated cannot exceed £5,000.

Question 15

On the death of the deceased, what happens to the monies in the accounts for statutory nominations?

Answer 15

The monies in the relevant account(s) pass to the nominee rather than under the will or intestacy of the deceased.

Question 16

How are benefits for Discretionary pension scheme benefits, Insurance policies written in trust, Statutory nominations released?

Answer 16

Benefits are released on production of a death certificate.

Question 17

What happens if the deceased was a beneficial joint tenant?

Answer 17

The property will automatically pass to the other joint tenant(s) by survivorship. It therefore does not pass into the succession estate.

Question 18

What happens if the deceased was a beneficial tenant in common?

Answer 18

If the deceased was a beneficial tenant in common, they have a separate, divisible share in the trust property which is not extinguished upon their death. This share will pass into the succession estate.

Question 19

What are two examples of Beneficial co-ownership?

Answer 19

1. The family home
2. Bank accounts

Question 20

If the deceased was a life tenant under a life interest trust, does their beneficial life interest form part of their succession estate?

Answer 20

No. The life interest expires on their death and the remainder interest usually vests in possession.

Question 21

When will the remainder interest survive the remainderman’s death?

Answer 21

The remainder interest can survive the remainderman’s death provided the remainder interest is vested ‘in interest’.

Question 22

How is trust property distributed under testacy or intestacy?

Answer 22

The value of assets held in a trust in which the deceased had a beneficial interest is not usually included in the deceased person’s succession estate.

Question 23

What is an exception to the general rule on how trust property is distributed?

Answer 23

An exception would be if a deceased (by will) exercises a power of appointment in respect of trust assets.

Question 24

Within how many days must a spouse or civil partner survive a deceased in order to inherit under the intestacy rules?

Answer 24

28 days.

Question 25

Will former spouse/civil partners have entitlements under the intestacy rules?

Answer 25

A former spouse or civil partner has no entitlement under the intestacy rules.

Question 26

What is Judicial Separation?

Answer 26

Spouses and civil partners may wish to separate on a formal basis, but without bringing the marriage or civil partnership to an end.

Question 27

Will spouses who are judicially separated be able to inherit under the intestacy rules?

Answer 27

A spouse will not have any entitlement on intestacy if the parties to the marriage have judicially separated.

Question 28

If the issue survives the deceased, how is their share distributed under intestacy rules?

Answer 28

They will need to satisfy the 'contingency limb' before obtaining a vested interest.

Question 29

on what rules are relevant to issue in intestacy?

Answer 29

statutory trusts: 1. contigency limb 2. substitution limb

Question 30

What is the contingency limb?

Answer 30

Each entitled beneficiary must survive the intestate and reach the age of 18 in order to inherit.

Question 31

If the issue does not survive the deceased, how is their share distributed under intestacy rules?

Answer 31

Their own issue may still inherit their entitlement under the 'substitution limb' of the statutory trusts.

Question 32

What is the substitution limb?

Answer 32

If an entitled beneficiary dies before the intestate, that beneficiary's own issue can inherit in their place.

Question 33

If the intestate leaves a spouse and issue, what are their entitlements?

Answer 33

Spouse: Personal chattels absolutely, statutory legacy of £322,000 free of tax and costs plus interest, one half of the residue absolutely. Issue: Other half of the residue on the statutory trusts.

Question 34

How is the estate distributed if the intestate dies without leaving any spouse/civil partner or issue?

Answer 34

(a) Parents (b) Siblings of whole blood on the statutory trusts (c) Siblings of half blood on the statutory trusts (d) Grandparents (e) Uncles and aunts of whole blood on the statutory trusts (f) Uncles and aunts of half blood on the statutory trusts (g) The crown as bona vacantia.

Question 35

simple way to remember distribution order for intestate (excluding spouse and issue)? Priya's soft sweet grandparents underneath ugly cats

Answer 35

P - parents s- siblings (full blood) on ST S - siblings (half blood) ST G - grandparents U - uncles and aunts (full blood) ST U - uncles and aunts ( half blood) ST C - crown

Question 36

what is the relevance of the on statutory trusts on some of the people mentioned in the priority order of distribution in intestacy?

Answer 36

if statutory trusts is applicable then, if that particular person dies, then their children take their place (via substitution limb and dependent on reaching contingent limb).

Question 37

if intestate had only a uncle and niece, who would receive the estate?

Answer 37

you might jump to think uncle because uncle is on the priority list but niece is not on the list. however, niece means its daughter of a sibling. Siblings apply in connection with statutory trusts and therefore this niece sort of replaces the siblings position - which is high position than uncle.

Question 38

Does the PR have the discretion on which assets to use to distribute the remaining beneficial entitlements after the personal chattels?

Answer 38

Yes. There is no obligation to distribute particular assets to particular individuals.

Question 39

What are personal chattels?

Answer 39

It means 'tangible movable property'.

Question 40

What properties are excluded from personal chattels?

Answer 40

1. Money or securities for money 2. Property used by the intestate at their death solely or mainly for business purposes 3. Property held at the death of the intestate solely as an investment.

Question 41

What should the spouse do if the deceased was the sole owner of their shared home or a beneficial tenant in common?

Answer 41

The spouse has no automatic right to receive the deceased's share of the marital home. However, they may make an election which enables them to appropriate the home in full or partial satisfaction of their statutory entitlements.

Question 42

Within how many months must the surviving spouse/civil partner make an election in writing to the PRs to appropriate the marital home?

Answer 42

Within 12 months of the date of the grant.

Question 43

What should the spouse do if they want to appropriate the deceased share of the marital home but their entitlement under the intestacy rules is lower than the value they are appropriating?

Answer 43

The spouse/civil partner must pay the difference from their personal funds.

Question 44

The marital home is valued at what date?

Answer 44

The home is valued as at the date of appropriation not the date of death.

Question 45

When is consent by the court needed for the appropriation of a marital home by the surviving spouse/civil partner?

Answer 45

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 premises.

Question 46

Can a testator leave their property to whomever they wish?

Answer 46

Yes - a testator can leave their property to whomever they choose.