Intestacy

Question 1

Distribution

Answer 1

1. Wholly intestate by Will
2. Wholly intestate - distribution in accordance with statutory rules on intestacy - Administration of Estates Act 1925 and Intestates Estates Act 1952 (as amended)
3. Partially intestate - first by Will, then any undisposed of property is dealt with in accordance with intestacy rules

Inheritance and Trustees Powers Act 2014

Well drawn up Will should include provisions to pass reside where residuary beneficiary predeceases the testator

Question 2

S33 Statutory Trust

Answer 2

• On Intestacy, assets are subject to statutory trust under s33 AEA 1925.

-PRs hold estate that is undisposed of (rather than money) on trust with power to sell it.

• PRs have to pay funeral costs and debts from intestate’s cash, ready money and net money arising from disposal of other assets
• PRs have to hold remaining estate to be distributed under s46 AEA 1925 - sets out the order of persons entitled to benefit
• cannot be varied by PRs

Question 3

Partial Intestacies

Answer 3

• when valid Will but either Will doesn’t dispose of all of the estate (normally no residuary clause) or the Will contained provisions that would have disposed of residuary estate fails - for example residuary beneficiary predeceases testator and there is no substitution clause.
• Valid legacies have to be paid normal way, then rest is distributed applying intestacy rules
• One consequence could be that rules favour a relative that the testator didn’t want to benefit as they were not in the Will
• To avoid, Will should be drafted in way to make additional provisions if the main gifts fail

Question 4

s46 AEA 1925 - Distribution on Total intestacy order

Answer 4

1. Spouse - including same sex couples - Marriages (Same Sex Couples) Act 2013 - and civil partners.
2. Issue - children and direct descendants on statutory trust
3. Parents
4. Brother and sisters of the whole blood on statutory trust
5. Brother and sisters of the half blood on statutory trust
6. Grandparents
7. Uncles and aunts of the whole blood on statutory trust
8. Uncles and aunts of the half blood on statutory trust
9. The Crown

• In laws do not qualify, but adopted children may do.

Question 5

s47 AEA 1925 - Statutory Trusts

Answer 5

• includes class of relative to whom applies together with issue of relative if relative predeceased testator.
• If more than one, divided per stirpes (equal shares) including child en ventre sa mere (unborn at the date of death but later born alive)
• have to be issue will step into dead parent’s shoes and inherit parent’s share and if more than one, in equal shares, then shares contingent on issue attaining 18 or marrying earlier
• if dies before 18, shares devolves
• only if parent predeceased, if alive at date of death but later dies, issue doesn’t get share and continues as if never existed (THIS IS THE OLD WAY)
• S3 Estates of Deceased Persons (Forfeiture Rule and Laws of Succession) Act 2011 - exception if beneficiary dies after deceased, without attaining interest and leaves issue then treated as predeceased so issue takes share
• same statutory trust applies to other categories of beneficiaries under s46 AEA 1925

Question 6

Distribution - surviving spouse/civil partner but no issue

Answer 6

• Surviving spouse inherits entire estate
• Divorced or judicially separated spouses or ex-civil partners where civil partnership not dissolved not entitled to share.
• s46(2A) AEA 1925 - spouse or civil partner must survive intestate at least 28 days before can inherit - doesn’t apply when other relatives inherit

Official Solicitors v Yemoh and Others 2010 - Ghana husband had at least 6 marriages when he died. Ct held spouse who had been lawfully married in accordance with where they lived, was entitled to be recognised as a surviving spouse under s46 and Court said surviving wives of polygamous marriage could success to husbands property on his death.

Question 7

Distribution - Surviving spouse/civil partner but there IS issue

Answer 7

Spouse/civil partner takes:

1. personal chattels as per s55(1)(x) AEA 1925
2. Statutory legacy of £270k plus interest at Bank of England base rate effective at the end of the day of death from the date of death until payment.

• Sch1 ITPA 2014 means Lord Chancellor resets statutory legacy every 5 years and has to increase it in line with CPI rates. Administration of Estates Act 1925 (Fixed Net Sum) Order 2020 increased statutory legacy to £270k from death from 6 February 2020 onwards.

3. Half of the residue absolutely.

Issue get other half of residue on statutory trusts

Question 8

Family Home

Answer 8

• If property held on joint tenants, survivor takes intestate’s share by survivorship so doesn’t pass on intestacy.
• If property held as tenant in common or alone, will pass under intestacy.
• s41 AEA 1925 gives PR general power to appropriate house to beneficiaries instead of case equivalent, but if to spouse/civil partner then can only be if value doesn’t exceed their entitlement.
• if not cooperative or value of house greater than entitlement, spouse can require PRs to appropriate house to them under Sch 2 IEA 1952 provided following requirements met:

1. Right is exercised within 12 months of date of grant, and PRs cant sell without consent of spouse unless needed to pay off debts and no other assets available.
2. Written notice has to be given to PRs. If spouse is sole PR, have to give notice to Court to appoint second PR or get consent of beneficiaries - Kane v Radley-Kane and Others 1998
3. Family home is valued at date of appropriation, not date of death - Re Collins 1975 (can postpone if house value falling)
4. If value exceeds share due, they have to pay difference (equality money) from own money to PRs so beneficiaries dont miss out.

Consent of Court is needed if may diminish value of whole estate, its part of a larger building and rest is in residuary estate, forms part of agricultural land included in agricultural estate, all or part was used as hotel or lodging house, or part was used for non-domestic purposes.

Question 9

Personal Chattels

Answer 9

• definition at s55(1)(x) AEA 1925 as: “tangible moveable property, other than any such property which consists of money or securities for money, was used at the death of the intestate solely or mainly for business purposes, or was held at the death of the intestate solely as an investment.
• Re Reynolds 1966 - Court held stamp collection was personal use.
• Re Crispin’s Will Trusts 1974 - Ct said question is whether articles were of their very nature of personal use. Held that collection and watches were personal chattels.
• if mixed use, Ct held in Re MacCulloch 1981 that dominant purpose must be determined. Was held that dominant use of a yacht was business so not personal chattel.

Question 10

Disclaimer

Answer 10

• Beneficiary can disclaim share of estate if have no need for it.
• can also be disqualified due to be convicted of killing intestate.
• if disclaim, property passes as if gift or entitlement failed - Re Scott 1975. For deaths after 1 February 2012, statutory effect given by Estates of Deceased Persons (Forfeiture Rule and Law of Succession) Act 2011.
• s1 says if disclaimed, property devolves under intestacy rules as if person predeceased so if leaving issue they can claim.
• otherwise, devolves as if beneficiary never existed so passes to other class of beneficiary or moves to the next one.

Question 11

Legitimacy, Illegitimacy & adoption

Answer 11

1. Legitimate and Legitimated children
   - legitimate if born of parents married at time of conception or birth. Can be legitimated if parents later marry
   - If, under Human Fertilisation and Embryology Act 2008, woman is child’s other parent as result of written consent and forms civil partnership with child’s mother, child will be legitimated.

a. Voidable marriage
- if voidable marriage dissolved, annuls marriage but any child born before annulment will be legitimate - s16 Matrimonial Causes Act 1973
b. Void marriage
- child can be legitimate if at time of conception or at time of marriage parents believed marriage to be valid

2. illegitimate children
   - treated same was as legitimate child.
   - s18(1) Family Law Reform Act 1987 states don’t have to be married, so child en ventre sa mere at death benefit in same way as one already live
   - PRs have to rely on s27 Trustees Act 1925 or other protection if cannot find illegitimate children.
   - s18(2) FLRA 1987 - general rule that intestate child not survived by their father unless contrary shown if illegitimate (only if parents had entitlement of intestate).
3. Adopted children
   - s67 Adoption and Children Act 2002, from date of adoption order, adopted child treated as child of adoptive parents and not of natural parents/.
   - Means that as far as ITPA 2014, following adoption, adopted child loses entitled to interest held contingently on statutory trusts arising on intestacy.
   - s4 ITPA 2014 amended s67 ACA 2002 - when immediately before adoption, legal parents already died and some of estate held on contingent trusts for the child, interest of child not affected by the adoption.
4. Children born as a result of fertilisation techniques or surrogacy arrangements
   - Human Fertilisation and Embryology Acts 1990 and 2008 complex provisions to determine parents of children and making of parental orders.

Question 12

Reform

Answer 12

Law Commission recommended significant changes in 2011 report - Intestacy and Family Provision: Claims on Death. Part 8 dealt with cohabiting couples and confirmed:

1. 15% of couples living as cohabs not married - less likely to have made Wills but tend to be younger couples.
2. Can claim share through I(PFD)A 1975, but requirement to go to Court onerous and causes unnecessary difficulties/costs as children have to have separate representation.
3. Don’t realise dont have rights under intestacy, and most likely finances are intertwined and they are interdependent.
4. Other jurisdictions, Australia, Canada, New Zealand, have been able to provide for cohabitants under intestacy without huge issue.

Argued couples had choice of getting married or writing a Will, but relying on that choice could lead to injustice as both parties had to agree to marriage and both had to make a Will so could make it unfair if one reluctant.

Proposed bill said that unmarried cohabs living together for 5 years or more same rights as spouse/civil partner or if had a child together. 2 years.