Establishing Entitlement Flashcards
(19 cards)
What basic presumptions apply when interpreting wills?
- Non-technical words bear their ordinary meaning
- Technical words are given their technical meaning
Presumptions can be rebutted if it is clear from the will and any admissible extrinsic evidence, that the testator was using the word in a different sense
There is a basic rule that extrinsic evidence is not used to establish the testator’s intentions; the will alone is used. When can extrinsic evidence be admitted as an aid to interpretation?
Where:
- Any part of the will is meaningless
- Any part of the will has ambiguous language
- Evidence shows that the language used is ambiguous in the light of surrounding circumstances
When can the court correct/rectify a will?
Where their intentions are clear, but the wording is not, so in two situations where the wording does not carry their intentions into effect:
- A clerical error – includes writing or omitting something by mistake
- A failure to understand the testator’s instructions
What is the general rule for determing what assets form the subject matter of a gift?
The will ‘speaks from the date of death’ when it comes to property
- This means the gift will be formed of whatever they have in existence at date of death
Example - A gift of ‘all my estate’ would dispose of all the property the testator owned when they died, whether or not they owned it at the time the will was made
A contrary intention shown in the will might disrupt this rule
- Words that refer to the present, like the car I now own, might refer to the car owned at the time the will was made
What is the general rule when determining who is to receive a gift?
The will ‘speaks from the date of execution’ when it comes to beneficiaries
- This means gifts go to the person who met the description at the time of execution, not the one who meets it at death (if different)
Example - A gift to ‘Donna’s eldest child’ would be construed as a gift to the person who fulfilled the description at the time of execution (Camilla), so if this person predeceased the testator, it wouldn’t go to the child that became the eldest (Kyle)
A contrary intention shown in the will again might disrupt the rule
What are some other noteworthy points about the ‘speak from the date of execution’ rule?
1) The fact that a person’s gender has changed after acquiring a full gender recognition certificate does not affect their ability to inherit under a will if it was made after 4th April 2005
- If the will made in 2006 says David and the person is now recognised as Diana, they would still inherit if they fit the description of the class of beneficiary
2) Terms ‘husband/wife’ are not synonymous with ‘civil partner,’ so a gift to John’s wife would fail, if they entered a civil partnership instead
Give an overview of the ways a gift can fail and what the effect of this is
- Uncertainty
- Beneficiary witnessed the will
- Divorce/dissolution
- Ademption
- Lapse
- Disclaimer
- Forfeiture
If a gift fails, the subject matter goes into the residuary estate. If the residuary gift fails, this passes on intestacy. The will remains valid.
When might a gift fail due to uncertainty?
If the subject matter or recipient cannot be identified from the wording of the will, the gift will fail for uncertainty
Where a gift to charity does not sufficiently identify the charity, the court can direct which charity is to benefit
When might a gift fail due to a beneficiary witness?
Where a beneficiary or their spouse/civil partner witnesses a will, the gift to them fails, but the will remains validly executed
A gift will not fail if the will is validly executed without the beneficiary’s signature (or that of their spouse/civil partner)
- If there are three witnesses for instance, the gift to the beneficiary is valid, because the will is still validly executed if the beneficiary’s signature is ignored
When might a gift fail due to divorce/dissolution?
Any property which would have passed to a former spouse, passes as if they died on the day of divorce
Living apart whilst still married will cause the gift to remain valid
Only applies to the testator’s divorce; if you have a gift to a best friend’s wife in a will in 2020, they divorce in 2022 and you die in 2023 - gift stands as they fit the description at date of execution (will speaks from execution as regards people)
When might a gift fail due to ademption?
1) A specific legacy will fail if the testator no longer owns the property at death – gift is ‘adeemed’
- Property might have been sold, given away or destroyed
2) Where an asset is retained but its nature has substantially changed, the gift is adeemed
- If it has remained substantially the same (change in name or form – shares held in a new company name – the gift remains valid)
3) Where the testator refers to something specifically, like ‘my piano,’ if they sell that and get another piano later, the gift is adeemed, because there’s a presumption that the intention was to give the asset they owned at date of will
- If the property is capable of increase/decrease, like ‘all my jewellery,’ a gift is made of any items satisfying this description at death
What is a point to note about general gifts and ademption?
If the will says ‘I give 500 shares’ instead of ‘500 shares which I own,’ there is no specific gift, so no ademption
There is a general gift and the personal representative must purchase the asset using funds from the estate which will then pass to the beneficiary
When might a gift fail due to lapse?
A gift fails or ‘lapses’ if the beneficiary dies before the testator
Provided a beneficiary survives a testator, for however short a time, the gift takes effect
Where the testator and beneficiary die close together, if the order cannot be proven, the **elder is deemed to have died first **
A gift to two people jointly won’t lapse unless all donees die before the testator - (if A dies before testator, B gets the entire gift instead of half)
- Doesn’t apply if words of severance like ‘everything to A + B in equal shares’ are used – (if A dies before testator, B gets only one share)
What exception applies to lapse of gifts when a child of the testator predeceases?
The issue of a deceased beneficiary take the gift their parent would have taken in equal shares
Example:
* If you have a child, A, who has two children, B + C and B has two children, D + E; where A would be gifted £40k, but A and B are dead
- C gets half – that branch of the family gets an equal share
- D + E get £10k each – this branch also gets an equal share
This exception doesn’t apply if the will shows contrary intention (express substitution clause for example)
When might a gift fail due to disclaimer?
Beneficiary can decline to accept a gift
- They are treated as having predeceased the testator, so their issue can replace them
A beneficiary who has received a benefit from a gift is taken to have accepted the gift and cannot disclaim
When might a gift fail due to forfeiture?
A person should not benefit from the estate of a person they have unlawfully killed
- Applies to any entitlement (under survivorship, will or intestacy rules)
- Applies to murder, manslaughter, aiding and abetting suicide and death by careless driving
- Issue can be substituted for the person who forfeits (child of murderer can inherit)
Court can grant relief against the rule for unlawful killings other than murder, if justice demands it
- Killer must apply for relief within three months of conviction
What is the general rule in relation to the burden of inheritance tax in a will?
Default rule for IHT is that the IHT on individual legacies is paid out of the residuary estate, but the will can displace this rule by contrary intention
If the testator gives something, ‘subject to tax,’ they will have to bear the IHT attributable to that gift – giving it ‘free of tax,’ confirms the general rule
If there are costs relating to packing or transporting a gift, who bears these?
Unless the will provides otherwise, the beneficiary bears these costs
‘Free from costs,’ would cause the costs to be paid from the residuary estate
Where a gift is made of a house with a mortgage, who has the burden of the mortgage debt?
The mortgage debt falls on the beneficiary who receives the charged property
‘Free of mortgage,’ would cause the mortgage debt to pass to the gift of residue
