Intestacy Flashcards
In what situations do intestacy rule operate in?
- Where there is no will either because the deceased never made a will at all or all wills have been successfully revoked.
- Where there is a will, but for some reason it is invalid or it is valid but it fails to dispose of any of deceases estate.
- Where there is a valid will, but it fails to dispose of all the deceased’s estate ( partial intestacy). This will occur if the will simply omitted a gift of residue or if a residuary gift fails. for example because the residuary beneficiary has predeceased. In a partial intestacy the intestacy rules only apply to that part of the estate not disposed of by the will.
Can a declaration or provision be made excluding certain people inheriting under intestacy?
No, the rules of intestacy apply and are mandatory. The only way for an individual to avoid the rules is to make a rule.
There are very limited circumstances where the intestacy rules can be displaced such as order made under the the inheritance act 1975.
What type of property does the intestacy apply to?
Only property that is capable of being left by will.
A house held a joint beneficial tenants, is not capable of being left by will and as such will not pass under Intestacy. Niether would a life policy passing under a trust.
What are statutory trusts?
The intestacy rules impose a trust over all property. That property is held on trust by the personal representatives.
The trust provides that the Personal representatives must pay the funeral, testamentary and admisntration expenses such as legal fees and any tax, debts of the deceased.
If necessary the personal representatives can sell assets from the estate in order to raise cash to pay these debts and expenses.
The balance remaining is the ‘residuary estate’ to be shared among the family under the rules of distribution set out in s46 Admisntration of Estates ac 1925.
Personal representatives have the power of apporitation, what does this mean?
Under the power of appropriation the personal representatives can ‘appropriate’ any part of the estate in satisfaction of legacy or share of the Residiuary Estate. For example instead of providing a beneficiary with a cash gift of £50,000, the personal representatives may instead give the beneficiary assets with a total value of £50,000. With the beneficiary’s consent.
How were the rules of disbturbution formulated under intestacy
The rules of distribution as said to reflect the ‘average will’ which resulted from a government survey in 20th century to see who, on average that had made will decided to leave their estate to.
The survey revealed that on average, people left their estates to their family members, with the main beneficiary being the spouse.
Under the intestacy rules the estate will usually pass to the intestate’s family. The term family is restricted and excludes unmarried partners, charities and friends.
Per S46 AEA the primary beneficiary is a surviving spouse, But precisely who gets what is determined by the relationship the intestate had during their lifetime and the family member who survive.
What does a spouse mean under the rules of Intestacy?
The person the deceased was married to at the time of their death. All spouses are treated equally, so the nature or quality of the relationship is irrelevant. The couple may be living apart or indeed have new partners and yet still come within the definition.
A former spouse is excluded from the definition, but only from the point when the divorce is actually finalised and the marriage is legally at an end.
Civil partners are treated exactly the same.
A cohabitant has no entitlement under the intestacy. If the Intestate was living with someone outside marriage, they do no feature in the rules of distribution and have no entitlement, even if the relationship was long standing.
What are the rules of Distribution and entitlement under intestacy Where the intestate is survived by both spouse or civil partner and issue?
The residuary estate is distributed in the following way.
Personal chattels ie tangible moveable property is received by the spouse absolutely. Unless the property consists:
(a) Money or securities for money
(b) was used at the death of the intestate sole or mainly for business purposes
(c) was held at the death of the intestate soley as an investment.
In Addition to this, the spouse or civil partner receives a ‘statutory legacy’ free of tax and costs plus interest from the death until payment. The rate of interest is the Bank of England Tate that had effect at the end of the day on which the intestate died.
The rest of the residuary estate is divided in half. One half is held on trust for the spouse or civil partner absolutely. The other half is held by for the issue on the statutory trusts.
The intestate spouse or civil partner must survive the intestate for 28 days in order to inherit. If the intestate spouse or civil partner dies within 28 days of the intestate, the estate is distributed as if the spouse civil partner has not survived the intestate.
What is the statutory legacy?
A set amount fixed by parliament and for deaths on or after 6th February 2020 is £322,000
If the residuary estate, apart from the personal chattels is worth less than £322,000, the spouse receives it all.
How is the family home distributed under intestacy?
If the family home is held in the intestates sole name or as tenants in common, the intestate’s interest in the home will form part of the residuary estate and therefore subject to the intestacy rules.
Under the rules, the family home will not automatically pass to the surving spouse.
If the family home forms part of the residuary estate passing on intestacy, the surviving spouse or vicil partner can require the personal representatives, to apporitate the family home in full or partial satisfaction of their interest in the estate. However they must be living at the property.
for example if the surviving spouse entitlement under the intestacy rules amounts to 500k and the residuary estate includes the family home worth 300k held in the intestate sole name, the surviving spouse can require the home to be transferred to the in part ratification of their entitlement.
If the property is with more than the entitlement of the spouse or civil partner, the spouse/civil partner may still require approbation provided the pay the difference to the estate.
The surviving spouse.civil partner must formally elect to exercise this right and notify the PRs in writing within 12 months of the grant of representation.
How are statutory trusts applied?
That part of the estate which does not pass to the surviving spouse passes to the intestate’s issue on ‘the statutory trusts’.
The statutory trusts determine members of the class of beneficiaries and the terms on which they take as follows:
- The primary beneficiaries are the children of the intestate who are living at the intestate death. Remoter issues are not included (grandchildren) unless a child has died before the intestate.
- The interest of the children are contingent upon attaining the age of 18 or marrying or forming a cilcil partnership under that age. Any child who fulfils the contingency at the testate death takes a vested interest
- If any child of the intestate predeceased the intestate, any children of the deceased child (grandchildren of the deceased) who are living at the intestates death take their deceased parents share equally between them, contingently upon attaining 18 or earlier marriage or formation of a civil partnership. Great grandchildren would also be included if their parent hd also predeceased the intestate.
- If the children or issue survive the intestate but die without attaining a vested interest, their interest would normally fail and the estate distributed as if they had never existed.
However if they die without attaining a vested interest but leaving issue, they will be treated as having predeceased the intestate so that they can be replaced by their own issue. To be substituted, the issue must be living at the intestates death.
What is the procedure for distribution where there is a surviving spouse but no issue
Where the intestate leaving a surviving spouse or civil partner but no issue, the whole estate however large passes to the spouse or civil partner absolutely.
Other relatives such as brother and sister, grandparents and cousins are not entitled.
Disbtibution where there is no serving spouse or civil partner? or the spouse or civil partner dies within 28 days of the intestate?
The residuary estate is divided between the intestates relatives: The list works on an all or nothing basis. Working from the top, if anyone falls within the category they receive the whole of the entitlement.
(a) issue on the statutory trusts, Children, Grandchildren and great grandchildren but if none,
(b) parents, equally if both alive, but if none
(c) Brothers and sisters of the whole blood on the ‘statutory trusts’ but if none,
(d) brothers and sisters of the half blood on the ‘statutory trusts’ but if none,
(e) grandparents, equally if more than one, if none,
(f) Unlces and aunts of the whole blood on the statutory trust but if none,
(g) unces and aunts of the half blood on the ‘statutory trust’s but if one
(h) the crown ( bona Vacantina)
Each category other than parents and grandparents takes on ‘statutory trusts’. This means that members of the specified class catergories take the estate equally and that issue of deceased relative may take that relative share ( a person with an interest under the statutory trust who dies without attaining a vested interest but leaving issue, will be treated as having predeceased the intestate so that they can be replaced by their own issue. To be substituted the issue must be living at the intestate death.
What does Bona Vacantia mean?
Where the intestate is not surveyed by any of the relatives provided for under the intestacy rules, the estate passes to the crown.
The Crown has a discretion to provide for dependants of the intestate or for other person for whom the intestate might reasonably have been expected to make provision but had no entitlement under the intestacy rules.
How are adopted children treated for the purpose one intestacy?
As children of their adoptive parents and not of their natural parents.
if a person who was adopted dies intestate without a spouse or issue, their estate will be distributed between the closest relatives in the adoptive family. An adopted child may also inherit on the intestacy of any member of their adoptive family.
Any contingent interest which an adopted person had immediately before the adoption in the estate of a deceased person natural parent is preserved.
