Head 8: Intestate Succession Flashcards
Where is the law of intestacy to be found?
Partly to be found in the Succession (S) Act 1964 and partly in common law.
Who laid down the single list of rules for cases of intestacy?
Mackintosh Committee
How can intestacy occur?
Intestacy can come about in a number of ways:
⁃ No will at all
⁃ Will invalid or reduced (I.e. Will leaves everything to husband and when wife dies, husband is already dead”.
⁃ Complete failure of legacies
⁃ Artificial intestacy
⁃ Partial intestacy
- Renouncement of legacy
What are the five stages of intestate succession?
There is an order of priority. NB, not every stage will be relevant in every case.
One always begins with paying the debts, including taxes. After that there are up to five stages to go through (not of all of these will be relevant to every case):
1) Prior rights
2) Relict’s right (inc. Civil partner’s right)
3) [Cohabitant’s right][ Only relevant if there is a cohabitant. Comes after relict but before legitim.If there isn’t a cohabitant then the relict’s right and legitim are given effect at the same time. Relevant statutory provision is s 29 FL(S)A 2006.]
4) Legitim
5) Free estate[ Any property left after prior rights, relict’s right, cohabitant’s right and legitim have all been paid.]
What are the three stages in the prior right stage?
1) Dwellinghouse right
2) Plenishings
3) Financial Provision
What is the Dwellinghouse right?
1) Right to a dwelling house (s 8 Succession (S) Act 1964)
⁃ The surviving spouse[ ONLY] has a right to a “relevant interest”[ This will almost always mean ‘ownership’. However it is possible to be referring to certain types of tenancy.] of the deceased in heritable property (s 8(1)).
⁃ The interest is net of any secured debt (s 8(6)(b))
⁃ For the surviving spouse to benefit from this right, they must have been ordinarily resident in the dwelling house (s 8(4)(a))
⁃ If the interest is worth £473,000 or less then the surviving spouse inherits the full share. If it is worth more than £473,000 the surviving spouse gets £473k cash.
⁃ Examples[ 1. Mary and Nick are married and live together. Co-own family home worth £1,046,000. £100,000 bank loan secured by standard security. She dies intestate.
Subtracting the debts leaves £946,000. Each half share is worth £473,000 and thus Nick inherits her share of the house.
- Same facts but house owned by Mary only. This means Mary’s share is the full value of the house (£946,000 after debts). This is way over the £473,000 limit. Thus, Nick is entitled to be paid £473,000 cash.]
⁃ NB the effects can be somewhat lopsided if one of the couple has moved out:
⁃ Mary and Nick are married and co-own the family home. They quarrel and he moves out. If Mary now dies intestate there is no dwelling house right for Nick as he is not ordinarily resident (s 8(4)). However, if Nick dies, Mary does receive Nick’s dwelling house interest because she is ordinarily resident (s 8(4)). [This sort of arrangement would be unlikely in practice. Usually there is a joint loan that is secured over both shares. But the same principles apply].
What is the plenishings right?
⁃ The relict has right to ‘furniture and plantings’ within the dwelling house, up to a set figure.
- The surviving spouse is entitled to £29,000 worth of plenishings[ NB this is different from general moveables.] in the dwelling house (s 8(3)).
⁃ If the plenishings are worth less than £29k then the surviving spouse takes them all.
⁃ If the plenishings are worth more than £29k then the surviving spouse must select up to this value from the plenishings[ NB this is different from the dwelling house right (if the dwelling house right exceeds £473k then the surviving spouse is paid £473k cash.)].
⁃ NB the FL(S)A 1985 s 25 provides that the law presumes that the moveables belonging to married couples are co-owned (this is most likely in practice)
⁃ SO if there is a question in which there are £50,000 worth of moveables, the presumption is that the £25,000 worth are owned by each spouse. To have this right the relict must be ‘ordinarily resident’ e.g. If they are separated and the deceased lives alone in the house, the relict will not have the prior right if she dies but she will if he dies.
What is the right to financial provision?
⁃ The third prior right is a right to money. The amount depends on whether the deceased left issue.
- Surviving spouse is entitled to be paid a payment of money from the estate (s 9). Their entitlement to this payment depends on whether there are issue or not.
⁃ Issue: £50k (s 9(1)(a))
⁃ No issue: £89k (s 9(1)(b))
⁃ If the estate is insufficient (i.e. if there is less than £50k or £89k) to make these payments, then the intestate estate will be transferred to the spouse[ I.e. instead of getting money, the actual items of the estate will be transferred.] (s 9(2)).
⁃ If there is sufficient estate to make these payments, then the financial provision will be paid proportionally[ The reason for this is so that the legal rights which may be available later are somewhat protected.] from the moveable / immoveable estate (s 9(3)).
1) Iain dies intestate, survived by second wife, Jenni, from whom he was separated but not divorced, and one son from first marriage, Karl.
⁃ Since they are separated, Jenni may not benefit from the dwellinghouse/plenishings right. But Jenni would definitely benefit from the financial right and legal rights.
⁃ Karl would have legal rights (legitim) and he is the first claimant of the free estate (however, there may be no free estate left).
2) Linda dies intestate survived by civil partner Mary. No issue. L’s total net estate is worth £60k.
⁃ Mary will get everything under prior rights. If there is a dwelling house she would receive it. Regardless, the financial provision entitlements would be £89k since there are no children. NB prior rights are applicable to civil partners too.
3) Nigella dies intestate survived by her husband Osbert and one child, Petronicus. Her estate is a bank account (£25k) and a car (£5k).
⁃ Osbert would receive everything under s 9(2) (since the value of the estate is less than £50k). NB Osbert would receive the actual goods rather than the cash value. Petronicus would receive nothing since prior rights triumph over legal rights.
To ascertain moveable estate left for legal rights (next stage) this financial provision must notionally be apportioned between heritage and moveables. (Sect 9(3)).
Quintus dies intestate survived by widow, Rachel, and two children, Sandra and Tim. House worth £170,000 owned in common with R. Subject to secured loan of £40,000. Contents worth £40,000. Holiday house owned by Q alone, worth £50,000. Sundry moveables worth £200,000. What is the rule here about prior rights?
⁃ i. First prior right (s 8 dwellinghouse): R takes house.
⁃ ii. Second prior right (s 8 Plenishings): R takes Q’s share of contents[ The contents are worth £40k thus under s 25 FL(S)A 1985 it is presumed that Quintus’s interest in this is £20k.]. (After this stage what’s left is free heritage £50,000 and free moveables £200,000.)
⁃ iii. Third prior right (s 9 financial provision) Since there are children, the financial right of R is £50,000. This is taken rateably from free heritage and free moveables: £10,000 from heritage and £40,000 from moveables[ The method is this: the ratio of £50,000 to £200,000 is as 1:4. So heritage contributes 1/(1+4) = 1/5 and moveables contribute 4/(1+4) = 4/5. Almost home: 1/5 of £50,000 = £10,000 and 4/5 of £50,000 = £40,000. To check result, add £10,000 to £40,000 and you get… £50,000.]. Section 9(3).
⁃ After prior rights, £40,000 heritage and £160,000 moveable estate remaining.
What are the rules about prior rights?
⁃ No prior rights except from intestate estate.
⁃ No prior rights unless there is a relict.
What are the rules about legal rights?
⁃ Legal rights exigible only from net moveable estate = £160,000. Relict’s right is 1/3 and legitim fund is 1/3. So R takes £53,333. S and T take £26,666 each.
- In testate succession, legal rights and relict’s rights have the same priority: they come first subject only to the rights of creditors. In intestate succession legal rights also apply, but not in the same way. Both legal rights are postponed to prior rights, and legitim, but not the relict’s right, is postponed to cohabitant’s right.
What are the rules about cohabitants rights?
This isn’t a right as such, merely a right to apply for an award (either for a monetary payment or a specific piece of property) from the estate by the court
The rules are contained in s 29 of the FL(S)A 2006
The cohabitant’s ‘right’ only applies in intestate succession.
If the court chooses to award the cohabitant then the award will be made after the prior rights and relict’s rights but before legitim.
Where there is a cohabitant there is no spouse. The court has a power to make an award to the cohabitant, but the power is discretionary. The FL(S)A 2006 sets out a list of factors which the court should take into account. The award is made out of the ‘net intestate estate’. The way that is defined means that the award comes after prior rights and relict’s right have been satisfied, but before legit or free estate.
There is a maximum that the amount awarded not exceed the amount that would have been awarded to a spouse or civil partner.
The maximum does not ensure that children will receive anything.
**see cases below
What are the rules about free estate?
Free estate (1964 Act s 2) ⁃ What's left? £53,333 moveables and £40,000 heritage. This goes to S and T equally, as s 2 successors (modern equivalent of next of kin)
Free estate is governed by s 2 1964 Act.
Under s 2 there is a list of people entitled to inherit. The amount depends - often there will be no free estate as the prior rights have exhausted the estate.
To determine who inherits you go down the s 2 list until you find a relevant person. The first person on the list takes all of the free estate (or if there are more than one person from that class it is split rateably).
The list:
⁃ 1) Children
⁃ 2) If no children, but parents AND siblings then 1/2 to each class
⁃ 3) No children, no parents - all to siblings.
⁃ 4) No children, no siblings - all to parents
⁃ 5) None of the above, surviving spouse
⁃ 6) None of the above, aunts/uncles.
NB under s 2(2), relatives of the half-blood can claim under s 2 also. However full blood relatives will beat half-blood relatives s 3 (if there is a competition between a full blood and half blood relative, the full blood relative will receive it all.) See handout example 5 and 46mins 2013 lecture.
What are the rules about representation?
Representation also applies to the free estate. The rules are the same as for legal rights.
This is provided for in s 5 and 6 of the 1964 Act.
Example:
⁃ Kate and John had three children, Laura, Marie and Norman. K and N died some years ago. N was married to Ottalie. They had two children, Paula and Quilla. M now dies, unmarried, intestate.
⁃ Marie has a parent and a sibling. The parent, John, is entitled to free estate (1/2). The siblings would have been entitled to free estate too. Representation allows Norman’s two children Paula and Quila to inherit (1/4 each). [An example of a per stirpes distribution.]
What is the rule ultimus haeres?
When it is not possible to trace any relatives, any remaining estate will go to the Crown (the ultimus haeres). There is no limit in our law as to how distant a relative can be to inherit (e.g. Where the nearest relative on death is a fifth cousin). The general rule in our law is that since everyone is related to everyone else, nobody can die heirless. However in practice it occasionally happens that someone dies intestate and no relative can be trace. The crown is then the ultimus haeres (last heir).
The Queen’s and Lord Treasurer’s Remembrances (QLTR) administers such inheritances for the Crown. The beneficiary in Scotland is the Scottish Consolidated Fund.
