SQE1 - Wills and the Administration of Estates (Intestacy)

What happens if someone fails to make provisions for what will happen to their estate before they die?

If an individual fails to make provision for what is to happen to their estate when they die, statute does it for them in the form of the intestacy rules.

What the the three situations where the intestacy rules under the Administration of Estates Act 1925 operate?

1. Where there is no will either because the deceased never made a will at all or all wills have been successfully provoked

2. 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).

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

What is partial intestacy?

A partial intestacy arises when someone dies leaving a valid will but that will does not dispose of all of his or her assets.

e.g. the will simply omitted a gift of residue or if a residuary gift fails, for example because the residuary beneficiary has predeceased.

In a partial intestacy the intestacy rules only apply to that part of the estate not disposed of by the will.

Who do the intestacy rules apply to?

Intestacy rules are mandatory rules that apply to every intestacy situation

Can you make provisions or declarations to exclude specific individuals from inheriting under the intestacy rules

No, it is not possible to make any provisions or declarations to exclude specific people from inheriting under the intestacy rules.

The only way to avoid the rules is to make a will.

What is the only way for an individual to avoid the intestacy rules?

The only way to avoid the intestacy rules is to make a will.

Are there any circumstances in which the intestacy rules can be displaced?

Yes, there are limited circumstances in which the intestacy rules can be displaced, such as by an order made under the Inheritance (Provision for Family and Dependants) Act 1975.

Do the intestacy rules apply to all property?

No, intestacy rules apply only to property which is capable of being left by a will.

Sheree dies intestate, survived by her husband, Isaac, and their two children. Sheree and Isaac owned their house as beneficial joint tenants. Sheree had taken out a life assurance policy for £100,000 which is written in trust for the children, and she owned investments worth £150,000.

Which property will pass under intestacy rules?

The intestacy rules do not affect Sheree's share of the house (which passes to Isaac by survivorship) or the life policy (which passes to the children under the terms of the trust). Only the investments pass under the intestacy rules.

What is the intestacy rule for property distribution under s33 AEA 1925?

The intestacy rules impose a trust over all the property (real and personal) in respect of which a person dies intestate.

That property is held on trust by the person(s) dealing with the estate - (personal representative(s) or PRs).

This trust is similar to the usual express trust found in a will and includes a power of sale.

Who are the people who administer an estate under intestacy?

An administrator

What must the personal representatives of a an intestacy trust do with the estate?

The trust provides that the PRs must pay the funeral, testamentary and administration expenses (such as legal fees and any tax), and any debts of the deceased.

The PR can do this by selling assets from the estate in order to raise cash to pay off debts and pay for expenses.

What is the residuary estate of an intestacy trust?

Residuary estate is the balance remaining (after setting aside a fund to meet any pecuniary legacies left by the deceased in the will - this bracket LOOK INTO).

The residuary estate is to be shared amongst the family under the rules of administration set out in S 46 AEA 1925.

Do personal representatives have to sell assets which form the residuary estate?

Whilst the PRs have a power of sale, they are not required to sell the assets which form the residuary estate.

What power do personal representatives have under s 41 AEA 1925?

The PRs have power under s 41 AEA 1925 to appropriate assets in or towards satisfaction of a beneficiary's share (with the beneficiary's consent).

What is the distribution where there is a surviving spouse/civil partner and no issues?

Where the intestate leaves a surviving spouse or civil partner but no issue, the whole estate (no matter how large) passes to the spouse or civil partner absolutely.

Other relatives are not entitled.

The spouse or civil partner must survive the intestate for 28 days in order to take. If the spouse or civil partner dies within that period, the estate is distributed as if the spouse or civil partner had not survived the intestate.

How long must the intestate's spouse/civil partner survive the intestate in order to inherit?

Spouse or civil partner must survive the intestate for 28 days in order to inherit.

What happens if the intestate's spouse/civil partner does not survive the intestate for 28 days?

If the intestate's spouse or civil partner dies within 28 days of the intestate, the estate is distributed as if the spouse or civil partner has not survived the intestate.

What is the distribution where there is a surviving spouse/civil partner and there is issues?

The spouse receives:

- personal chattels absolutely

- Statutory legacy fee (£322,000)

The rest of the residuary estate (if any) is divided in half. One half is held on trust for the spouse absolutely. The other half is held for the issue on the statutory trust for the issues.

What is statutory legacy?

A 'statutory legacy' is a set amount fixed by Parliament. For deaths on or after 26 July 2023, it is £322,000. If the residuary estate (excluding personal chattels) is worth less than £322,000 the spouse or civil partner receives the entire estate.

How does the family home pass if the the spouse was a beneficial joint tenant?

An interest in a property held as beneficial joint tenant passes (outside the intestacy rules) by survivorship.

How does the family home pass if the home was held in the intestate's sole name or as tenants in common?

The intestate's interest in the home will form part of the residuary estate and therefore subject to the intestacy rules.

The family home will not automatically pass to the surviving spouse.

Family Home

A surviving spouse can require the personal representatives

to appropriate the matrimonial home (or the deceased's

interest in it if they were beneficial tenants in common) to

the spouse in partial or total satisfaction of their interest.

If the property is worth more than the entitlement of the

spouse or civil partner, they can still require appropriation

provided they pay over the difference ('equality money')

to the estate. The deceased's issue take the other half of the

residue absolutely.

How are personal chattels defined in AEA 1925?

Personal chattels' are tangible moveable property, other than:

-money/securities for money

- property used for business

- property held for investment properties

s55(1)(x)

How is spouse defined for the purposes of the AEA 1925/intestacy rules?

A spouse means the person the deceased was legally married to at the time of their death.

All spouses are treated equally (even if a couple had been living apart at the time, have new partners etc)

Are former spouses included in the definition of spouse?

No, former spouse is excluded. BUT only from the point when the divorce is actually finalised and the marriage has legally ended.

Re Seaford [1968]

Definition of spouse

The divorce case had advanced to the stage where the wife met all divorce requirements, but the husband's death occurred before the divorce was finalised. As a result, the marriage was still in existence at the time of his death, making the wife eligible under the intestacy rules.

Re Park [1951]

Definition of spouse

Definition of spouse was satisfied because the couple were still legally married, irrespective of the fact that their relationship only lasted 17 days.

Do void marriages fall into the definition of spouse?

Couples may enter into a marriage which is void in law (e.g. because one party is already married or under-age).

These marriages are void from the beginning and is treated in law as if it had never taken place.

A party to a void marriage is not a spouse for the purposes of the intestacy rules.

Shaw v Shaw [1954]

Definition of spouse

Despite being married to Mr. Shaw for 14 years, it was discovered after his death that his first wife was still alive for the first 12 years of their marriage. This made their marriage void, and as 'Mrs. Shaw' was not Mr. Shaw's legal spouse, she was not entitled to inherit anything under intestacy rules.

Do voidable marriages fall into the definition of spouse?

Some marriages are voidable (e.g. one party entered under duress or suffering from certain forms of mental disability.

A voidable marriage is valid until such time until the court makes a nullity order. Just as in divorce, a party to a voidable marriage is a spouse for the purposes of the intestacy rules until the order is actually made.

Are the rules for civil partners the same as spouses?

Spouses and civil partners are treated in exactly the same way under the intestacy rules.

Are unmarried cohabitees entitled under intestacy rules?

No, a cohabitant has no entitlement under the intestacy rules. If the intestate was living with someone outside marriage, they do not feature in the rules of distribution and have no entitlement, even if the relationship was long-standing.

What is meant by the term issue?

Issue includes all direct descendants of the deceased. Such as children, grandchildren, great grandchildren.

Are adopted children considered issue?

Adopted children are considered issue.

Are illegitimate children considered issue?

Children whose parents were not married at the time of their birth are considered issue.

Are step-children considered issue?

No, step-children/descendants of the deceased's spouse are not issue.

UNLESS they were adopted.

Roberta died without a valid will. She was married to Fabio. They had two children, Emilio, aged 27, and Octavia, aged 23. Roberta's estate comprised chattels worth £80,000 and other assets valued at £600,000.

Who is entitled to what under the rules of intestacy?

Under the rules of intestacy, Fabio is entitled to the chattels,

£270,000, and 50% of £333,000 (£600,000 less £270,000). If

Roberta's estate comprises an interest in the matrimonial home, this can be transferred to Fabio in part or full satisfaction of his entitlement.

The remaining 50% of the residue (after any inheritance tax due)

is inherited equally by Emilio and Octavia

What is the distribution where there is no surviving spose/civil partner?

The residuary estate is divided between the intestate's relatives in the highest capacity. The list works on an all or nothing bais, working from highest capacity, if anyone falls within the category, they will receive the whole of the entitlement (divided equally if there is more than one in the category) and those in the lower categories receive nothing.

What is order of entitlement?

- distribution where there is no surviving spouse

Order of entitlement:

- Issue of the intestate on statutory trusts

- Parents (equally if both alive)

- Brothers & sisters of whole blood (on statutory turst)

- Brothers & sisters of half blood (on statutory trust)

- Grandparents (equally if more than one)

- Uncles and aunts of whole blood on statutory trust

- Uncles and aunts of half blood (on statutory trust)

- The Crown as 'bona vacantia)

If you cannot find anyone in the first category, you keep going down the list.

Agnes dies. She was unmarried, had no children, and both her parents were dead. She is survived by her sister and a half brother

(her mother had remarried and had a son by her second husband).

Under the rules of intestacy, who is entitled to her estate?

Agnes's estate will be inherited by her sister. The half brother

receives nothing, being in a lower class of beneficiary.

Tom dies intestate. He was not married to his partner, Penny, although the couple have a son, Simon, aged 13, Tom's only child. Tom's parents predeceased him, but he is survived by his only sibling, his brother, Bob, aged 40.

How is Tom's estate distributed?

Tom's estate is held on trust for Simon, contingently upon attaining 18 or marrying earlier. If Simon dies before the contingency is fulfilled, Tom's estate passes to Bob absolutely.

What is a statutory trust?

Under the "statutory trusts," specified class categories, other than parents and grandparents, inherit equally. This includes children under 18 who inherit contingently upon reaching 18 or marrying earlier.

The share of a deceased relative goes to their issue (descendants). If a person with an interest under the statutory trusts dies before attaining vested interest but leaves issue, their own issue can replace them, but the issue must be living at the time of the intestate's death.

This means that relatives not mentioned in s 46 (e.g., nephews, nieces, and cousins) may inherit on intestacy if their parents died before the intestate.

Rose, a widow aged 80, is cared for by her step-daughter, Katya (the child of her deceased husband's first marriage). Her only living blood relatives are cousins, the children of her mother's brothers and sisters. Rose dies intestate.

How is Rose's estate distributed?

Her estate is divided 'per stirpes' between her cousins (and the children of any cousins who predeceased her). Katya receives nothing from Rose's estate.

Simon dies without a valid will. He was divorced. He had three

children: Amy, Bob, and Claire. Amy and Bob survived Simon,

but Claire had died three years before. She had two children of her own, Diana and Eva.

How is Simon's estate divided?

Simon's estate will be divided as follows:

• One-third each to Amy and Bob; and

• One-sixth each to Diana and Eva (that is, they inherit Claire's

share equally between them as her issue)

How are adopted children treated for the purpose of statutory trusts?

Adopted children will be considered the children of heir adopted parents and not their natural parents.

If a person who was adopted dies intestate without spouse

or issue, their estate will be distributed between the closest relatives in the adoptive family.

An adopted child may also inherit on the intestacy of any member of their adoptive family.

What happens to a minor child's contingent interest in an estate when they are subsequently adopted and lose legal connections to the natural family?

Despite adoption, any contingent interest that an adopted child had in the estate of their deceased natural parent before the adoption is protected. - an exception to the rule that adopted children are treated as the child of their adoptive parents.

However, this exception only applies to parents, so an adopted child will lose a contingent entitlement to the estate of other relatives.

What are the Intestacy rules for illegitimate children?

Regardless of whether a person's parents were married to each other or not, the intestacy rules are applied. When an individual's parents were not married to each other, there's a presumption that the individual has not been survived by their father or any paternal relatives, unless evidence suggests otherwise. This presumption is in place to avoid the need for inquiries when the identity or whereabouts of the father are unknown. However, this presumption doesn't apply if the father's name is on the intestate child's birth certificate.

What is bona vacantia?

Bona Vacantia means ownerless goods. Under acnient common law rights, property without an owner would be taken by a feudal lord.

If intestate is not survived by any of the relatives (under the intestacy rules) the estate passes bona vacantia.

This means that the estate passes to the Crown (ie the government), or the Duchy of Lancaster (if the intestate lived in Lancashire) or Duchy of Cornwall (if the intestate lived in Cornwall).

What discretion does the Crown/Duchy of Lancaster and Duke of Cornwall have when an estat is bona vacantia?

They have the discretion to provide for dependants of an intestate or other individuals for whom the intestate might reasonably have been expected to make provisions.term-56

This discretion can be exercised in favour of an individual who had a close relationship with the intestate but doesn't have entitlement under the intestacy rules, such as a step-child or a cohabitant.

When an estate is bona vacantia, what does each party do with the funds?

The Crown - hands the funds over to the HM Treasury to be used in the same way as money collected through taxes

The Duchy of Lancaster - donates the money to charity

Duke of Cornwall - the money is paid to the Duke of Cornwall's Benevolent Fund which provides grants for charitable purposes.

What does the Inheritance (Provision for Family and Dependants) Act 1975 enable individuals to do?

The Inheritance (Provision for Family and Dependants) Act 1975 enables qualifying individuals to seek provision from an estate through legal proceedings.

Why does the Treasury Solicitor's policy favour proceedings under the Inheritance (Provision for Family and Dependants) Act 1975?

The Treasury Solicitor's policy prefers this approach because it ensures that all potential claimants can participate, and their respective interests are considered and weighed.

How does the

Legal Mother - woman who gave birth to the child (s 33)

Legal Father - the husband of the mother unless he did not consent to the treatment (s35)

Second female parent - in a same-sex marriage or civil partnership, the mother's wife or civil partner is the child's other legal parent (referred to as the 'second female parent') when assisted reproduction using donated sperm occurs. (s42)

Are children who are not genetically related (e.g. parents used eggs/sperm) to their parents considered issue?

Under the Human Fertilisation and Embryology Act 2008, the child would be considered issue and entitled to their parent's estate under the intestacy rules, irrespective of whether there is any genetic connection between them.

Does the will have to be dated?

No, a non-dated will not make a will invalid. However, it is best practice to have the will dated because it will be easy to determine if the will was the last will of the testator.

Q: How does the Act treat children born through surrogacy? A: Children born through surrogacy are treated in a manner similar to adoption, and they are considered children of the commissioning couple for all legal purposes.

Potential updated statutory legacy fee?

Statutory Legacy Fee - £322,000 updated in July 2023.

UPDATE ALL FLASHCARDS TO INCLUDE £322,000