Legacies and Devises Flashcards
1
Q
Types of legacies
A
- Gift in Will may be DEVISE of a piece of land
- LEGACY is normally money or physical objects
-Specific legacies - gifts of particular things owned by the testator
- General legacies - gifts of things or money not expressed as owned by the testator
- Demonstrative legacies - gifts expressed as being payable from a particular fund, such as particular bank account
- Pecuniary legacies - gifts of money
- residuary legacies - gifts of everything left over after payment of debt and other legacies
2
Q
Specific Legacies
A
- gift of particular item identified in the Will as belonging to deceased - for ex “my books to A”
> Bothamley v Sherson 1875 - “gift refers to some part of the testator’s assets in such a way as to distinguish it form other assets and indicate that it is to pass to the legatee in specie” - normally identified by the possessive prefix “my” but not conclusive. Courts tend to lean against construing gifts as specific.
- If in a gift of shares the test owned exactly no of shares given in Will and at date of death, doesnt necessarily mean gift will be specific of those shares
>Re Willcocks 1921 - left father stocks, but at date of death she had already disposed of it. Held was a general legacies as didnt refer to stock as belonging to her at that date and execs ordered to purchase stock to the value.
> Re Gage 1934 - gave to niece old war loans and stocks. At date of Will had war loan, but before died she accepted cash payment in lieu of stock - Ct held that “now standing in my name” said was specific but separated by words “and” so gift to niece held to be general and directed to purchase stock.
- overriding factor must look at Will as a whole in light of surrounding circumstances.
> Re Rose 1949 - no possessive word, but still held as specific. Normally gift of shares will be specific if refers to “my 500 shares in X plc to..” or “all my shares in X plc to…”
> Re Eve 1956 - read “I bequeath to X an option to acquire from my executors at par value my shares in Z Limited”. No specific, as only gave right to buy
3
Q
Specific legacies - income and interest
A
- takes effect immediately on death and carries all income and profits accruing from date of death, but also subject to liabilities as well.
- devisee would be entitled to rents of profit from date of death but must bear burdens, such as LL repair obligations.
- if trust created before 1 October 2013, income needs to be apportioned under s2 Apportionment Act 1870, unless excluded in Will. Means all rents income etc considered to accrue from date to day and shall be apportioned in respect of time accordingly. So if rent on prop including date of death, and not collected until after death, is apportioned so part before death is capital of estate, part after is income of estate.
Important in situations:
- between specific beneficiary of land and residuary beneficiaries of estate
- between life tenant entitled to income and remainderman (person receiving residue of an estate in land)
- s1 Trusts (Capital and Income) Act 2013, disapplies s2 Apportionment Act 1870 for all new trusts created on or after 1 October 2013.
- for contingent or deferred specific gifts, entitlement of income governed by s175 Law of Property Act 1925. Contingent gift is “if X reached 25”, deferred is “to X after death of Y”. Unless test confirms, s175 confirms that specific or deferred gifts carry intermediate income. Income accumulated and added to capital.
- When minor beneficiary is contingently entitled, s31 Trustee Act 1925 gives trustees power to apply income for child’s maintenance, education or benefit.
4
Q
Specific Gifts - Abatement & ademption
A
ABATEMENT
- when residuary estate insufficient to meet liabilities, s34 and Part II Sch 1 AEA 1925 have effect that legacies are reduced pro rata, called abatement.
- Sch 1 has effect that general legacies abate, before specific legacies are touched. If general legacies exhausted in meeting debts, specific legacies then abated pro rata
ADEMPTION
- specific gift will fail by ademption if property identified in Will doesnt form part of estate
5
Q
General legacies
A
- doesn’t specifically identify item or object bequeathed as belonging to testator - for ex “a piano”, “a silver 1995 Mercedes 200S with leather seats”
- gift of stock or shares is prima facie general unless contrary intention in will, where for ex test intends legatee to take particular identical stock.
- if subject matter doesn’t form part of assets at death, operates as direction to PRs to purchase equivalent asset or offer equivalent in money.
- rule on ademption doesnt apply to general legacies
- if residue insufficient to meet all debts, general legacies abate before specific legacies.
6
Q
Interest on general legacies
A
- run from time the legacy is payable. Unless directed otherwise appropriate rate is 0.1 percent per annum simple interest - used for compensate legatee for any delay and prevent residuary from benefitting from delay.
- interest payable is treated as a payment in course of administration of estate and not additional legacy. Partial payment on account of interest and legacy treated as made first in respect of arrears of interest then principle sum - Re Morley’s Estate 1937
- normal rule is immediate legacy is payable 1 year after death, end of exec’s year. Interest payable from end of that year until actual payment date. If Will directs set aside and invest a sum in payment of legacy, carries interest from end of exec’s year.
- Test can fix time for payment of legacy, by directing that legacy payable immediately from the date of death.
- 4 cases where interest on general legacy will run from death:
- Test gives a legacy to a creditor in satisfaction of debt, unless test directs later time for payment of legacy.
- Legacy, charged only on real property if legacy is vested. Not apply where legacy is payable out of proceeds of sale of real prop where trust for sale has been imposed.
- Where legacy given to child of test or child who test stands in loco parentis - to provide maintenance for the child. Not apply where has made specific legacy for maintenance of child or where legacy not given directly to child but to trustees to hold. Doesnt apply if specific contingency has no ref to child’s infancy - for example if “to X at 25”, not apply.
- legacy shows intention to provide for maintenance of infant beneficiary - not confined to just child of test or child they stood loco parentis and applies even if contingent event doesn’t relate to infancy.
- deferred or contingent don’t carry interest until becomes payable, unless said that legacy be set aside from the remainder of estate, then runs from end of exec’s year.
7
Q
Demonstrative legacies
A
> Ashburner v Macguire 1786 - described as “something of a hybrid” - legacy paid from a specific fund, so as long as that exists then paid. If doesnt exist, turns into general legacy and paid out of general assets of estate.
- if specified fun is sufficient, legacy treated as specific for purposes of entitlement to income and for protection from abatement. If not sufficient, treated as general.
- rarely created intentionally.
8
Q
Pecuniary legacies
A
- gifts of money, usually general but can be specific or demonstrative.
- AEA 1925 describes in s55(1)(ix) as including annuity, a general legacy, a demonstrative legacy as far as it is not discharged out of a designated property, or any other general direction by test for the payment of money, including all death duties free from which any devise, bequest or payment is made to take effect.
