Wills 5 Flashcards
What types of property are not permitted to pass via will or intestacy?
- Property owned as a beneficial joint tenant* Life assurance policies* Pension scheme death benefits (may be exceptions) * Nominated Property* Life interests in trust property* Gifts with reservation of benefit (already given away)These rules are strict and cannot be varied by the terms of the will.
Who does the interest in property owned as a beneficial tenant pass to on death?
- The interest in property owned as a beneficial joint tenant passes to the survivors e.g. bank account, matrimonial home.* Note, this rule does not apply for tenancies in common, where the share passes via the will or intestacy rules.
F died recently. He owned several assets, including his interest in the house he co-owned with his wife, W. Can F leave the house to his son in his will?
No. They owned the property as joint tenants. F’s interest in the property does not pass via his will but instead passes to W by the right of survivorship.
F died recently. He owned several assets, including his interest in the house he owned as a tenant in common with his wife, W. Can F leave the house to his son in his will?
Yes
Who does an interest in a life assurance policy pass to on death?
- Life assurance polices are held on trust for, or assigned to, beneficiaries.* Alternatively, a person insuring their own life may express the policy to be for the benefit of their spouse and/or children. * In either scenario, the policy belongs to the beneficiaries and is payable directly to them (or trustees) on proof of death. The proceeds will not form part of the deceased’s taxable estate for IHT purposes.
T has a £100,000 life assurance policy which names his lifelong friend, B as the beneficiary. T also has a will which leaves everything he owns to his wife, W. T dies. How is the estate distributed?
The £100,000 proceeds of the life assurance policy are not part of T’s estate. They are not subject to IHT, and they do not pass to W despite the will provision leaving everything to her. Instead, they will pass to B as the policy provides.
Who does an interest in pension scheme death benefits pass to on death?
- Pension scheme death benefits may be subject to discretionary trusts, but the scheme member is normally permitted to make a non-binding nomination of their preferred recipient in which case the benefit won’t be subject to IHT. * Not all pension schemes operate in this way; in some cases the death in service benefit forms part of the estate for the will or intestacy rules.
Who does an interest in nominated property pass to on death?
- A person may transfer property held on death in friendly societies, the National Savings Bank, and National Savings Certificates directly to chosen beneficiaries by way of statutory nomination in writing. * If an individual has made a nomination for such accounts, the institution will pay the investment to the chosen nominee. The provisions apply to deposits not exceding £5,000.
Who does a life interest in trust property pass to on death?
Interests in a trust fund will pass according to the terms of the trust. These interests may be subject to IHT.
J died owning various assets in her own name. She was also a beneficiary of a trust in which she had the right to receive the income from the trust as it arose (a life in- terest). On J’s death, how is her estate distributed if she has not made a will?
The trust assets will pass to the named capital beneficiary (the ‘remainderman) outside of J’s estate. The rest of her estate will pass via the intestacy rules.Note: the value of the trust when J dies will be included as part of her estate for IHT purposes.
Which types of property do not form part of the succession estate but are subject to IHT?
- Jointly owned property* Life interests in trust property* Gifts with reservation of benefit
