W1

Question 1

What is the purpose of the intestacy rules?

Answer 1

The intestacy rules determine who inherits and what each beneficiary receives when a person dies without making a valid will. They are found in the Administration of Estates Act 1925 (as amended by the Inheritance and Trustees Powers Act 2014).

Question 2

What is the difference between testacy, partial intestacy, and intestacy?

Answer 2

Testacy refers to a person who dies with a valid will that covers their entire succession estate. Partial intestacy occurs when the will does not cover the entire estate, and intestacy refers to a person who dies without making a valid will. The intestacy rules apply to the entire succession estate in the case of intestacy.

Question 3

What types of property do not form part of the succession estate?

Answer 3

Some types of property that the deceased owned during their lifetime do not form part of the succession estate. These include donationes mortis causa, discretionary pension scheme benefits, insurance policies written in trust, life insurance written in trust, statutory nominations, and property held as beneficial joint tenants.

Question 4

What is a donationes mortis causa (DMC)?

Answer 4

This is a gift made in contemplation of death. It has three requirements: the gift is made because the donor believes they may die imminently of a particular cause, the donor makes it clear that the gift is conditional upon them dying, and the donor either parts with the property or something representing ownership of it. A valid DMC does not form part of the succession estate as it has already been validly disposed of.

Question 5

What happens to discretionary pension scheme benefits upon the death of the contributor?

Answer 5

Discretionary pension scheme benefits are paid out to the nominated beneficiary upon the death of the contributor. These payments are entirely at the discretion of the trustees and do not form part of the deceased’s estate for distribution purposes.

Question 6

How are insurance policies distributed if they were written in trust?

Answer 6

If the benefit of an insurance policy was written in trust for another person, the proceeds of the policy will not form part of the succession estate. The insured has no beneficial interest under the policy, and the proceeds belong to the beneficiaries nominated in the policy and vest on the insured’s death.

Question 7

What is the purpose of statutory nominations?

Answer 7

Statutory nominations allow a person to make a nomination in certain accounts such as friendly societies, industrial societies, and provident societies. The amount nominated cannot exceed £5,000.

Question 8

What is the significance of identifying the succession estate?

Answer 8

Identifying the succession estate is important because it helps determine which assets will be distributed under the will or the intestacy rules. Some types of property owned by the deceased do not form part of the succession estate and are governed by other rules.

Question 9

What happens to the monies in a deceased person’s account?

Answer 9

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

Question 10

What is required to release the benefit of a nominated account?

Answer 10

The benefit of the nominated account will be released upon the production of a death certificate.

Question 11

What happens to a property if the deceased was a beneficial joint tenant?

Answer 11

If the deceased was a beneficial joint tenant, the property will automatically pass to the other joint tenant(s) by survivorship. It does not pass into the succession estate.

Question 12

What is the difference between beneficial co-ownership as joint tenants and as tenants in common?

Answer 12

In beneficial co-ownership as joint tenants, the property passes to the other joint tenant(s) by survivorship and does not pass into the succession estate. In beneficial co-ownership as tenants in common, each co-owner has a separate, divisible share in the property, which passes into the succession estate.

Question 13

How is land registered at the Land Registry?

Answer 13

Land can only be registered at the Land Registry in the name of an individual or up to four joint tenants. It cannot be held as tenants in common at law.

Question 14

What should be considered when determining the ownership of land?

Answer 14

When determining the ownership of land, it is important to consider not just the legal ownership but also the equitable and beneficial ownership. This includes whether the legal owners hold the land on trust for themselves and/or others as equitable tenants in common.

Question 15

What happens if there is no express trust declared over the land?

Answer 15

If there is no express trust declared over the land, there may still be an implied trust. Therefore, it is important to take particular care when advising on the beneficial ownership of the family home.

Question 16

How are joint bank accounts treated in terms of beneficial ownership?

Answer 16

Joint bank accounts are treated similarly to family homes in terms of beneficial ownership. The account holders are legal joint tenants, and the account opening documents usually make clear that the account is held as beneficial joint tenants. If there is no declaration of beneficial ownership, it may be necessary to consider whether an implied trust has arisen.

Question 17

What is the doctrine of presumed resulting trusts in relation to joint bank accounts?

Answer 17

Unlike in family home cases, the doctrine of presumed resulting trusts may still apply to joint bank accounts. The key English law authority on beneficial ownership of joint bank accounts is Aroso v Coutts & Co [2002] 1 All ER (Comm) 241.

Question 18

Does a beneficiary’s beneficial interest form part of their succession estate?

Answer 18

If the deceased was a beneficiary under a trust, their beneficial interest will not necessarily form part of their succession estate. It depends on the nature of the interest and whether it survives their death.

Question 19

What happens to a life tenant’s beneficial life interest upon their death?

Answer 19

A life tenant’s beneficial life interest does not form part of their succession estate. The life interest expires on their death, and the remainder interest usually vests in possession. However, the remainder interest can survive the remainderman’s death if it is vested in interest and not contingent on the remainderman outliving the life tenant.

Question 20

Are assets held in a trust distributed according to the will or intestacy rules?

Answer 20

No, assets held in a trust are usually distributed in accordance with the terms of the trust deed, not the will of a deceased beneficiary or the application of the intestacy rules. There may be exceptions if a deceased exercises a power of appointment in respect of trust assets.

Question 21

What determines the distribution of a discretionary trust’s assets upon the death of an object?

Answer 21

The death of an object of a discretionary trust does not usually result in the distribution of trust assets. The distribution of the trust fund is at the discretion of the trustees. However, if a deceased exercises a power of appointment in respect of trust assets, they can determine the distribution of the trust fund.

Question 22

What is the entitlement of a spouse and issue in intestacy?

Answer 22

If the intestate leaves a spouse but no issue, the spouse inherits the entire succession estate absolutely. If the intestate leaves issue but no spouse, the issue inherit the entire succession estate on the statutory trusts. If the intestate leaves both spouse and issue, the position is more complicated and depends upon the nature and value of the assets forming the succession estate. The spouse’s entitlement is dependent upon them surviving the deceased by 28 days. If the spouse does not survive by 28 days, the rules apply as if the deceased was not survived by their spouse.

Question 23

What happens if a spouse does not survive the deceased by 28 days?

Answer 23

If the spouse does not survive by 28 days, the rules apply as if the deceased was not survived by their spouse. This means the spouse has no entitlement under the intestacy rules and therefore cannot pass their interest to their own estate. This rule is specific to spouses. There is no requirement for any other beneficiary to outlive the deceased by 28 days.

Question 24

What are the entitlements of a spouse and issue in intestacy?

Answer 24

If the intestate leaves a spouse and issue, their entitlements are: the spouse receives personal chattels absolutely, a statutory legacy of £322,000 free of tax and costs plus interest from the date of death to the date on which payment is made, and one half of the residue (if any) absolutely. The issue receives the other half of the residue (if any) on the statutory trusts.

Question 25

What are the requirements for an entitled beneficiary to inherit under the Statutory Trusts?

Answer 25

Each entitled beneficiary must survive the intestate and reach the age of 18 in order to inherit. Until this requirement is satisfied, the beneficiary has a contingent interest. If a beneficiary is already 18 or older when the intestate dies, they will inherit absolutely and immediately, as the contingency is already satisfied.

Question 26

What happens if an entitled beneficiary dies before the intestate?

Answer 26

If an entitled beneficiary dies before the intestate, that beneficiary’s own issue can inherit in their place, provided the beneficiary’s issue themselves satisfy the contingency limb (i.e., reach the age of 18). This would also apply if a beneficiary survives the intestate but subsequently dies before attaining a vested interest, e.g., before reaching 18.

Question 27

What is the order of entitlement to the succession estate when the intestate dies without leaving a spouse or issue?

Answer 27

If the intestate is not survived by a spouse or issue, section 46 AEA 1925 sets out the following order of entitlement to the succession estate: parents, siblings of whole blood (share both parents) on the statutory trusts, siblings of half blood (share one parent) on the statutory trusts, grandparents, uncles and aunts of whole blood (whole blood siblings of a parent) on the statutory trusts, uncles and aunts of half blood (half blood siblings of a parent) on the statutory trusts, and the crown as bona vacantia. If there is more than one person in the relevant category, the succession estate is divided equally.

Question 28

What happens if the intestate dies leaving no spouse but is survived by a child?

Answer 28

If the intestate dies leaving no spouse but is survived by a child, the child inherits the entire estate under the intestacy rules. For example, if A dies intestate, leaving an estate worth £500,000, and A leaves no spouse but is survived by her daughter B (18), B inherits A’s entire estate under the intestacy rules. B’s interest has vested because B is 18.

Question 29

What happens if one of the deceased’s children predeceased them?

Answer 29

If one of the deceased’s children predeceased them, the substitution limb applies, meaning that the deceased child’s share is divided among their own children (the deceased’s grandchildren). Each grandchild’s share is determined based on the value of the deceased child’s share and the number of grandchildren.

Question 30

What is the purpose of the spouse’s election in relation to the marital home?

Answer 30

The surviving spouse has the right to make an election to appropriate the marital home in full or partial satisfaction of their entitlement under the intestacy rules. This allows them to ‘buy’ the deceased’s share of the property from the estate using the money they would have received.

Question 31

What are the restrictions on the spouse’s right to appropriate the marital home?

Answer 31

The consent of the court is required if the home is only part of a building owned by the deceased or if the home is part of a farm or other business premises. Additionally, the spouse must make the election in writing to the personal representatives within 12 months of the date of the grant.

Question 32

What is the purpose of the statutory definition of ‘personal chattels’?

Answer 32

The statutory definition of ‘personal chattels’ in the context of intestacy rules means tangible movable property. However, it excludes money or securities for money, property used solely or mainly for business purposes, and property held solely as an investment.

Question 33

What happens to the remaining assets of the estate after the spouse’s entitlement and the issue’s entitlement?

Answer 33

The remaining beneficial entitlements, including the statutory legacy and the residue, are distributed at the discretion of the personal representatives. There is no obligation to distribute particular assets to particular individuals, and the personal representatives appropriate assets as they see fit to fulfill the entitlements.

Question 34

What is the significance of the surviving spouse holding the marital home as beneficial joint tenants?

Answer 34

If the surviving spouse and the deceased held the marital home as beneficial joint tenants, the right of survivorship applies. This means that the surviving spouse automatically becomes the sole owner of the home upon the deceased’s death.

Question 35

What happens if the deceased was the sole owner of the marital home or a beneficial tenant in common?

Answer 35

If the deceased was the sole owner of the marital home or a beneficial tenant in common, their interest in the home forms part of the succession estate and is distributed in accordance with the intestacy rules. The surviving spouse does not have an automatic right to receive the deceased’s share of the home.

Question 36

What is the time limit for the surviving spouse to make an election regarding the marital home?

Answer 36

The surviving spouse must make the election in writing to the personal representatives within 12 months of the date of the grant. During this period, the personal representatives cannot normally sell the home without the spouse’s consent.

Question 37

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

Answer 37

If the surviving spouse’s entitlement under the intestacy rules is lower than the value they are appropriating (e.g., when the home is the only or main asset of the estate), the spouse must pay the difference from their personal funds.

Question 38

What are the restrictions on the right to appropriate the marital home?

Answer 38

The consent of the court is required when 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. These restrictions ensure that appropriate legal procedures are followed in such cases.

Question 39

What happens when one of the joint owners dies in terms of their legal and beneficial interest?

Answer 39

If the joint owners held the beneficial interest as joint tenants and one of the joint owners dies, the deceased owner’s legal and beneficial interest in the property will pass automatically to the surviving joint owner(s) through the right of survivorship. If the joint owners held the beneficial interest as tenants in common and one of the joint owners dies, the legal estate will pass automatically to the surviving joint owner(s), but the deceased’s beneficial interest will pass via their will or according to the rules of intestacy if they do not have a will.

Question 40

What documents does the Land Registry require when dealing with the property of a deceased tenant in common?

Answer 40

The Land Registry will want to see an official or certified copy of the death certificate of the deceased tenant in common and the deed of appointment of the second trustee (usually the purchase deed).

Question 41

How is land owned by partners in a partnership held?

Answer 41

Land owned by partners in a partnership is held on trust for the partnership, according to Section 20 of the Partnership Act 1890. There is a common law presumption that partnership property is held by the partners as tenants in common.

Question 42

Can a company or Limited Liability Partnership (LLP) hold property on trust?

Answer 42

Yes, a company can hold property on trust if its constitution gives it the power to do so. The same is true for a Limited Liability Partnership (LLP).

Question 43

Who is a Personal Representative (PR) and what is their role in selling property?

Answer 43

A Personal Representative (PR) is responsible for administering the estate of an individual who has died. If the sole individual owner of land has died, a buyer will be buying from a PR. The PR must sign the contract and execute the purchase deed. Payment of purchase monies to a sole PR overreaches all beneficial interests.

Question 44

What information is contained in the proprietorship register?

Answer 44

The proprietorship register contains the class of title, details of the registered proprietor, and details of any restrictions affecting the owner’s right of disposal. The Land Registry will have awarded the property one of four possible classes of title.

Question 45

Who can be the registered proprietor of a property?

Answer 45

The registered proprietor of a property can be an individual, a company, a limited liability partnership, or joint owners. It is important to note that the seller of the property might not be the registered proprietor, such as when a personal representative is selling the property of a deceased sole owner.

Question 46

How can equity fulfill the transferor’s intention to make a gift or declare a trust if constitution has not occurred?

Answer 46

Equity has found exceptions to the rule in Milroy v Lord, which states that if legal title has not been vested in the intended recipient, the disposition will fail. These exceptions include the Principle in Re Rose, Fortuitous Vesting, and Donationes Mortis Causa.

Question 47

What is fortuitous vesting?

Answer 47

Fortuitous vesting is an exception to the rule in Milroy v Lord. In some cases, a failure to perfect the intended recipient’s title may be cured if they obtain legal title through another route. This usually occurs when the intended recipient of a gift is also the personal representative of the transferor’s estate.

Question 48

What are the conditions for the Rule in Strong v Bird to apply?

Answer 48

The following conditions must be met for the Rule in Strong v Bird to apply: There must be an intention to make an immediate gift, the intention must continue until the donor’s death, and the intended donee becomes an executor (or one of the executors) of the donor’s estate.

Question 49

What is an immediate gift according to Re Freeland?

Answer 49

According to Re Freeland, an immediate gift requires the intention of giving, as distinct from an intention to give. The intention must relate to existing, not future or after-acquired property.

Question 50

What are the exceptions to the rule in Milroy v Lord?

Answer 50

The exceptions to the rule in Milroy v Lord include the Principle in Re Rose, Fortuitous Vesting, and Donationes Mortis Causa. These exceptions allow equity to fulfill the transferor’s intention to make a gift or declare a trust even if constitution has not occurred.

Question 51

What is the rule in Strong v Bird and how does it apply to gifts and imperfect gifts?

Answer 51

The rule in Strong v Bird states that if the intended recipient of a gift is also the personal representative of the transferor’s estate, the gift may be perfected on the death of the transferor. This exception is called fortuitous vesting. The rule in Strong v Bird can also apply to perfect imperfect gifts, even if the intended recipient is one of several executors.

Question 52

What was the court’s decision in Re James [1935] Ch 449 regarding the rule in Strong v Bird?

Answer 52

In Re James [1935] Ch 449, the court held that the rule in Strong v Bird applied when the donee was appointed as the administrator independently of the donor. This extended the principle of fortuitous vesting to include personal representatives appointed independently of the donor.

Question 53

What is a donationes mortis causa (DMC) and when does it apply?

Answer 53

A donationes mortis causa (DMC) is a gift made in contemplation of death. It is an exception to the rule in Milroy v Lord and applies in circumstances where a person contemplates their imminent death and wishes to leave their property to another person but does not have time to execute a will.

Question 54

What are the conditions for a valid DMC?

Answer 54

The conditions for a valid DMC include: the gift is made in contemplation of death; the gift is conditional on death (not fully effective until then and can be revoked before death); there is delivery of the property; and the donor must part with control (dominion) of the property by handing it, or something representing title, to the donee.

Question 55

What is the difference between a valid DMC and a lifetime gift or a testamentary gift?

Answer 55

A valid DMC is a hybrid between a lifetime gift and a testamentary gift. It does not fully comply with the rules for either. A DMC is made in contemplation of death and is conditional on death, but it does not require full transfer of legal title. Instead, the donor must part with control (dominion) of the property.