Wills and Administration of Estates (incl Trusts)

On death, how are assets that do not pass independently or under a valid will distributed?

According to the intestacy rules.

Where property is held by more than one person as beneficial joint tenants ,on the death of one joint tenant, their interest passes by …

Survivorship to the surviving joint tenant(s).

On death, how does the share of a tenant in common pass?

Under their will or according to the intestacy rules.

“Personal representatives” — definition

The people who administer an estate after the deceased’s death.

Where the deceased has taken out a life insurance policy, who does it belong to? What happens to the policy on the policy holder’s death?

It belongs to the deceased.

On the person’s death, the policy matures. It is then paid to the deceased’s personal representatives, who then distribute the money according to the terms of a will/the intestacy rules.

Where the deceased has taken out a life insurance policy and put it into trust, who does it belong to? What happens to the policy on the policy holder’s death?

Where an insurance policy has been written into trust, its benefit no longer belongs to the policy holder. On death, the policy matures and it is distributed to the named beneficiaries.

In which order will a solicitor deal with the deceased’s assets?

1. Property passing outside the will

2. Property passing under the will

3. Any property not disposed of in (a) and (b) passing on intestacy

“Testator/testatrix” — definition

The person making the will.

“Executor/executrix” — definition

The person who deals with the testator’s affairs after their death.

Responsibilities of an executor/executrix

They collect the deceased’s assets, pay their debts and IHT liability, and then distribute the remaining assets accordingly.

What is a grant of probate?

A grant of probate confirms that the will is valid and the executor(s) has/have the authority to act.

It will not be issued if there are any doubts as to its validity.

“Specific gift” — definition

A gift of a specific item(s) the testator owns, which is/are distinguished from the rest of the testator’s assets.

“General gift” — definition

A gift of an item corresponding to a description.

“Demonstrative gift” — definition

A gift that is general in nature but is directed to be paid from a specific fund.

“Pecuniary gift” — definition

A gift of money.

“Residuary gift” — definition

Comprises all money and property left after the testator’s debts, estate expenses and other gifts under the will have been paid.

What are the requirements for capacity established by Banks v Goodfellow (1870)?

The testator must have “soundness of mind, memory and understanding”. This requires the testator to understand:

(a) The nature of their act and its broad effects,

(b) The extent of their property and

(c) The moral claims they ought to consider.

The testator must also not be suffering from any insane delusion which affects the disposition of property.

What is the general rule about capacity and validity of a will?

What was the exception created by Parker v Felgate?

The general rule is that testators must have capacity at the time they execute their wills.

Exception: a will can be valid if the testator has capacity when they give instructions for the will, even if they lose capacity by the time the will is executed. The will is valid if the instructions were given oa s solicitor, who prepared the will in accordance with the instructions, and at the time the testator executes the will, they appreciate that they are signing a will prepared in accordance with their previous instructions.

What is the “golden rule” suggested by Kenward v Adams (1975)? What was its effect?

A solicitor preparing a will for a testator whose mental state is in doubt should follow the “golden rule”: the solicitor should ask a medical practitioner to provide a written report confirming that the testator has the testamentary capacity and also ask the doctor to witness the will. The solicitor should record their own view of the testator’s capacity in a file note. The written evidence should be kept on the file in case someone challenges the validity of the will after the testator’s death.

What is the presumption of capacity?

When will it apply?

There is a presumption that the testator satisfied the mental capacity test.

The presumption applies if the will is rational on its face and the testator showed no evidence of mental confusion before making the will.

What kind of intention must the testator have when signing their will? What does it require?

The testator must have both general and specific intention. These require that the testator must intend to make a will and intend to make the particular will that is now being executed. (Note that the exception from Parker v Felgate applies.)

What is the burden of proof as regards intention to make a will?

The person asserting that a will is valid must prove it.

Who does the presumption of knowledge and approval apply to?

A testator who has capacity and has read and executed the will.

In what circumstances will the presumption of knowledge and approval not apply?

Where the testator is blind or illiterate or is not signing the will personally or where there are suspicious circumstances.

Where a testator with capacity appears to have known and approved their will’s contents, any person who wishes to challenge the will must do so one certain grounds to prevent a grant of probate. What are these grounds?

(a) Force or fear (through actual or threatened injury) or

(b) Fraud or

(c) Undue influence or

(d) Mistake.

What are the requirements for a valid will under s 9 of the WA 1837?

(a) In writing and signed by the testator (or by some other person in his presence and by his direction) and

(b) 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: attests/signs the will OR acknowledges his signature in the presence of the testator (but not necessarily in the presence of the other witness). (NB compliance is presumed if the will contains an attestation clause.)

Where a person signs a will on the testator’s behalf in the testator’s presence and at their discretion, what must be provided by the testator to confirm this?

The testator must give the person a positive and discernible direction (verbal or non-verbal) that they want the person to sign on their behalf.

There are two stages to witnessing a will. What are they?

1. The testator’s signature must be made or acknowledged in the presence of two witnesses. The two witnesses must be present at the same time.

2. The witnesses must sign in the presence of the testator (but not necessarily in each other’s presence).

When witnessing a will, what does a witness’ “presence” require?

“Presence” requires mental and physical presence.

To be mentally present, the witnesses must be aware that the testator is signing a document (they need not know that it is a will).

To be physically present, they must be see or be able to see the testator signing; there must be an unobstructed lign of sight between the witness and the testator.

What are the consequences if either of the witnesses to a will signing is a beneficiary under the will or is the spouse or civil partner of a beneficiary?

The will remains valid, but the gift to the witness’ spouse/civil partner fails (s 15, WA 1837).

During the pandemic, legislation allowed remote witnessing of wills for a limited period. These rules applied to wills made within that period. What period was it?

28 September 2020 to 31 January 2024.

There is one exception to the validity of a will under s 9, WA 1837. What is the exception?

“Privileged wills”— a will made on actual military service or by a miner or seaman at sea may be in any form, including a mere oral statement (s 11, WA 1837). The only requirement is that the “testator” intends to dispose of his property after his death.

When does the presumption of due execution arise?

Where the will includes a clause that recites the s 9 formalities observed (otherwise known as an attestation clause).

What does the presumption of due execution mean?

Anyone challenging the validity of the will on the ground that it was not validly executed has the burden of proving this was the case.

What will HMCTS require if the will does not contain an attestation clause?

An affidavit of due execution from a witness or any other person present during the execution.

Failing that, HMCTS will require an affidavit of handwriting evidence ot identify the testator’s signature or they will refer the case to a judge.

When a trust is created, how is the ownership of the property held on trust automatically split?

The legal title goes to the trustee and the equitable/beneficial title goes to the beneficiary.

When does a resulting trust arise?

Implied in situations where it is presumed that the settlor would have intended such a trust, if they had thought about it.

Difference between fixed-interest trusts and DTs

Fixed-interest trust — the Ts have no discretion re how the trust property is to be distributed between the Bs.

DT — gives the Ts a discretion re the amounts any person may receive and/or whether particular people receive anything at all.

3 certainties required for a valid declaration of trust

1. Certainty of intention (aka certainty of words) — must be clear the person making the declaration intended to create a trust,

2. Certainty of subject-matter — must be clear what property is being held on trust and what the individual interests of the beneficiaries are,

3. Certainty of objects — must be clear who the beneficiaries are.

What does certainty of intention require?

The settlor must have used words that impose a duty on someone to act as a T, i.e. the words must impose a duty on the T to hold property for someone else.

2 aspects to certainty of subject-matter

1. The trust property must be described with certainty and

2. The settlor must define the beneficiaries’ interests with certainty.

Test for certainty of objects in a fixed-interest trust

Complete list test: it must be possible to draw up a complete list of each and every beneficiary. Requires conceptual certainty and evidential certainty:

• Conceptual certainty — is the description of the class clear and objective?

• Evidential certainty — do we have the evidence to identify all the beneficiaries that will benefit under the fixed trust?

Test for certainty of objects in a DT

Given postulant test: can it be said with certainty whether any given individual is or is not a member of the class of objects? Requires conceptual certainty.

A DT will be administratively unworkable if …

The class is so hopelessly wide as “not to form anything like a class” (McPhail v Doulton).

Requirements for a will trust to be valid under the WA 1837

• The declaration of trust must be contained in a will that is made in writing,

• Signed by the testator

• In the joint presence of two witnesses.

If A asserts that B declared a will trust in writing, what is the applicable two-stage analysis?

1. A must prove that B signed the document (question of fact).

2. A must show that the document, properly interpreted, constituted a declaration of trust (question of law).

If A asserts that B made an oral declaration of trust, what is the applicable two-stage analysis?

1. A must prove what B said (question of fact).

2. A must show that this demonstrated an intention to declare a trust (question of fact).

Declarations of trust over land must comply with s 53(1)(b) of the LPA 1925. What are these requirements?

The dec of trust must be evidenced in writing and signed by the settlor.

NB the dec itself can be oral provided it is subsequently confirmed in writing.

Hudson v Hathway established the rules applicable where a settlor purports to put land intro trust through an email. What are these rules?

• An email is a written document.

• If a settlor declares an express trust over land in an email and they type their name at the end, the typing of their name constitutes a signature (whether it is their full name, last name prefixed by initials, just initials, just their first name or a nickname by which they are known).

• If a settlor declares an express trust over land in an email, that email is signed where the settlor has previously inserted a signature block into their email settings, which is then applied to all outgoing emails.

• The email address of the settlor itself is not a signature.

What must a settlor do for an express trust to be enforceable?

• Make a valid declaration of trust and

• Put assets into the trust.

True or false:

If a settlor appoints someone else as T, then, as well as making a valid dec of trust, the settlor must put the legal property in the title of the T.

True.

If land is part of the trust fund, to transfer legal title to a third party T, the settlor must …

• Execute a deed (if the land is registered, use HMLR’s TR1) and

  • Give the executed deed either to the T (who then sends it to HMLR) or send it directly to HMLR.

Requirements for a valid deed under s 1, LPMPA 1989

• The doc is stated to be a deed or is stated to be signed as a deed and

• The person making the deed signs the doc in the presence of a witness, who also signs it.

2 ways to transfer legal title in company shares

Either:

• Within the CREST system — only applicable to certain shares in public quoted companies or

• Outside the CREST system — applicable to all other shares in private companies.

If private company shares are to be part of the trust fund, to transfer legal title to the third party T, the settlor must …

• Execute a stock transfer form and

• Give the executed stock transfer form and relevant share cert either to the T (who then passes it to the relevant company) or send it to the company itself.

At what point is a transfer of legal title in land to a T effective?

When HMLR registers the change.

At what point is a transfer of legal title in shares to a T effective?

When all steps have been completed and the T is the new shareholder.

Legal title to money generally passes with delivery in 3 possible circumstances

• If the settlor hands cash to a T, legal title passes upon delivery.

• If the settlor transfers money electronically from their bank acc’t to the T’s, legal title passes once the money arrives in the T’s acc’t.

• If the settlor hands a cheque to a T, legal title passes when the cheque clears. (NB if the settlor dies before then, the cheque can no longer be cashed.)

What happens if a settlor does not follow the rules relevant to the property to be held on trust?

“Equity will not assist a volunteer” — equity cannot help as it will not assist a volunteer (i.e. the beneficiary). (NB there are some exceptions).

An exception to “equity will not assist a volunteer” is the “every effort test” — what does it entail?

If the settlor has done everything to transfer legal title, the transfer may be considered complete in equity even though the transfer of legal title has not yet been completed.

For the exception to apply, the settlor must have done everything to the point of no recall.

If a settlor wanted to create a trust with a third party T, but did not transfer legal title during their lifetime, if that same person is also their executor/administrator,is that person’s legal title sufficient to constitute the trust?

Yes, if the conditions from Strong v Bird are met, i.e.:

• The settlor intended to create an immediate trust with a third party as T,

• The trust was not immediately created due to a failure to comply with a relevant transfer rule,

• The settlor’s intention continued up to their death and

• The intended T acquired legal title to the trust property by becoming the settlor’s executor/administrator.

3 situations in which the intestacy rules apply

• Where there is no will either because the deceased never made a will at all or all wills have been successfully revoked (total intestacy).

• 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).

• Where there is a valid will, but it fails to dispose of all the deceased’s estate (partial intestacy).

A statutory trust arises as part of the intestacy rules. How does it affect the deceased’s property (both real and personal)?

• The trust is over all the property.

• Property is held on trust by the PRs dealing with the estate.

• Similar to the usual express will trust.

• PRs must pay the funeral, testamentary and administration expenses and of the deceased’s debts.

• The PRs can appropriate assets in or towards satisfaction of a B’s share (with B’s consent) (s 41, AEA 1925).

“Spouse” — definition under the intestacy rules

The person the deceased was married to at the time of their death.

Includes a party to a voidable marriage (not an outright void marriage) until the court makes a nullity order.

NB former spouses are excluded, provided the divorce is finalised and the marriage is legally ended.

What does “issue” include?

All direct descendants of the deceased, i.e. children, grandchildren, great grandchildren, adopted children, illegitimate children and stepchildren only if they have been adopted.

Where the intestate is survived by both spouse/CP and issue, how is the “residuary estate” distributed?

The spouse/CP receives chattels absolutely.

The spouse/CP receives a statutory legacy (fixed by Parliament), free of tax and costs plus interest from the DoD until payment.

The remainder of the residuary estate (if any) is divided in half: ½ for the spouse/CP absolutely and ½ for the issue on the statutory trusts.

“Personal chattels” — definition under s 55(1)(x), AEA 1925

Tangible moveable property, excluding property consisting of:

• Money or securities for money or

• Property used at the intestate’s death solely or mainly for business purposes or

• Property held at the intestate’s death solely as an intestate.

How long must a spouse/CP survive after an intestate’s death? What happens if the spouse/CP does not survive past this time?

28 days. If the spouse/CP does not survive 28 days, the estate is distributed as if the spouse/CP has not survived the intestate.

In an intestacy, if the family home is owned in the intestate’s sole name or as TiC, how is the intestate’s interest in the home distributed?

The intestate’s interest will form part of the residuary estate and be subject to the intestacy rules. The family home will not automatically pass to the spouse/CP.

If the family home form part of the residuary estate passing on intestacy, how can the spouse/CP appropriate the home?

The spouse/CP can require the PRs to appropriate the family home in full or partial satisfaction of their interest. The spouse/CP must be living in the property.

If the property is worth more than the spouse’s/CP’s entitlement, the spouse/CP can require appropriation, provided they pay the difference to the estate.

• The spouse/CP must formally elect to exercise this right and notify the PRs in writing within 12 months of the grant of representation.

In an intestacy where there is a surviving spouse/CP and issue, how is the issue’s entitlement under the statutory trusts distributed?

The primary Bs: the children of the intestate who are living at the intestate’s death. (NB excludes remoter issue, unless a child died before the intestate.)

The children’s interests are contingent upon the age of 18 or marrying/forming a CP’ship under that age.

If any of the intestate’s children predecease the intestate, any of the children of the deceased’s child who are living at the intestate’s death, take their deceased parent’s share equally between them, contingent upon attaining 18 or marriage/CP’ship. (“Per stirpes” distribution)

If children/issue survive the intestate but die without attaining a vested interest, their interest would normally fail and the estate distributed as if they never existed. UNLESS they leave issue, wherein they will be treated as having predeceased the intestate.

How is an intetate’s estate distributed where there is a surviving spouse/CP but no issue?

The whole estate passes to the spouse/CP absolutely, provided the spouse/CP survives for 28 days. Other relatives are excluded.

In an intestacy, where there is no surviving spouse/CP (or the spouse/CP died within 28 days of the intestate), how is the intestate’s residuary estate distributed?

On an all or nothing basis in the following hierarchy:

1. Issue on the “statutory trusts”, but if none →

2. Parents, equally if both alive, but if none →

3. Brothers and sisters of the whole blood on the “statutory trusts”, but if none →

4. Brothers and sisters of the half blood on the “statutory trusts”, but if none →

5. Grandparents, equally if more than one, but if none →

6. Uncles and aunts of the half blood on the “statutory trusts”, but if none →

7. The Crown, Duchy of Lancaster (if the intestate lived in Lancaster) or Duke of Cornwall (if the intestate lived in Cornwall).

How do the intestacy rules affect estate distributions to illegitimate children?

On the intestacy of an individual whose parents were not married to each other, it is presumed that the individual has not been survived by their father or by any person related to them through their father unless the contrary is shown.

Does not apply where the father is named on the intestate child’s birth certificate.

3 requirements for a valid will

1. Compliance with formalities of a making a will.

2. Testamentary capacity.

3. Testamentary intention.

What happens to a beneficiary’s trust interest when they turn 18?

The trust doesn’t automatically ended. The trustees continue to hold the property on trust for the beneficiary until the beneficiary requests that the property be transferred to them (known as a “bare trust”).

When is testamentary capacity presumed?

When, on the face of it, the will appears rational and there is nothing on the facts that calls capacity into question.

A beneficiary with an interest in capital is often referred to as having __________. A beneficiary with an interest in income only is often referred to as having __________.

An “absolute interest”

A “limited interest”

If a beneficiary has a vested interest and they die before the trust property is paid to them, what happens to the trust property?

The trust property will belong to the beneficiary’s estate, i.e. it will pass under their will/the intestacy rules.

Where a beneficiary has a contingent interest and dies before satisfying the contingency, what happens to their trust interest?

Their interest goes back to the settlor, unless the settlor has provided that the beneficial interest should go to someone else.

“Bare trust” — definition

A trust for a sole, adult, mentally capable beneficiary that gives the beneficiary a vested interest

The rule from Saunders v Vautier

The beneficiaries can end the trust by calling for a transfer of trust property to themselves or other trustees, provided all the beneficiaries under the trust who could become entitled:

• Are in existence and ascertained

• Are 18+ and have mental capacity

• Agree

The rule against alienability of capital

If a purpose trust is not charitable, it will be void if it locks away capital for more than 21 years

Non-charitable purpose trusts are void for offending the rule against inability of capital unless …

• The trust states that it is to last for no more than 21 years or

• The trustees may spend all the trust capital on the purpose and thereby end the trust at any time

Conditions for a charitable trust to be registered as a charity

• The trust must be for a charitable purpose (i.e. those listed in s 3(1), CA 2011)

• The trust must have sufficient public benefit

• The trust must be exclusively chairtable

To be charitable, the purpose being promoted by the charitable trust must have sufficient public benefit. 2 aspects to this?

• The trust purpose must have an identifiable benefit(s) and

  • The benefit of the trust must be clear and relate to the charity’s purposes

• The benefit must accrue to the public or a sufficiently large section of the public

In a charitable trust for the advancement of religion, public benefit will be present if …

Either:

• The place of worship is open to all (even if only a small number attend) or

• While the place of worship is not open to all, members of the relevant congregation “live in this world and mix with their fellow citizens”.

Tests for charitable trusts for the advancement of education and other charitable purposes

The personal nexus test — people linked by a personal nexus are not a sufficient section of the public

The class within a class test — the class of people to benefit from a charitable trust can be limited if the limits are legitimate, proportionate, rational or justifiable, given the nature of the charitable trust

Charitable trusts must not exclude the poor

To be charitable, a trust must be exclusively charitable. 2 aspects to this test

• To be charitable, a trust must not have political purposes and

• If a charitable organisation charges fees, the profits from those fees must be ploughed back into the trust rather than be paid over to private individuals

If a purpose trust is not charitable, it will only overcome the beneficiary principle and the rule against inalienability of capital if …

Either:

• It is a Re Denley trust or

• It is a trust of imperfect obligation

Requirements for a valid Re Denley trust

• The purpose of the trust must be sufficiently clear and give rise to a sufficiently tangible benefit

• The persons to benefit must be ascertainable. Apply the given postulant test

• The trust must not offend the rule against inalienabilityrpo

Trusts of imperfect obligation include …

• Trusts to care for specific animals

• Trusts to maintain graves and tombs