Validity of the Will

Question 1

A will is valid so long as the testator:

Answer 1

Had testamentary capacity at the time they gave instructions for the preparation of the will; and

The will was prepared in accordance with those instructions; and

At the time of execution the testator understood they were signing a will for which they had previously given instructions.

Question 2

There is no presumption of knowledge and approval where:

Answer 2

The testator is blind or illiterate (ie unable to read the will)

The will was signed by someone on behalf of the testator

There are suspicious circumstances (e.g. the will was prepared by a key beneficiary or their relative)

Question 3

If there is no presumption of knowledge and approval

Answer 3

an affidavit is needed when submitting the will

Question 4

The formalities of a valid will are:

Answer 4

To comply with s. 9 the will must be in writing and signed by the testator (or by someone else on his behalf)

The testator’s signature must be made or acknowledged in the presence of two adult witnesses with capacity

The witnesses must each sign the will in the presence of the testator but not necessarily in the presence of each other

The attestation clause in a will describes the circumstances under which the will was signed, but it is not a legal requirement to include one - just best practice

Question 5

Can a beneficiary be an attesting witness?

Answer 5

Under this section any gifts to an attesting witness (or their spouse) are void.

Question 5

What names should be included in a valid will?

Answer 5

If the testator owns assets in another name the grant of representation must refer to each possible alias. If it does not, it will not be possible to administer all of the estate and this causes delays.

Question 5

Can a company be appointed as the executor of a will?

Answer 5

To appoint a law firm partnership all of the partners must be appointed (then expressly limit the number). An LLP and trust corporation may appointed directly.

Question 5

How many executors are permitted for a valid will?

Answer 5

A minimum of 1 executor is required, but it is often better to appoint at least two in case a sole executor does not survive the deceased or is unwilling/unable to act. A maximum of 4 can apply for the grant of representation. If more than 4 are named in the will then power is ‘reserved’ to those who do not apply initially to apply later if any vacancy arises.

Question 5

What is a contrary intention in a will?

Answer 5

A contrary intention can be demonstrated by the use of words such as ‘my’ (as you would see in a specific legacy), ‘now’, or ‘at present’ when describing a gift. These words make the date of execution of the will the relevant date. In both examples below the car the testator owned when they executed the will (not when they died) would be the subject matter of the gift. The second clause is preferable as it states this expressly.

I GIVE to [ ] my car absolutely

I GIVE to [ ] the car that I own at the date of my will

It is because the use of the ‘my’ is construed to be a contrary intention to the general rule in s 24 Wills Act that specific gifts have a significant risk of failure.

The gift will adeem if the testator no longer owns that car when they die and the beneficiary will receive nothing unless there is an express substitutional gift.

Question 6

Unless otherwise expressly stated…

Answer 6

Items that comprise a collection are identified at the date of death

People are identified with reference to the date of execution

A gift in a will is made free of IHT

A specific gift is made subject to expenses and costs of transfer

A gift of property subject to a charge bears the liability of that charge

Question 7

What is the class closing rule?

Answer 7

The general rule is that a class closes (i.e. the beneficiaries within the class are identified and no one born subsequently can qualify) when any one member of the class first becomes entitled in possession. For example:

I give £300 absolutely to each of my grandchildren who reach the age of 21

When the first grandchild reaches 21 the class of ‘grandchildren’ would close (this may be after the testator’s death). If the testator has grandchildren born subsequently these grandchildren would not be included.

Question 8

Who can receive a gift in a will?

Answer 8

Adults. It is sometimes possible for a child aged 16 or 17 to give good receipt but only if there is an express clause within the will permitting this.

Question 9

What is the IPFDA 1975 test?

Answer 9

Did the deceased fail to make reasonable financial provision for the applicant?

If so, what award should the court make?

Question 10

What categories can the claimant fall into with IPFDA?

Answer 10

Maintenance standard and the surviving spouse standard. The key difference between the two standards is that the surviving spouse standard simply requires the court to consider what it would be reasonable for the applicant to receive, without any requirement to consider what is needed for their maintenance. This is clearly a higher standard than the maintenance standard.

Question 11

What is considered under the maintenance standard?

Answer 11

Broadly, the courts consider the maintenance standard to require an assessment of what it would be reasonable for an applicant to live on (without either living in luxury or poverty). This is not the same thing as the actual standard of living that the claimant has enjoyed during the deceased’s lifetime (although this will be a relevant consideration).

The applicant’s financial resources and financial needs

The financial resources and financial needs of any other applicants

The financial resources and financial needs of any beneficiary of the estate

Any obligations and responsibilities which the deceased had towards any applicants or beneficiaries

The size and nature of the net estate of the deceased

Any physical or mental disability of any applicant or beneficiary

Any other matter the court considers relevant in the circumstances (including the conduct of the applicant or any other person)

When considering a person’s financial resources and needs, the court must take into account any resources and needs they are likely to have in the foreseeable future.

Question 12

What is considered under the spousal standard?

Answer 12

The court has discretion to apply the surviving spouse standard where the three following conditions are satisfied:

An applicant is a former spouse or civil partner of the deceased who has not remarried / entered a civil partnership, or a spouse who is judicially separated from the deceased;

Divorce, dissolution, nullity or judicial separation occurred within 12 months of the death; and

No order for financial provision has been made or refused in the ancillary proceedings.

Question 13

Can a will be changed after death?

Answer 13

If an original beneficiary does not wish to keep their inheritance, or otherwise wants to re-distribute the estate, they are free to give this away as they see fit.

However, such a gift will take place after the administration of the deceased’s estate and will be treated for tax purposes as a transfer made by that beneficiary.

If a beneficiary chooses to give away their inheritance there may be adverse inheritance tax (‘IHT’) and capital gains tax (‘CGT’) consequences for the donor:

IHT: * The original beneficiary would be making a PET * This would be a chargeable transfer if they died within 7 years of the gift

CGT: * A gift of a non-cash asset would be a CGT disposal by the original beneficiary * Any increase in value of the asset since the date of the deceased’s death would be subject to CGT if the increase (i.e. gain) is greater than the beneficiary’s tax-free allowance.

Question 14

How can a beneficiary avoid the tax consequences of altering a will?

Answer 14

• Variation (If the conditions of s.142 Inheritance Tax Act 1984 (IHTA) (as explained later) are satisfied, the gift from the original beneficiary is read-back to the date of the deceased’s death and treated for IHT purposes as having been made by the deceased to the new beneficiary)
• Disclaimer
• Precatory trust

Question 15

What is the procedure for variation of a will?

Answer 15

s. 142 (1) IHTA * made by the original beneficiary in writing (a deed is not required but frequently used) * within the two years following the deceased’s death * contains an express statement by the beneficiary confirming s142 should apply * not be made for consideration in money or money’s worth

if the variation results in additional IHT being due in respect of the deceased’s estate, the PRs should: * Sign the variation * Provide HMRC with a copy of the written variation and pay the amount due.

Question 16

How is CGT measured post-death?

Answer 16

• CGT is charged on the disposal of a non-cash asset. Selling and giving an asset away are both types of disposal.
• A gain made by the person who disposes of the asset is potentially subject to CGT.
• The gain is the increase in value of the asset since the date of acquisition to the date of disposal. Date of acquisition is still date of death even with variation.

Question 17

What are the restrictions to variation?

Answer 17

Capacity to vary If the original beneficiary is a minor or lacks mental capacity, they cannot make a variation without the consent of the court under the Variation of Trusts Act 1958. Such applications are expensive and time consuming.

Number of variations possible There is no limit to the number of times a will can be varied, but each asset can only be varied once.

Property subject to a variation Property passing by will, intestacy and interests in joint property can all be the subject of a variation. However, the following cannot be varied: * Property in respect of which the deceased was a life tenant immediately before death. The trust deed will determine where those assets go. * If the deceased had made a gift with reservation of benefit, this property cannot be varied post death as the deceased was not the legal owner of these assets and, although they are subject to IHT, they do not form part of the distribution estate.

Question 18

What is a mutual will?

Answer 18

After making a will a testator is free to change it and a will cannot be made ‘irrevocable’.

However, it is possible to make a mutual will: where one testator agrees with another testator to each make a will on terms agreed between them. Both testators also agree that neither of them will amend their will without the consent of the other. If a testator attempts to revoke their will, contrary to the previous agreement, equity may impose a constructive trust over that testator’s property on the terms previously agreed and limit the effect of any new will.

Question 19

What is a mirror will?

Answer 19

Mirror wills are common and are the wills of a couple which mirror each other.

For example, each couple makes a will that leaves their estate to the survivor of them, but if the other does not survive the assets pass to their children.

Executing a mirror will does not imply that there is an agreement not to revoke the will later and there is no constructive trust imposed. The survivor of the couple is free to revoke their will at any time prior to the death of either of them.