2 - Wills: Drafting and Interpretation & IPFDA 1975

Question 1

What are the key requirements for a will to be considered valid?

Answer 1

The testator must be at least 18 years old (s 7 Wills Act 1837), except for those in military service.

Testamentary Capacity: The testator must have testamentary capacity, they must understand the nature of the act (signing a will), appreciate the extent of their estate, understand moral claims on their estate, and not be suffering from a disorder of the mind that affects their ability to dispose of property by will (Banks v Goodfellow).

The testator must have knowledge and approval.

Form and Formalities: The will must be executed in accordance with the formal requirements set out in the Wills Act 1837, which includes being in writing, signed by the testator, and witnessed by two individuals who are present at the same time.

Question 2

What is testamentary capacity and how is it determined?

Answer 2

Testamentary capacity refers to the mental ability of a testator to make a will.

Requirements (Banks v Goodfellow):
- Understanding of the Act: The testator must understand that they are signing a document that will dispose of their property upon death.
- Appreciation of Property: The testator must have a general awareness of their property and its approximate value.
- Moral Claims: The testator should recognise the moral claims of those who should be considered for inclusion in the will.
- No Disorder of Mind: The testator should not be affected by mental disorders that impair their ability to make decisions about the disposition of their estate.

Question 3

What are the timing requirements for testamentary capacity?

Answer 3

The testator must have testamentary capacity at the time the will is executed.

Exception (Parker v Felgate): A will can be valid even if the testator lacks capacity at the time of execution if:
- They had capacity when they gave instructions for the will.
- The will was prepared according to those instructions.
- At the time of execution, the testator understood that they were signing a will for which they had previously given instructions.

Question 4

How is fluctuating capacity addressed in will validity?

Answer 4

Intermittent Capacity: A testator may experience fluctuating capacity due to illness or other conditions, such as dementia, where they may have lucid periods.

Assessment: Each instance of will-making must be assessed for capacity at the time of execution, taking into account the testator’s fluctuating mental state.

Example (Key v Key): A testator’s capacity may be affected by grief or other temporary conditions, impacting their ability to make a will.

Question 5

What is the “golden rule” in relation to testamentary capacity?

Answer 5

Rule: Instruct a medical practitioner to assess the testator’s capacity when taking instructions from elderly or seriously ill clients.

Purpose: This rule is not legally mandatory but is considered best practice to help reduce disputes regarding testamentary capacity.

Contemporaneous Record: The assessment and conclusions should be documented.

Limitations: Failing to follow this rule does not automatically constitute poor practice, as practical difficulties may arise.

Question 6

What is the presumption of capacity regarding wills and who does the burden of proof lie with?

Answer 6

Burden of Proof: The person propounding the will (usually the executor) must prove the testator had capacity.

Presumption: If the will appears rational and has been duly executed, capacity is presumed.

Challenge: Anyone challenging the will must provide sufficient evidence to raise doubt. If doubt is raised, the burden shifts to the propounder to prove capacity.

Question 7

How does the Mental Capacity Act 2005 relate to testamentary capacity?

Answer 7

Statutory Test: The Act provides a general test of decision-making capacity.

Relationship to Common Law: The statutory test complements the common law test for testamentary capacity as set out in Banks v Goodfellow.

Prevalence: The common law test remains applicable, and if the statutory and common law tests produce different outcomes, the common law test prevails.

Question 8

What are statutory wills and when can they be used?

Answer 8

A statutory will is a will made on behalf of an individual who lacks testamentary capacity.

Authority: The court can authorise the execution of a will under s.18(1) MCA 2005 if it is in the person’s best interests.

Grounds: Statutory wills may be used when a person has never made a will, or to address changes in circumstances that necessitate revising the existing testamentary position.

Question 9

What is required for knowledge and approval of a will?

Answer 9

• The testator must have a general intention to create a will disposing of their property and understand that it will take effect upon their death.
• They must also have specific knowledge of the contents and approve them, meaning they must understand and intend the choices made.
• The testator should read the will and understand it, and by signing it, they intend to give effect to its terms.
• Knowledge and approval must be present at execution, unless the Parker v Felgate exception applies.

Question 10

How is knowledge and approval presumed?

Answer 10

If the testator had testamentary capacity, knowledge and approval are presumed by the court.

If there is evidence casting doubt, this presumption is rebutted, and the burden shifts to prove the testator had knowledge and approval.

Question 11

When does the presumption of knowledge and approval not apply?

Answer 11

The presumption does not apply if the testator:
- Is blind or illiterate.
- The will was signed on the testator’s behalf.
- There are suspicious circumstances (e.g., prepared by a key beneficiary).

In these cases, an affidavit of knowledge and approval may be necessary.

Question 12

What is an affidavit of knowledge and approval?

Answer 12

• An affidavit may be required if the presumption of knowledge and approval does not apply and the attestation clause, which explains the circumstances under which the will was executed, doesn’t cover it.
• The affidavit helps prove the testator knew and approved the will’s contents.

Steps to mitigate future challenges include drafting the attestation clause to reflect any extra efforts taken to ensure the testator fully understood the document (e.g., having the will read or translated).

Question 13

What are undue influence and duress?

Answer 13

Undue influence - when the testator is coerced into making a will or including specific terms against their judgment and intention.

Duress - external pressure that forces the testator’s hand, making the will not reflect their true wishes.

If undue influence or duress affected the entire will, the will is invalid. If it affects only part, the rest of the will may still stand, provided the omissions don’t disrupt the overall testamentary plan.

Question 14

What is undue influence in relation to wills?

Answer 14

Definition: Coercion or pressure that forces the testator to act against their true intentions.

Persuasion vs. Coercion: Convincing the testator is allowed if their judgment remains intact, but coercion overcomes their free will.

Burden of Proof: The party alleging undue influence must provide evidence. It must be proven that no other explanation for the facts exists.

Physical and Mental Strength: A weaker testator may be more vulnerable to undue influence, especially when seeking peace or quiet.

No Presumption: Unlike lifetime arrangements, there is no automatic presumption of undue influence for wills.

Whether or not the court considers the testator’s will to be fair is irrelevant. The question is whether, in executing the will, the testator acted “as a free agent”.

Question 15

What are the formal requirements for a valid will under Section 9 Wills Act 1837?

Answer 15

To be valid a will must comply with s 9 Wills Act 1837 (‘WA’) which states:

No will shall be valid unless—

(a) It is in writing, and signed by the testator, or by some other person in his presence and by his direction; and

(b) It appears that the testator intended by his signature to give effect to the will; and

(c) The signature is made or acknowledged by the testator in the presence of two or more witnesses present at the same time; and

(d) Each witness either

(i) Attests and signs the will; or

(ii) Acknowledges his signature,

In the presence of the testator (but not necessarily in the presence of any other witness), but no form of attestation shall be necessary.

(a) It is in writing, - Includes handwritten and typed/printed text in any language

and signed by the testator, - Any ‘mark’ may constitute a ‘signature’ if the testator intends it to be, but it is preferable for a testator to use their normal signature to avoid doubt

or by some other person in his presence and by his direction - This could apply e.g. if a testator is physically unable to sign themselves and authorises another person to sign on their behalf

b) It appears that the testator intended by his signature to give effect to the will - Where the signature is at the end of a will it usually indicates the necessary intention. Signatures at the beginning or in the middle of the will can be problematic.

(c) The signature is made or acknowledged by the testator in the presence of two or more witnesses present at the same time - A testator either signs in person or acknowledges the signature of the person who signed on their behalf. Two is the minimum - there is no maximum.

Question 16

What constitutes a ‘signature’ under Section 9 Wills Act 1837?

Answer 16

• A mark (even if it’s not the testator’s usual signature) may count as a signature, as long as the testator intends it to be one.
• The testator’s normal signature is preferable to avoid doubt.
• If a testator is physically unable to sign, another person can sign on their behalf, in their presence and with their direction.

Question 17

What are the requirements for witnesses under Section 9 Wills Act 1837?

Answer 17

• Two witnesses are required, though there is no maximum number.
• Witnesses must be physically and mentally present but do not need to know the document is a will or its contents.
• Inappropriate witnesses: minors, blind individuals, or people of unsound mind should not serve as witnesses.
• Witnesses must sign in the presence of the testator, but they do not need to sign in front of each other.

Question 18

What is the role of an attestation clause in a will?

Answer 18

• An attestation clause explains how the will was executed.
• There is no legal requirement for an attestation clause, but a well-drafted one creates a presumption of due execution (i.e., the will was executed correctly).
• Without an attestation clause, proof of proper execution is required, often through an affidavit of due execution from the witnesses.
• If the will is executed in special circumstances (e.g., the testator is blind or illiterate), the clause should reflect those circumstances.

Question 19

What are the consequences of an improper or missing attestation clause?

Answer 19

• Without a properly drafted attestation clause, additional proof of due execution will be needed, usually through an affidavit.
• This can complicate the probate process, making it more difficult to prove the will was executed correctly.

Question 20

What does Section 15 of the Wills Act 1837 state about witnesses who are beneficiaries?

Answer 20

• If a beneficiary or their spouse acts as a witness, any gifts to them under the will are void.
• The will remains valid, but the witness cannot inherit under it.
• If a professional executor (who can charge for their services) witnesses the will, Section 15 does not apply to their remuneration for acting as executor.
• The appointment of the beneficiary as an executor remains valid, even if they cannot inherit under the will due to Section 15.
• If there are two other valid witnesses not subject to Section 15, or if the will is later confirmed by a properly executed codicil, the effect of Section 15 can be ignored, and the will is still considered properly executed.

Question 21

What is the basic overview of a standard will?

Answer 21

• A standard will includes sections like Commencement, Revocation, Burial/Funeral Wishes, Appointment of Executors, Guardianship, Gifts (specific, pecuniary, general), Residuary Gift, Administrative Clauses, Date & Attestation.
• The will is clearly written, avoids ambiguous terms, and commonly uses capitals for key clauses like “I GIVE” and “I APPOINT.”
• Punctuation is often avoided for consistency in legal interpretation.
• Numbered paragraphs and the use of sub-clauses make it easier to read and cross reference.
• Precedents are an aid to drafting and may not reflect what is required without amendment.

Question 22

What information is included in the introductory clauses of a will?

Answer 22

• Identifies the testator by their full name, address, and sometimes occupation.
• Mentions any aliases or names the testator is known by.
• The date of the will can be placed here or at the end of the will, marking the document’s finalisation.

Question 23

What does the Revocation clause in a will do?

Answer 23

• Revokes all previous wills and codicils, ensuring only one valid will is in place.
• Avoids potential conflicts with earlier documents.
• Revocation can also occur by operation of law (e.g., marriage, divorce), destruction, or codicils.
• While not mandatory, including a revocation clause prevents uncertainty.
• If a testator has more than one valid will the later will impliedly revokes the earlier will but only to the extent that it is inconsistent with or merely repeats the terms of the earlier will.

Question 24

How are burial or funeral wishes handled in a will?

Answer 24

• Testators may specify burial, cremation, or funeral arrangements, but these are not legally binding.
• Executors or personal representatives usually follow these wishes as a matter of respect.
• Typically included early in the will before any gifts or appointments.

Question 25

What is an executor/PR?

Answer 25

- The role of a personal representative (‘PR’) is to collect in the deceased’s assets and administer the estate (s.25 Administration of Estates Act 1925); they must pay the deceased’s debts, administration costs and expenses and distribute assets to the correct beneficiaries. - A PR is appointed by will is referred to as an executor and their power to act derives from the will. - If a will does not appoint an executor who can act, the Non Contentious Probate Rules determine who acts as PR. A Pr appointed by the NCPR is an administrator.

Question 26

What is the purpose of the Appointment of Executors clause?

Answer 26

- Names the individuals responsible for administering the estate. - Executors must be over 18 and have mental capacity; bankrupt individuals may face restrictions. - It is common to name at least two executors to ensure continuity if one cannot act, however a minimum of one if required. - The testator is free to choose their executor. - Unless stated otherwise, the appointment of a spouse/civil partner becomes ineffective if the testator later divorces/dissolves their civil partnership.

Question 27

What happens if more than four executors are appointed?

Answer 27

Only four executors can apply for the grant of probate at any time. If more than four are appointed, the others may have their powers reserved and can act if needed later.

Question 28

How can an executor’s appointment be qualified?

Answer 28

- In most cases, the scope of an executor's appointment is absolute and unresitricted. However, qualified appointments are possible. - An executor’s role can be limited by time (e.g., during a specific period), type of asset (e.g., real property) or business assets, or location (e.g., for international estates). - Qualified appointments are used to address specific estate management needs. - Where a qualified appointment is made the drafter must ensure all of the estate will be administered and no assets passing under the will are left without an executor appointed to deal with them. - An appointment may be void if it is not clear that someone has been appointed that role, or there is ambiguity about who is supposed to fulfil the role.

Question 29

How are Executors and Trustees appointed together?

Answer 29

- Executors often act as trustees if a trust arises in the will. - At least two trustees are required for most trusts, or a corporate trustee may act alone. - Additional trustees may be appointed if the initial ones cannot act.

Question 30

How is a law firm partnership appointed as executors?

Answer 30

- Law firms cannot be named as executors, instead, all of the partners (construed as profit sharing) at the date of death are appointment ('a' or 'any one' partner is void for uncertainty). - The will should specify that any current partners at the firm at the time of the testator’s death will act as executors. - A testator can express a preference for a specific partner but should avoid a personal appointment (that person may no longer practice or work at the firm).

Question 31

Can LLPs or trust corporations act as executors?

Answer 31

Yes, an LLP or trust corporation can be appointed as an executor. They are often chosen for their professional expertise and ability to act as sole executors, especially for complex estates.

Question 32

What are the considerations when appointing professional executors?

Answer 32

- Professional executors, such as solicitors or trust corporations, are often appointed for their expertise. - They may charge for their services, and it is wise to check the fee structure beforehand. - They will want to include an express charging power. This is commonly added as part of the appointment clause. - The statutory right to charge under s.29 Trustees Act 2000 imposes some restrictions. - Are ideal for handling complex estates or where neutral administration is preferred

Question 33

What are the considerations when appointing guardians?

Answer 33

- A testator with parental responsibility may appoint a legal guardian for their infant children by will (s 5 Children Act 1989). - Appointment by one parent would not normally take effect until after the death of the surviving parent. - The testator should obtain consent from the proposed guardian(s) that they are willing to act. A guardian is not required to accept their appointment. Consider: Whether any financial provision for the guardian is appropriate (e.g., legacy to be paid only if guardian is appointed), or whether jointly appointed guardians will work together effectively.

Question 34

What are administrative powers in a will?

Answer 34

- Executors administer the estate, while trustees manage any ongoing trusts. - Administrative powers allow both roles to function, derived from statute, common law, or the will itself. - Express powers in the will may override or supplement default powers. - Without express provisions, statutory/common law powers apply. - Common express powers relate to asset management, payment of debts, and distribution to beneficiaries. Administrative powers are usually found at the end of a professionally drafted will after property disposition clauses.

Question 35

What is the role of administrative powers in estate administration?

Answer 35

- Executors handle estate assets, ensuring debts and expenses are paid before distribution. - Trustees manage any trust created by the will, continuing their role as long as the trust exists. - Executors and trustees must act according to the powers given in the will or legal provisions, ensuring proper asset management and beneficiary rights. - A will may include express powers to adjust or expand statutory powers, like varying how investments are handled or when assets are sold.

Question 36

How do express administrative powers affect the executor and trustee roles?

Answer 36

- Express administrative powers, often included at the end of the will, grant executors and trustees specific abilities to manage the estate or trust. - These powers may allow executors to delay asset distribution or trustees to invest in certain ways. - Without such provisions, they would be limited to standard powers under statutory law or common law, potentially complicating effective estate management. - The use of standard provisions (e.g., STEP provisions) helps clarify and simplify the executor/trustee responsibilities.

Question 37

What is the purpose of the date and attestation clause in a will?

Answer 37

- The attestation clause verifies the proper execution of the will, confirming it was signed in the presence of two witnesses. - The date may be included here or at the beginning of the will, but should not appear in both places. - While the testator doesn’t need to sign at the end of the will, the attestation clause typically comes last to ensure clarity on the testator’s intention.

Question 38

What are dispositive clauses?

Answer 38

- Dispositive clauses in a will direct who inherits the testator's assets, what they receive, and on what terms. - Gifts can be absolute or conditional, including legacy (personal property, e.g., gifts or chattels) and devise (real property). - They may be specific, general, pecuniary or residuary gifts.

Question 39

What order do dispositive clauses appear in and what are the types?

Answer 39

Non-monetary gifts come first, followed by monetary legacies and finally, the residue. Types include: 1. Specific (e.g., items or chattels) 2. General 3. Pecuniary (cash) 4. Residuary (remaining estate)

Question 40

What are special gifts and what are the vulnerable to (dispositive clauses)?

Answer 40

Specific gifts refer to specific items of value that the testator leaves to a designated beneficiary. These are identified clearly to avoid any confusion, typically with a detailed description such as: Personal chattels: Specific personal possessions (e.g., “I leave my gold Rolex watch to my son Mark”). Real estate: Properties or land (e.g., “I leave my house at 123 Elm Street to my niece Sarah”). Special gifts are: - **Vulnerable to ademption:** If the testator no longer owns the item at the time of death (e.g., they sold the house), the gift will fail unless the will provides alternative provisions. - The solicitor should check the testator's intention in the event that the original item no longer exists.

Question 41

What are collections (dispositive clauses)?

Answer 41

A collection refers to a group of similar items bequeathed as one unit. - The collection should be clearly defined to avoid disputes about what is included. - A will can also set out how the collection is to be divided among beneficiaries if applicable. Where division is required, the will should specify how the agreement should be reached, a timeframe for deciding on a division, and state how any failure to agree within such timeline should be resolved (in the absence of an agreement the executors should decide). - The testator may need to define whether new items added to the collection after the will's drafting are also included.

Question 42

What are chattels (dispositive clauses)?

Answer 42

Personal chattels include tangible movable property (excluding money, business assets, investments) under s.55(1)(x) AEA 1925. The definition should be adjusted if necessary (e.g., include vehicles or exclude business items). - A gift of a collection of chattels is a type of specific gift. - Most testators will have chattels which are included and distributed in their succession estate when they die. To the extent that these are not to be given away under the will, a specific clause is needed.

Question 43

What potential conflict arises when a will contains both specific gifts and a general gift of personal chattels, and how can this be avoided?

Answer 43

A conflict arises if both the specific gift and the general gift of chattels (as defined by s. 55) attempt to give away the same items. To avoid this, specific gifts of items or collections should appear before the general gift of chattels in the will, and the general gift should be drafted to cover only items not already specifically gifted.

Question 44

What happens if the testator owns a property jointly?

Answer 44

Joint ownership of property affects their distribution upon the testator’s death: - If owned as joint tenants, the chattels pass automatically to the surviving co-owner(s) and do not form part of the testator’s estate. - If owned as tenants in common, the testator can dispose of their share in their will, and the chattels will be dealt with according to the will’s terms. If the testator has no beneficiary in mind to receive the property and is happy for it to be sold as part of the administration and proceeds to be distributed according to the terms of the will, no specific provision within the will is required.

Question 45

What are specific gifts of land (dispositive clauses)?

Answer 45

The bequest of real estate in a will. The property must be clearly described to avoid ambiguity: - Full address and, if possible, title number should be included. - If the testator owns multiple properties, specific identification is necessary (e.g., “I leave my house at 123 Elm Street”). - The clause should expressly state what will happen if that property is no longer owned by the testator when they die. e.g., should a specific alternative property be given. Additional matters - The property must be capable of passing under the will, so if owned as joint tenants the joint tenancy must be severed. Third party interests - If the property is owned jointly as tenants in common, and the testator wants to leave their share to someone other than the surviving co-owner, the testator needs advising on the rights of the co-owner.

Question 46

What should a testator do if they want to give their interest in a property to a beneficiary?

Answer 46

They should consider: - Severing joint tenancy: If the property is jointly owned, severing a joint tenancy can ensure the testator’s share is included in the will. - Clarity in description: Ensure the property and the testator’s interest are clearly described in the will. Conditions: Specify any conditions for the gift (e.g., whether the beneficiary can sell or must retain the property). - Substitution: If the testator anticipates that the property may be sold, they could include an alternative bequest (e.g., a cash equivalent).

Question 47

What tax advice should be given regarding the gift of properties?

Answer 47

Residence Nil Rate Band (RNRB): Properties left to direct descendants may benefit from an additional tax-free allowance.

Question 48

What are general legacies under dispositive clauses?

Answer 48

A general legacy is a gift of property which is not distinguished from property of a similar type – e.g. “a” rather than “my”. * A general legacy does not normally fail because the PRs would have to buy the specified property if it was not part of the estate at death. Check with the testator that this is in accordance with their wishes. Most pecuniary legacies (gifts of cash) are general in nature e.g. “I give £1,000 to [ ]”.

Question 49

What are demonstrative gifts under dispositive clauses?

Answer 49

A demonstrative gift is a type of general legacy (most often pecuniary in nature) which the will directs should be paid out of a specified fund. For example: “I leave £10,000 from my Barclays savings account to my niece.” - This gift will not fail if there are insufficient assets in the specified fund. - If the specified fund has ceased to exist or is inadequate then the beneficiary is entitled to recieve what is left in the fund and to have the balance of the legacy paid as a general legacy.

Question 50

What is a residuary gift?

Answer 50

A residuary gift distributes the remainder of the estate after all debts, taxes, expenses, specific gifts, and legacies have been paid. This includes that which has not already been disposed of under the will or any later codicil. The residuary estate is typically the largest portion of the estate and may include: - Cash and investments. - Properties not specifically gifted. - Business interests.

Question 51

Why are residuary gifts important?

Answer 51

They ensure that any leftover assets are distributed according to the testator’s wishes. They help prevent partial intestacy (where part of the estate is not disposed of by the will and falls under intestacy rules).

Question 52

When should residuary gifts be set up?

Answer 52

The residuary legacy may be given directly to beneficiaries or may impose a trust. A trust is advisable when: - A beneficiary has a life interest in the residue. - A discretionary trust of the residue is established. - The residue is to be shared among multiple beneficiaries. - There are contingent or minor interests. Each clause should explicitly declare the trust and its terms. Substitution provisions are often included to activate if the primary gift fails.

Question 53

What happens if a residuary gift fails and how is the risk avoided?

Answer 53

If a residuary gift fails (e.g., if the sole residuary beneficiary predeceases the testator without substitution), the estate will fall into partial intestacy, meaning any remaining assets will be distributed according to intestacy laws. This can be avoided by: - Including a substitution clause (e.g., “If my spouse predeceases me, I leave my residuary estate to my children equally”). - Adding an ultimate gift over (e.g., leaving the residuary estate to a charity if no individual beneficiaries survive).

Question 54

What is a pecuinary gift (dispositive clauses)?

Answer 54

A pecuniary legacy is a gift of money. It can be specific or general. The clause will often contain the amount of the gift in numbers and words in case there is an error when typing the numerical figure.

Question 55

What is the role of a solicitor when drafting a will?

Answer 55

- Advise on legal requirements and implications. - Ensure the testator’s intentions are clearly expressed. - Draft the will in accordance with the law and client wishes. - Provide guidance on tax implications and relieving provisions. - Verify the testator’s capacity and understanding.

Question 56

What is the general rule for the date from which the will speaks, regarding property?

Answer 56

General rule: Unless a contrary intention is shown, the will speaks from the date of the testator’s death in respect of identifying the subject matter of a gift by virtue of s.24 Wills Act 1837. This means that any property gifted is taken to include what the testator owns at their death, unless a contrary intention is expressed.

Question 57

How is contrary intention demonstrated for the date from which the will speaks

Answer 57

- Use of specific terms: Words like "my" or "now" indicate that the will refers to the property as of the date of execution. Example: "I GIVE to [ ] my car absolutely" suggests the car owned at the execution date, not at death. - Such terms create a risk of ademption if the property no longer exists at death. - Example: I GIVE to [ ] the car that I own at the date of my will is preferable as it states what is owed on the date of the will expressly.

Question 58

What considerations apply to collections regarding the date from which the will speaks?

Answer 58

General rule: Unless stated otherwise, the will speaks from the **date of the testator’s death** for gifts of collections (e.g., chattels, stamp collections). Use of the word **"my"** in a will (e.g., "my stamp collection") means the gift refers to items in the collection at the **date of death**. A collection can grow between the execution of the will and death, so it’s crucial to clarify whether the gift includes future acquisitions. Instructions should be taken from the testator about whether the gift includes only the collection at the date of the will or at the **time of death.**

Question 59

What considerations apply to people regarding the date from which the will speaks?

Answer 59

General rule: The will speaks from the date of execution when identifying people unless stated otherwise. For gifts to classes of beneficiaries (e.g., "my grandchildren"), it is important to clarify whether the testator means grandchildren alive at the time of the will’s execution or those born after. Without express wording, the **class closing rules apply**, and the class closes **when the first member of the class gains a vested interest**. Codicils: If a later codicil republishes the will, the relevant date for identifying people is the date of the **codicil**, not the original will.

Question 60

What do relieving provisions deal with?

Answer 60

Who should bear the burden of taxes, charges (e.g., mortgages), expenses and costs. Such provisions should be expressly stated to avoid confusion, but in the absense of express wording there are general rules which apply.

Question 61

What are the relieving provisions for inheritance tax?

Answer 61

**Inheritance Tax (IHT)** is payable on the value of an estate above the **nil-rate band** (currently £325,000). **General rule:** IHT is paid out of the residuary estate unless the will states otherwise. To avoid confusion, the testator can specify whether certain gifts should bear their own IHT burden, ensuring clarity in tax responsibility. Legacies are typically drafted as **free of tax**, leaving the residuary estate to cover IHT.

Question 62

What are the relieving provisions for expenses and costs of transfer?

Answer 62

General rule: Specific beneficiaries bear the costs of transferring property to them and any expenses for upkeep since the testator’s death. The testator can specify in the will that these expenses be covered by the **residuary estate** rather than by the beneficiaries, avoiding additional costs to them. This is especially relevant for costly transfers, such as **property** or **large assets**.

Question 63

What are the relieving provisions for charges?

Answer 63

General rule: Under s.35 Administration of Estates Act 1925, property gifted in a will is inherited subject to any charge or debt, such as a mortgage. The testator can relieve the asset of this charge, allowing the debt to be paid from the residuary estate. A general direction to pay debts from the estate is insufficient to remove the effect of s.35; the will must expressly mention the charge.

Question 64

What does Section 21 of the Administration of Justice Act 1982 state?

Answer 64

Section 21 allows courts to consider **extrinsic evidence** when interpreting a will if the meaning is unclear or ambiguous. This evidence can be used when the will: 1. Is **meaningless** or unclear in its wording. 2. Has **ambiguities on its face.** 3. Has ambiguities based on **surrounding circumstances**. The court’s role is to **construe** the will in line with the testator’s **intended meaning**. This is done withut contradicting or varying its terms.

Question 65

What are the survivorship provisions if the order of death is unknown?

Answer 65

s.184 Law of Property Act 1925: When two people die in circumstances where the order of death is uncertain, the law presumes that the eldest died first. This is known as the commorientes rule, and it affects how estates are passed on. If both deaths occur simultaneously for **inheritance tax** purposes, they are treated as dying at the same time under s.4 Inheritance Tax Act 1984.

Question 66

How can the confusion caused by two deaths in close succession be avoided?

Answer 66

The will can include an express survivorship clause, ensuring beneficiaries must outlive the testator by a set period (e.g., 28 or 30 days). This prevents complications if two people die in close succession, avoiding multiple administrations of estates and reducing potential IHT liabilities. Example: - "I give my Residuary Estate to my spouse if they survive me by more than 28 days." Such clauses help avoid the risk of assets passing through two estates in a short time, minimising costs and potential double taxation.

Question 67

What must a testator consider when including gifts for their issue in their will?

Answer 67

**Who is included**: Gifts to "children" generally include illegitimate, legitimated, and adopted children but not stepchildren unless explicitly stated. **Class gifts**: These gifts may be left to a group identified by their relationship, like "children" or "grandchildren." **Vested vs contingent**: Whether the gift vests immediately or depends on a condition like reaching a certain age. **Substitution**: Whether another person (usually descendants) should inherit if the primary beneficiary predeceases the testator.

Question 68

How should gifts to issue be named when drafting?

Answer 68

**Naming individually:** Testator can name each child specifically, e.g., "I give to my son X and my daughter Y." **Class gifts**: Instead, the testator can use a class description, e.g., "I give to each of my children." **Consider future children**: Class gifts are useful if the testator wants to include future children not yet born at the time the will is executed.

Question 69

What are the issues with class gifts and how are they overcome?

Answer 69

- **Issue** - It may be unclear who qualifies as part of the class until all potential members are born. - **Overcome** - Class closing rules help determine when the class closes, providing clarity about which beneficiaries are included. Express provisions - Testators should state clearly when the class closes to avoid confusion.

Question 70

What are the class closing rules?

Answer 70

General rule: The class closes when any member of the class first becomes entitled to the gift. Example: "I give £300 to be shared equally between my grandchildren who reach 21." The class closes when the first grandchild turns 21. **Death of testator:** If no contingency applies, the class closes on the testator's death.

Question 71

What are vested interests?

Answer 71

Vested interest: A gift that is given outright without conditions, and the beneficiary immediately owns it. Example: "I give £1,000 absolutely to each of my children alive at the date of my death." **Minors**: If a minor has a vested interest, the gift is held on trust until they reach 18 because **they cannot give a valid receipt for capital**.

Question 72

What are contingent interests?

Answer 72

**Contingent interest**: The beneficiary must meet a condition before the gift vests. Example: "I give £1,000 to my grandchildren alive at my death who reach 21." **Effect**: If a beneficiary dies before fulfilling the condition, the gift fails and does not pass to their estate. Contingent gifts are most commonly used where gifts are made to the testator's issue, and in relation to the residuary estate.

Question 73

What happens if a beneficiary dies before the testator?

Answer 73

**Lapse of gift**: The gift fails (lapses) if the beneficiary dies before the testator. Example: "I give my niece £100." If the niece predeceases the testator, the gift lapses and becomes part of the residuary estate. **Residuary estate**: If the residuary estate gift lapses, it could result in partial intestacy.

Question 74

What are substitutional gifts?

Answer 74

**Substitution**: If a gift lapses, the testator can specify another person to inherit in place of the deceased beneficiary. Example: "I give to my niece X, but if she dies before me, to her daughter Y."

Question 75

How should substitutions be handled when children pre-decease the testator?

Answer 75

Common substitution: Gifts to children often include a substitution in favor of grandchildren if the child predeceases the testator. Example: "I give my residuary estate to my children who survive me, but if any child predeceases me, their share passes to their children."

Question 76

What is Section 33 of the Wills Act 1837 and where does it apply?

Answer 76

Section 33: Prevents a gift from lapsing if a child or remoter descendant predeceases the testator, leaving issue (descendants). Effect: The issue of the pre-deceased beneficiary will inherit the share intended for the original beneficiary. Section 33 applies when: - The will includes a gift to the testator’s **issue**. - The intended beneficiary dies before the testator, leaving issue alive at the testator's death. - No contrary intention is expressed in the will.

Question 77

How can Section 33 of the Wills Act be excluded?

Answer 77

Exclusion: Section 33 can be excluded by the testator expressing a contrary intention in the will. Clarity: It is important to clearly state if Section 33 should not apply to avoid confusion about who inherits.

Question 78

What must a testator consider when making gifts to charities or unincorporated associations?

Answer 78

- Include the charity’s full name and registered number. - Consider the inheritance tax implications if the charity has registered status. - Plan for what happens if the charity no longer exists (e.g., name a substitute charity). - Specify who can give valid receipt for the gift, such as the treasurer.

Question 79

What is the cy-pres doctrine?

Answer 79

**Cy-pres doctrine**: If a charitable gift cannot be given effect (e.g., the charity no longer exists), the gift can be redirected to a charity with similar purposes under **s.62 Charities Act 2011**.

Question 80

Is there anything you can do if you feel that the deceased has unreasonably left you without anything?

Answer 80

While close relatives have no legal right to inherit any fixed proportion of the estate, the Inheritance (Provision for Family and Dependants) Act 1975 allows them to make an application to the court to vary the content of a will or an intestacy after the deceased has died. The court has the power to make provision for an applicant if it feels that reasonable financial provision has not been made out of the deceased's estate.

Question 81

What is the eligibility to make an application under IP(F)DA?

Answer 81

An applicant must: - Jurisdiction: Be within the jurisdiction of the IP(F)DA 1975, which applies where the deceased was domiciled in England and Wales. - Recognised categories: Demonstrate they fall within the eligible categories set out in the Act. - Time limits: Submit their application within the prescribed time limits following the grant of representation.

Question 82

When must solicitors be aware of IPFDA?

Answer 82

Solicitors must be aware of the implications of the IPFDA 1975 when: - Taking instructions from a client for a will - Acting in the administration of an estate - Advising a potential applicant looking to make a claim - Acting in ancillary relief proceedings

Question 83

What is the jurisdiction of IPFDA (s 1(1))?

Answer 83

The IPFDA applies when the deceased was domiciled in England and Wales. Domicile Types: - Domicile of origin: Determined at birth based on the parents' domicile. - Domicile of dependency: Changes with the parent’s domicile for children under 16. - Domicile of choice: Requires a permanent intention to sever ties with the domicile of origin.

Question 84

What are the categories of applicant and the meaning of maintenance?

Answer 84

Eligible Categories (s 1(1)(a)-(e)): - Spouse/Civil Partner: Surviving partner. - Former Spouse/Civil Partner: Must not have remarried. - Cohabitant: Lived together as spouses/civil partners for two years before death. - Children: Includes adopted children. Treated as Children: Includes step-children or those recognised as family. - Financial Maintenance: Any person being financially maintained by the deceased. Must demonstrate substantial financial support from the deceased.

Question 85

What are the time limits to bring a claim under IPFDA (s 4)?

Answer 85

An application must be made: - Within six months: After the grant of representation, although applications can be made prior to the grant. - Grant records: Check online for the date of the grant; if the person died recently, no grant may have been issued yet.

Question 86

How can an extension of time limits to bring a claim be granted?

Answer 86

The Court has discretion to extend time limits based on: - Special reasons: Applicants must demonstrate why the time limit was exceeded. Considerations: - Circumstances of the delay. - Whether negotiations were initiated within the original time limit. - Distribution of the estate before the claim was made. - If refusal would leave the applicant without recourse. - An arguable case must be presented.

Question 87

What is the choice of court to bring a claim under IPFDA?

Answer 87

Claims can be lodged in either: - High Court: Consider the Family or Chancery Division based on the nature of the case. - County Court: For simpler claims. Family Division: More appropriate for claims involving spouses or civil partners without complex issues. Chancery Division: Generally used for more complex cases.

Question 88

What property does the IPFDA 1975 apply to?

Answer 88

Orders under the IPFDA are made from the ‘net estate’. Net estate: Defined in s 25 and includes: - Normal succession estate. - Property subject to unexercised general powers of appointment. - Severable shares in joint tenancies. - Other property disposed of during the deceased’s life under court’s anti-avoidance powers.

Question 89

What are the grounds for IPFDA Claims (s 1)?

Answer 89

Claims are based on: - Reasonable financial provision: The will or intestacy rules did not provide reasonable financial support to the applicant. Judicial Consideration: - Courts weigh competing interests of applicants and intended beneficiaries. - Original intentions of the deceased are taken into account. Reasonableness: The term is difficult to define, as highlighted in Ilott v The Blue Cross and others [2017] UKSC 17.

Question 90

What orders can the court make under s2(1) IPFDA?

Answer 90

The court can order: - Periodical payments: Regular financial support. - Lump sum payments: One-time financial distribution. - Transfer of property: Direct allocation of estate assets. - Settlement of property: - Establishment of trusts or arrangements. - Acquisition of property for transfer: - Allowance to buy property for the applicant. - Variation of settlements: Changes to marriage or civil partnership settlements. - Variation of trusts: Adjustments to trusts created by will or intestacy. **Effective Date:** Orders are effective from the deceased’s death for tax purposes.

Question 91

How do the courts determine whether a deceased has made 'reasonable financial provision' for someone?

Answer 91

An IPFDA 1975 Assessment requires the court to consider: 1. Did the deceased fail to make reasonable financial provision for the applicant. 2. If so, what award should the court make? Both questions require an objective assessment of the facts of the case.

Question 92

What is the first step in determining reasonable financial provision?

Answer 92

The first step is to assess whether the deceased made "**reasonable financial provision**" for the applicant. This is objective and based on statutory criteria outlined in the Inheritance (Provision for Family and Dependants) Act 1975 (IPFDA). The court does not consider whether the deceased was morally wrong in their estate distribution.

Question 93

What ate the standards of financial provision under IPFDA?

Answer 93

Section 1(2) sets out the two standards of reasonable financial provision, one applies to spouses and the other to all other applicants. - **Surviving Spouse Standard** - Such financial provision as would be reasonable in all circumstances for husband, wife, or civil partner to receive, whether or not that provision is required for his or her maintenance. - **Maintenance Standard** - Such financial provision as it would be reasonable in all circumstances of the case for the applicant to recieve for his/her maintenance.

Question 94

What is the extension of the surviving spouse standard under Section 14?

Answer 94

**The surviving spouse standard can be extended** to a former spouse or civil partner who meets three conditions: 1. They have not remarried or entered a civil partnership. 2. The divorce, dissolution, or judicial separation occurred within 12 months of the death. 3. No order for financial provision has been made or refused in the ancillary proceedings.

Question 95

What is useful terminology related to Section 14?

Answer 95

- Divorce ends a marriage; parties are free to remarry. - Civil partnership is ended by dissolution, equivalent to divorce. - Annulment is a judicial declaration that a marriage never existed. - Judicial separation formalizes the end of a relationship but does not end the marriage. - Ancillary relief refers to financial orders made upon divorce or separation.

Question 96

What is the difference between the two standards of financial provision?

Answer 96

- The **surviving spouse standard** requires the court to determine what is reasonable for the applicant to receive, not limited to maintenance needs. - The **maintenance standard** focuses on what is reasonable for the applicant’s maintenance. The surviving spouse standard is thus generally considered higher, leading to significant case law around its application.

Question 97

What factors must be considered under Section 3 IPFDA guidelines?

Answer 97

Under Section 3, the court must consider: - The applicant’s financial resources and needs. - The financial resources and needs of any other applicants and beneficiaries. - The deceased’s obligations to applicants or beneficiaries. - The size and nature of the deceased's estate. - Any physical or mental disabilities affecting the parties. - Other relevant matters, including conduct. When considering a person's financial resources and needs, the court must consider any resources or needs they are likely to have in the foreseeable future.

Question 98

What specific guidelines apply to spouses or civil partners?

Answer 98

Under Section 3(2), the court considers: - The applicant’s age and the duration of the marriage/civil partnership. - Contributions made by the applicant to the family's welfare. - Provision the applicant might reasonably expect from divorce/dissolution proceedings if the couple ended their relationship at the date of death. (This does not apply if they are judicially separated). The court considers the first two criteria for former spouses/civil partners too. The third applies if the court exercises its discretion to apply the surviving spouse/civil partner standard under s14.

Question 99

What specific guidelines apply to cohabitees?

Answer 99

Under Section 3(2A), the court evaluates: - The age of the applicant and the length of cohabitation. - Contributions made to the family's welfare. The third criterion from the spouse standard does not apply.

Question 100

What specific guidelines apply to children of the deceased?

Answer 100

Under Section 3(3), the court considers: - The applicant’s education or training expectations. For children treated as such, e.g., stepchildren, the court also assesses: - The extent of maintenance provided by the deceased. for what time they did so. - Whether the deceased's assumed responsibility for maintenance, even if the applicant was not their child. - The liability of others to maintain the applicant.

Question 101

What specific guidelines apply to other applicants?

Answer 101

Under Section 3(4), if an applicant was maintained by the deceased, the court must consider: - The duration and basis of maintenance. - The extent of the deceased’s responsibility for maintenance. An applicant who falls within this category is treated as being maintained by the deceased "only if the deceased was making a substantial contribution in money or money's wortht towards the reasonable needs of that person, other than a contribution made for full valuable consideration pursuant to an arrangement of a commerical nature".

Question 102

What is the second step in determining a court award if a claim is brought under IPFDA?

Answer 102

Once it is established that reasonable financial provision was not made, the court assesses: - Quantum: How much should the applicant receive? - Form of award: What form should the award take? Considerations depend on the applicant's category and all relevant Section 3 factors.

Question 103

How do you assess the value and nature of an award?

Answer 103

To assess the claim's value, compile the applicant's assets and liabilities. This will guide the assessment of the applicant's needs (e.g., income or housing) and determine both the amount and nature of the award.

Question 104

What comparisons are made with divorce?

Answer 104

- When the applicant is a spouse/civil partner, the court considers relief available on divorce. - However, it does not guarantee the same award. The deemed divorce factor is one of many considerations, and the court may not award a 50% interest in the estate outright.

Question 105

What interests under a trust must be considered?

Answer 105

- An applicant may argue that an interest under a trust does not constitute reasonable financial provision. - Factors include the level of income produced by the trust compared to the applicant’s needs. - The court has the power to award a life interest, which may be more suitable than a capital interest.

Question 106

What are the key reasons beneficiaries may be dissatisfied with the distribution of an estate and what are the potential tax consequences if a beneficiary gives away their inheritance?

Answer 106

Reasons for dissatisfaction: - Inadequate provision has been made for a particular person. - Too great or unwanted provision has been made for a beneficiary. - The distribution results in an undesirable tax situation. If a beneficiary gives away their inheritance: **IHT**: The original beneficiary would be making a PET (Potentially Exempt Transfer), which would become a chargeable transfer if they died within 7 years of the gift. **CGT**: A gift of a non-cash asset would be treated as a CGT (capital gains tax) disposal by the original beneficiary, and any increase in the asset's value since the date of the deceased’s death could be subject to CGT if the increase exceeds the beneficiary’s tax-free allowance.

Question 107

What is a variation in the context of estate distribution and what are its key features?

Answer 107

A variation is a direction from an original beneficiary to the deceased’s PRs (Personal Representatives), instructing them to transfer property the beneficiary is entitled to under a will or intestacy rules to another person instead. A variation can be made after the original beneficiary has accepted their inheritance. - A variation can apply to the whole or part of the inheritance. - The original beneficiary has complete freedom in determining who will receive the varied inheritance.

Question 108

What are the IHT consequences of a variation under s.142 IHTA?

Answer 108

IHT Consequences: - If the conditions of s.142 Inheritance Tax Act 1984 (IHTA) are satisfied, the gift is treated as if made by the deceased to the new beneficiary, rather than by the original beneficiary to the new beneficiary. - The original beneficiary is **not making a PET** (Potentially Exempt Transfer), so they are not concerned about surviving for 7 years after making the variation. - IHT due on the deceased’s estate is **recalculated** as if the deceased had left the property to the new beneficiary.

Question 109

What conditions must be met under s.142 IHTA for the variation of distribution under a will?

Answer 109

Conditions under s.142 IHTA: - The variation must be made by the original beneficiary in writing (a deed is not required, but frequently used). - It must be made within **2 years** of the deceased’s death. - The variation must contain an express statement by the beneficiary confirming that s.142 should apply. - The variation must not be made for consideration in money or money’s worth.

Question 110

What role do the PRs of an estate play in a variation, and when must they sign it?

Answer 110

The PRs do not need to approve a variation if it does not result in any additional IHT (Inheritance Tax) being due on the deceased’s estate. However, if the variation does result in additional IHT being due on the deceased’s estate, the PRs should: - Sign the variation. - Provide HMRC with a copy of the written variation. - Pay the amount of IHT due. PRs can only refuse to sign the variation or approve the “writing back” effect under s.142 if the assets held by the estate are insufficient to discharge the additional tax payable.

Question 111

How can variations affect the amount of IHT payable on an estate, and what are some examples?

Answer 111

A variation can increase, decrease, or have no effect on the IHT payable on an estate, depending on how the inheritance is varied. **Example 1**: A leaves their entire estate to their spouse, B, but F expected to inherit one of A’s paintings. B varies their entitlement so that A’s will includes the gift to F. A’s estate is now taxed as though: - The painting is given to F. - The residue of the estate is left to B. IHT becomes payable because the painting is passing to a non-exempt beneficiary, F, and there is no NRB (nil-rate band) to offset the tax. **Example 2**: A leaves a taxable estate to their child, D. D varies their entitlement to make a charitable gift of £50,000. A’s estate is now taxed as though: - £50,000 is given to charity. - The residue of the estate is left to D. The estate now qualifies for charity exemption, reducing the IHT payable and allowing A’s PRs to claim a refund. **Example 3** (No effect on IHT): A leaves their estate to their spouse, B, which qualifies for spouse exemption, so no IHT is payable. B then varies their entitlement to give £150,000 to A’s child, C. A’s estate is taxed as though: - £150,000 is left to C (within the NRB and taxed at 0%). - The residue of the estate is left to B. No IHT is payable, but part of A’s NRB has been used, affecting the amount transferable to B as the surviving spouse.

Question 112

What are the basic principles of CGT and how do they relate to variations of estate distribution?

Answer 112

Basic principles of CGT: - CGT is charged on the disposal of a non-cash asset, which includes both selling and giving the asset away. - The gain is the increase in value from the date of acquisition to the date of disposal. - For gifts, the gain is calculated based on the market value at the time of the gift. - Taxpayers have an annual tax-free allowance, and only gains above this threshold are taxed. Examples of CGT: If A purchased shares for £10,000 and sold them for £30,000, A’s gain is £20,000. After applying a £5,000 TFA (tax-free allowance), A is taxed on £15,000. If B received shares as a gift valued at £2,000 and later gave them to C at a market value of £30,000, B’s deemed gain is £28,000. After applying £10,000 TFA, B is taxed on £18,000.

Question 113

What are the CGT consequences of a variation, and how can the writing-back provisions under s.62 TCGA be used?

Answer 113

CGT Consequences: - Normally, a gift of a non-cash asset by the original beneficiary would be a CGT disposal, and a liability may arise if the asset has increased in value since the deceased’s death. - To avoid CGT, the writing-back provisions under s.62 TCGA allow the variation to be treated as if the asset was inherited directly from the deceased. Conditions for s.62 TCGA: - The conditions for s.62 TCGA are the same as those for s.142 IHTA, meaning the gift is treated as made by the deceased, not the original beneficiary. - The new beneficiary acquires the asset at its date-of-death value, not the value at the time of the variation.

Question 114

What are the benefits of choosing to apply the writing-back provisions under s.142 IHTA and s.62 TCGA?

Answer 114

The original beneficiary can choose whether to apply the writing-back provisions for either or both IHT and CGT. - IHT (s.142 IHTA): The original beneficiary avoids making a PET and is not concerned about surviving 7 years from the gift. - CGT (s.62 TCGA): The new beneficiary acquires the assets at their date-of-death value, potentially reducing the CGT payable on a later disposal. If no writing-back is required, no formal variation is necessary, and the beneficiary can simply gift the assets.

Question 115

What is a precatory trust and how does it impact IHT?

Answer 115

A precatory trust arises when a will expresses a wish for a beneficiary to distribute assets to others, but no formal trust is created because there is no intention to be legally binding. The beneficiary is free to keep the assets, as the testator’s wishes are not binding. IHT: If the beneficiary acts upon the testator’s wishes and makes the distribution within 2 years of death, s.143 IHTA treats the gift as having been made by the testator. No PET arises, and the IHT consequences mirror those of variation.

Question 116

What is a disclaimer in the context of estate distribution, and how does it differ from a variation?

Answer 116

A disclaimer is a refusal by a beneficiary to accept property to which they are entitled under a will or intestacy rules. - Must be made before acceptance. - Can apply to the whole or part of the inheritance. - It cannot be made in favour of another person; the disclaimed property is distributed as though the disclaiming beneficiary had died before the deceased. Differences from a variation: - A variation allows the original beneficiary to direct who will receive their inheritance, whereas a disclaimer leaves the inheritance to pass as if the disclaiming beneficiary had never been entitled to it. - A disclaimer cannot be made after acceptance of the inheritance, but a variation can be made after acceptance.

Question 117

Provide a summary for post-death arrangements - variations by the beneficiary under a will.

Answer 117

- A beneficiary may vary their inheritance by giving all or part of it away to another person that they choose. - A beneficiary may disclaim (i.e. refuse to receive) the whole (but not part) of their inheritance prior to accepting it. The property disclaimed is re-distributed according to the terms of the will/intestacy rules as if the original gift had failed. - If a variation or disclaimer is made in the 2 years following death the beneficiary may elect in writing to have the gift ‘read-back’ to the testator’s estate for IHT and/or CGT purposes such gifts are treated as made by the deceased, not the original beneficiary. - A precatory trust arises where a gift is made with an express wish that the beneficiary distributes their inheritance in accordance with the testator’s wishes. There is no legal obligation for the beneficiary to comply with these wishes. - If a beneficiary does comply with the testator’s wishes under a precatory trust, the distributions are automatically treated for IHT purposes as made by the deceased. There is no equivalent writing-back effect for CGT.