Wills WS1 (Intestacy Rules) Flashcards
When do the intestacy rules operate?
In three situations:
1) No willeither because the deceased never made a will at all or it was successfully revoked
2) Where there is a will, but for some reason it is invalid, or it is valid but fails to dispose of any of the deceased’s estate (total intestacy)
3) 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 of the residuary beneficiary that has predeceased. In a partial intestacy the intestacy rules only apply to that part of the estate that was not disposed of the will
Do the intestacy always apply if you don’t have a valid will?
Yes, if there is no will then the intestacy rules will apply.
How is a statutory trust created on property in respect of which a person does intestate?
Intestacy rules impose a trust over all of the property (real and personal) in respect of which a person dies intestate.
Property is held on trust by the person dealing with the estate - PRs.
PR’s need to deal with the estate and the balance remaining is the ‘residuary estate’ to be shared among the family under the rules of distribution set out in s46 AEA 1925.
What is the PR’s power of sale in intestacy?
The personal representatives have a power of sale - they are not required to sell the assets which form part of the residuary estate.
PR’s have a power under s41 AEA 1925 to appropriate assets in or towards satisfaction of a beneficiary’s share (with beneficiary’s consent)
What are the rules of distribution?
PRs must distribute the residuary estate in accordance with the order set out in s46 AEA1925.
The primary beneficiary = surviving spouse.
What is a ‘spouse’ for intestacy purposes?
Means the person who the deceased was legally married to at the time of death.
Nature of ‘quality’ of their relationship doesn’t matter.
Includes civil partners.
What is not considered a spouse?
1) Ex-partner
2) Even if they are in divorce proceedings, only when the divorce order has been made by the court then they are not a spouse (if they die a day before divorce order still considered a spouse).
3) Voidable marriage- e.g. underage, under duress, suffering from certain forms of mental disability. Valid until the court makes a nullity order (order needs to
4) Void marriage- When they haven’t divorced from previous partner and are in a relationship with a new partner.
5) Cohabitant- no entitlement under intestact rules, even if they are living with them for a long time.
Are step children ‘issue’?
Step children = not issue of the deceased unless adopted.
What is the entitlement when the intestate is survived by both the spouse or civil partner and issue. How is the residuary estate distributed?
(a) The spouse or civil partner receives the personal chattels absolutely
‘Personal chattels’ are defined as tangible moveable property. It does NOT include
1) Money or securities
2) Property used at the date of death for business purposes
3) Property held solely as an investment at the date of death
(b) In addition, the spouse or civil partner receives a ‘statutory legacy’ free of tax and costs plus interest from death until payment.
The ‘statutory legacy’ is a set amount fixed by Parliament and for deaths on or after 26 July 2023 is £322,000. If the residuary estate, apart from the personal chattels, is worth less than £322,000, the spouse receives it all (in a partial intestacy the spouse does not have to
account for anything received under the will).
(c) The rest of the residuary estate (if any) is divided in half. One half is held on trust for the spouse or civil partner absolutely. The other half is held for the issue on the statutory trusts.
How many days must the intestate’s spouse or civil partner survive them in order to inherit?
The intestate’s spouse or civil partner must survive the intestate for 28 days in order to inherit.
If the intestate’s spouse or civil partner dies within 28 days of the intestate, the estate is distributed as if the spouse or civil partner has not survived the intestate.
How does the family partner pass as beneficial joint tenants? Inside or outside the intestacy rules?
Most couples hold their family home as beneficial joint tenants
SURVIVORSHIP.
An interest in a property held as beneficial joint tenant passes (outside the intestacy rules) by survivorship;
How is the family home held in the intestate’s sole name as tenant’s in common, pass to the surviving partner?
What are the requirements?
If family home is held in the intestate’s sole name or as tenants in common, the intestate’s interest in the home will form part of the residuary estate and subject to the intestacy rules.
Under the rules, the family home will not automatically pass to the surviving spouse / civil partner.
If the family home forms part of the residuary estate passing on intestacy, the surviving spouse can require the PRs to appropriate the family home in full or partial satisfaction of their interest in the estate. In order to exercise this right, the spouse must be living in the property.
Example: So, if, for example, the surviving spouse’s entitlement under the intestacy rules amounts to £500,000 and the residuary estate includes the family home worth £300,000 (held in the intestate’s sole name), the surviving spouse can require the home to be transferred to them in part satisfaction of their entitlement.
If the property is worth more than the entitlement of the spouse or civil partner, the spouse/
civil partner may still require appropriation provided they pay the difference, ‘equality money’, to the estate.
What happens to the remaining assets (if there is an issue and a spouse?
Assets will be distributed ‘on the statutory trusts’
This means that the property will be distributed amongst the children equally.
This is however, contingent upon them
- Reaching 18 or
- Marrying, if sooner.
If the children are not yet 18 or married, the share will be held for them on trust until they reach the age of 18 or marry (if they marry before the age of 18).
What happens if the children of the intestate die before the intestate, how will the child’s share of the property be distributed?
1) Grandchildren of the deceased who are living at the intestate’s death, equally contingent upon each grandchild attaining 18 or marring if earlier.
2) Great grandchildren- contingent upon each great-grandchild attaining 18 or marrying if earlier.
What happens if children of the intestate die after the intestate, but still have a contingent interest (i.e. they die before they rich 18 or before they marry)?
1) The gift fails unless the children have had their own children prior to the age of 18 or marrying.
If the child leaves an issue (grandchildren).
The child is treated as having predeceased the intestate so the estate is distributed to the issue (grandchildren).
If the gift fails:
1) The person’s share is distributed as if they’d never existed
2) It does not go to the residue, but is distributed on the intestacy rules as if that person had never existed.
