Intestacy and succession

Question 1

Are the intestacy rules only relevant for those without a will?

Answer 1

No - also for when a will does not cover the entire estate

Will is followed - intestacy rules apply for remaining property

Question 2

What types of property do not form part of the succession estate and when can they be dealt with?

Answer 2

1. DMCs as already been validly disposed of (imminent death, conditional upon dying, parts with property)
2. Discretionary pension scheme benefits
3. Insurance policies written in trust
4. Statutory nominations
5. Property held as beneficial joint tenants (family homes, bank accounts)
6. Some other beneficial interests under trusts

Can be dealt with before obtaining a grant of representation

Question 3

If property is held by joint tenants but was contributed to unequally, will it form part of the succession estate?

Answer 3

No - if held as joint tenants this applies rather than unequal contributions

Question 4

Why will a discretionary pension scheme not form part of the death estate?

Answer 4

Deceased is not deemed to have entitlement to any payment from scheme as payment is entirely at discretion of Ts

Will usually allow contributor to ‘nominate’ TP to receive after death (not binding but almost always followed)

Question 5

When is the benefit of discretionary pension scheme released?

Answer 5

Upon production of a death certificate

Question 6

When will insurance policies form part of the succession estate?

Answer 6

• Simple insurance policy = passes to succession estate
• Benefit of policy written in trust for another person = does not form part of succession estate (as the insured has no beneficial interest under policy!)

Question 7

If the benefit of an insurance policy is written on trust and so does not form part of succession estate, when will the proceeds vest? When are the benefits released?

Answer 7

On the insured’s death - proceeds will belong to nominated Bs

Benefits released on production of death certificate

Question 8

What are the 3 ways in which a life policy can be written in trust?

Answer 8

1. Under s11 Married Woman’s Property Act 1882 for the benefit of spouse and/or children
2. Expressly for the benefit of any nominated third party e.g. grandchildren
3. Into an existing trust for the benefit of the named Bs in the trust deed

Question 9

In what bank accounts can a person make a statutory nomination and what amount can it not exceed?

These are rare!

Answer 9

• Friendly Society
• Industrial Society
• Provident Society

Amount cannot exceed £5,000

Monies in relevant account pass to nominee rather than under will/intestacy

Question 10

When will property jointly owned pass into the succession estate?

Answer 10

If the deceased was a beneficial tenant in common (has a separate divisible share which is not extinguished upon death)

Cf joint tenancy -automatically passes by survivorship (not succ estate)

Question 11

Does the rule on beneficial co-ownership as joint tenants only apply to homes?

Answer 11

No, will also apply to bank accounts

Question 12

What happens if there is no express declaration over the home or bank account setting out the equitable and beneficial ownership?

Answer 12

May be an implied trust

Question 13

Will a presumed resulting trust apply for both family home and a bank account?

Answer 13

Only bank account

Question 14

Will a life tenant’s interest in a life interest trust form part of the succession estate?

Answer 14

No - expires on death

Question 15

What happens to the remainder interest of a life interest trust if the remainderman dies?

Answer 15

• If the remainder interest is vested in interest (not contingent on remainderman outliving the life tenant) it can pass to their estate
• T will hold for life tenant for life, remainder to those entitled under the remainderman’s will/intestacy rules

Question 16

Will the value of assets held in a trust in which the deceased had a beneficial interest be included in their succession estate?

Answer 16

No - assets held in trust are usually distributed in accordance with terms of the trust deed, not the will of deceased B or intestacy rules

Question 17

To what property will the intestacy rules apply if the deceased left a will?

Answer 17

Any property not disposed of by will

Question 18

When will only the spouse and issue need to be considered in the entitlement to estate on intestacy?

Answer 18

If deceased is survived by spouse (28 days) and/or issue

If survived - do not consider anyone else!

If neither - rules set out clear priority order for inheritance

Question 19

What counts as ‘issue’ in the intestacy rules?

Answer 19

• Children and remoter linear descendants e.g. grandchildren etc.

Question 20

Are all types of children considered ‘issue’?

Answer 20

Step-children are not - illegitimate, adopted, conceived but not born are

Question 21

Where a child has been adopted, will they still be considered ‘issue’ of the deceased (biological parent) and thus be entitled under the intestacy rules?

Answer 21

No! Once adopted a child is no longer regarded as a relation of their biological parent and cannot therefore inherit under the intestacy rules

Question 22

What happens if the deceased leaves behind…

1. Spouse and no issue
2. Issue and no spouse
3. Both spouse and issue

Answer 22

1. Spouse inherits entire succession estate absolutely
2. Issue inherits entire estate on statutory trusts
3. Depends upon nature and value of assets forming succession estate…

Question 23

What are the entitlements if intestate leaves spouse and issue?

Answer 23

• Spouse = chattels, statutory legacy of £322,000 (free of tax/costs plus interest from date of death) and one half of residue (if any)
• Issue = other half of residue (if any) on statutory trust

A dies intestate, leaving an estate worth £530,000 (including personal chattels worth £10,000). A is survived by a spouse (S) and daughter (D) (18)

• Spouse’s entitlement - S receives: A’s personal chattels (worth £10,000), Statutory legacy: £322,000, Half the residue: £99,000.
• Issue’s entitlement - D receives: The remaining £99,000 (interest has vested because C is 18)

Question 24

What is a spouse’s entitlement dependent on under the intestacy rules? What happens if this does not happen?

Answer 24

• Surviving the deceased by 28 days
• If not = rules apply as if deceased was not survived by spouse

Question 25

What other B does the 28 day rule apply to?

Answer 25

None

Question 26

Does the 28 day rule automatically apply?

Answer 26

No - only if specified in will

Question 27

Where two persons die in circumstsances where it is not possible to tell who died first, who is deemed to survive?

Answer 27

The younger will be deemed to survive the older

Question 28

What happens to issue if they do or do not survive the deceased?

Answer 28

• Do survive = need to satisfy contingency limb before obtaining vested interest
• Do not survive = own issue may still inherit under substitution limb

Vested = no conditions must be met for interest to take effect
Contingent = will receive if X…

Question 29

How does the contingency limb work?

If issue survives deceased

Answer 29

Each entitled B must survive intestate and reach age of 18 to inherit

• If under 18 when deceased dies = B has a contingent interest
• If 18 or above when deceased dies = B has vested interest and inherits absolutely

Question 30

How does the substitution limb work?

If issue does not survive deceased

Answer 30

The B’s own issue can inherit in their place provided B’s issue themselves satisfy the contingency limb (reach 18)

A dies intestate, leaving an estate worth £500,000. A leaves no spouse but is survived by daughter, B (50). A’s son, C died last year, leaving a son, D (16) =
Issue’s entitlement:

• B and C are A’s issue and entitled to share the estate equally on the statutory trusts.
• Each is entitled to £250,000.
• B’s interest is vested because she is over 18.
• As C predeceased A, D inherits C’s share via the substitution limb of the statutory trusts.
• D’s interest is contingent on reaching age 18.

Question 31

Does the substitution limb apply where a B survives the intestate but dies before attaining a vested interest (pre-18)

Answer 31

Yes

Obviously very rare

Question 32

What is the order of distribution where intestate where there is no spouse or issue?

The statutory order

Answer 32

1. Parents
2. Siblings of whole blood
3. Siblings of half blood
4. Grandparents
5. Uncles and aunts of whole blood (whole blood siblings of parent)
6. Uncles and aunts of half blood (half blood here means the uncle or aunt who is not blood related to your parents e.g. uncle Will)
7. The crown as bona vocantia

NB THE SUBSTITUTION LIMB!

A dies intestate, leaving no spouse or issue. A is survived by mother, B and sister =
* B is highest in the statutory order so is entitled to the entire estate.
* C has no entitlement as siblings rank below parents in the statutory order.

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Question 33

What happens if there is more than one person in the relevant category of the statutory order of intestate distribution?

E.g. both parents survive deceased

Answer 33

The succession estate is divided equally

Those lower in statutory order get nothing

Question 34

Will the substitution limb apply for the statutory order of distribution for intestacy where there is no spouse or issue?

I.e. will it apply for cases other than spouses and issue

Answer 34

Yes

D dies intestate, leaving no spouse or issue. D is survived by brother, F. D’s sister E died last year, leaving children, G(7) and H (18) =

• If E and F had both survived D, they would share the estate equally on the statutory trusts.
• F is over 18 so the contingency limb is satisfied. F has a vested interest in half the estate.
• As E predeceased D, the substitution limb applies: G and H take E’s half share equally (i.e. they each receive a quarter of the estate).
• H has a vested interest as they are over 18. G’s is contingent because they are under 18.

Question 35

Summary of intestacy entitlement

Answer 35

Question 36

What is and is not included in ‘personal chattels’ that the spouse is entitled to receive under the intestacy rules?

3 things not included

Answer 36

Personal chattels = tangible movable property

Does not include:

• Money or securities for money
• Property used by intestate at death solely/mainly for business purposes
• Property held at death of intestate solely as investment

I.e. everything not included, will be distributed in accordance with the intestacy rules

Question 37

Where the marital home is owned as tenants in common, does the spouse have an automatic right to receive the deceased’s share?

Cf joint tenancy - survivorship applies

Answer 37

No! Must make an election enabling them to appropriate the home in full/partial satisfaction of statutory entitlements

Statutory entitlements = chattels, £322k, half of residue

Question 38

How does appropriation of the home work and what is the procedure?

Answer 38

• Spouse can ‘buy’ deceased’s share of property from PRs using money they would have received from estate
• Must make election to PRs within 12 months of date of grant (during which time house cannot be sold without spouse’s consent)

Question 39

What happens where the spouse’s entitlement under the intestacy rules is lower than the value they are appropriating?

Value = deceased’s share of home

E.g. where home is the only or main asset of the estate

Answer 39

Spouse must pay the difference from personal funds

Question 40

Is the home valued at date of death for the purpose of appropriation?

Answer 40

No, valued at date of appropriation

Question 41

Where is the court’s permission required to appropriate?

Answer 41

Where:
1. Home is only part of a building ownd by the deceased; or
2. Home is part of a farm or other business premises