4. Property, Estate And Probate

A. Introduction

For a will to be in valid form, it must be made in accordance with the rules of the country in which the deceased died domiciled, habitually resident or a national at the time the will was executed, or in accordance with the law of the country where it was executed.

The Civil Partnerships Act 2004, schedule 4, which came into force in 2005, amends enactments relating to wills, administration of estates, intestacy and family provision so that they apply to civil partnerships as they apply in relation to marriage.

B. Wills

In England and Wales, persons or ‘testators’, are free to leave their estate to anyone they choose, subject to the court’s powers under the IPFDA.

I. Requirements For A Valid Will

In order to create a valid will or codicil the document must conform to legal requirements and the testator must have capacity to make a will. The testator must be over the age of 18 years; there are special rules, which apply to a testator in the Services.

The test as to mental capacity to make a will is that the testator understands the nature of the act and its effects, the extent of the property being disposed, and claims on the estates, and does not have a disorder of the mind influencing or distorting their actions.

Mere eccentricity does not make a will invalid. A testator who is a patient under the Mental Health Act 1984 can make a valid will in a lucid interval.

Where a testator does not have the mental capacity to make a will, an application can be a made to the Court of Protection to make a will on the testator’s behalf. The Court has no jurisdiction to make a will for a minor, nor can the will validly dispose of movable property outside England and Wales.

Ii. Forms/types Of Wills

There are specific requirements relating to the validity of wills that can be found in the Wills Act 1837, as amended, including that the will is in writing; the will is signed (name, initials or mark) by the testator, or by some other person in the testator’s presence and at the testator’s direction; and, the testator intends by signature to give effect to a valid will. There are also provisions as to attestation regarding how the testator’s signature should be made or acknowledged in the presence of two independent witnesses.

Iii. Revocation And Alteration Of Wills

A testator is required to have the same capacity to revoke a will as to make one. A will can be revoked voluntarily by the testator or involuntarily by operation of law. Voluntary revocation can occur in a number of ways, for example, by the testator’s making a later validly executed will or codicil, destroying the original will, or making a written declaration of intention to revoke the will and executing it in accordance with formalities.

Involuntary revocation occurs on the subsequent marriage/formation of civil partnership of the testator unless the previously made will was stated to be made in expectation of the testator’s intended marriage/formation of civil partnership. Partial revocation occurs in the event of the testator’s divorce or other dissolution of the testator’s marriage/civil partnership, when appointment of the testator’s spouse/civil partner as executor or trustee fails and legacies to the spouse/civil partner fail unless contrary intention is expressed in the will.

There is a presumption that any alterations found in a will were made after it was executed. Any alteration shall be executed as though it were a will, or one of the following must apply, otherwise it will be invalid:

  • the alterations are initialled or signed by the testator and the attesting witnesses at the time of the execution of the will
  • the changes are mentioned in the attestation clause of the will or in a separate note at the end of the will, or
  • the will is republished, or re-executed and republished including the alterations, in a codicil.

It would still be possible for the alterations to be valid in the event that the attesting witnesses were able to give evidence to the Court that the alterations were made before its execution.

Iv. Testamentary Gifts, Lapse, Abatement And Ademption

Gifts may be specific, general or demonstrative. A specific gift leaves certain named property that can be identified, for example, ‘my grandfather clock’, and takes effect only if that thing is in the testator’s estate at the time of death. A general gift is not something that is included in a testator’s estate but is something that can be acquired, for example, ‘a grandfather clock’. A demonstrative legacy describes the fund or source of the legacy.

The Wills Act 1837, as amended, provides that every will shall be construed with reference to the testator’s estate immediately before the death of the testator, unless there is contrary intention. Where a testator makes a will leaving a specific legacy of, for example, ‘my grandfather clock’, and then sells that grandfather clock and buys a new one before death, the gift will be adeemed or fail and the beneficiary will receive nothing. If, however, the testator made a more non-specific gift of, for example, ‘all my books’, that gift would include all the books owned by the testator at the date of death.

If a beneficiary does not survive the testator, the gift fails or lapses. The Wills Act 1837, as amended, saves from lapse a gift to any issue of the testator who dies before the testator and substitutes their issue if they survive the testator, subject to contrary intention in the will.

The costs of administering an estate are payable out of the estate before it is distributed to the beneficiaries. In the event that there are insufficient assets in the estate to pay all liabilities, funeral and administrative expenses and the legacies, then the legacies will be abated in accordance with a set formula.

C. Dependants’ Relief

The IPFDA allows, where a deceased died domiciled in England and Wales, certain categories of person to make a claim against the estate if they have not been left anything or they do not consider they are receiving a sufficient portion of the estate. The claim is based on the concept of reasonable financial provision.

D. Intestacy Rules

In the event that a deceased person has not made a valid will or has made a will that does not dispose of part or all of the estate, the estate will be intestate.

The Administration of Estates Act 1925 sets out a prescribed list of people who can benefit from an intestate estate in order of priority. The first four categories are: (1) spouse/civil partner; (2) issue; (3) parents; (4) brother(s) or sister(s) of the whole blood (i.e. having both the same mother and father as the deceased) and their issue.

If a person dies leaving a spouse/civil partner and children surviving, the spouse/civil partner is entitled to ‘a statutory legacy’ of GBP250,000, the personal possessions and a life interest in half the residue of the estate. Children who attain the age of 18 years, or marry/enter into civil partnership under that age, are entitled to the balance of the estate and, if more than one, equally. If there are no children, but the deceased was survived by anyone in categories 3 and 4 above, the spouse/civil partner takes the first GBP450,000, the personal possessions and half of the residue of the estate. The parent(s), or brother(s) or sister(s) of the whole blood or their issue, take the balance of the estate. If none, the spouse/civil partner takes the entire estate.

If a person dies without leaving a spouse/civil partner but leaves issue, the issue inherit the entire estate on attaining the age of 18 years. If there are no issue, then those in the next applicable category inherit the entire estate.

E. Spousal/civil Partners’ Rights On Death

A surviving spouse/civil partner does not have automatic entitlement to a share of a deceased’s estate. Under the IPFDA, however, a surviving spouse/civil partner is entitled to a higher level of financial provision than another claimant, as the standard by which reasonable financial provision is measured in the case of a spouse/civil partner is such financial provision as would be reasonable for the spouse/civil partner to receive. With other applicants, the standard is based on what is reasonably required in the circumstances for their maintenance.

F. Powers Of Attorney

A power of attorney is a document in prescribed form whereby one person, the ‘donor’, gives another person, ‘the attorney’, power to carry out actions on behalf of the donor. There are general powers, specific powers, trustee powers, Lasting Powers of Attorney (LPAs) and Enduring Powers of Attorney (EPAs). The donor must have requisite capacity to make a power.

General powers give the attorney the power to do anything which the donor could have lawfully done with their property, whereas specific powers give the attorney authority to undertake specific acts only, for example, ‘to sell my Company plc shares’. Powers of attorney can be limited by time. LPAs and EPAs give wide powers for the attorney to deal with a donor’s affairs.

Powers of attorney are often used when the donor of the power would have difficulty carrying out a particular act. Powers of attorney, whether general or specific, have limited use as they continue to apply only for so long as the donor has mental capacity, whereas LPAs and EPAs endure beyond loss of mental capacity. It is no longer possible to make new EPAs, although for those who already have EPAs, the EPA system remains in force.

There are two types of LPA: a property and affairs LPA, which is for decisions concerning finances; and a personal welfare LPA, for decisions about health and personal welfare. LPAs must be registered with the Office of the Public Guardian before they can be used. Personal welfare LPAs are only valid in the event of the donor’s mental incapacity.

Donors of powers of attorney can appoint one or more attorneys to act. When appointing several attorneys they must decide whether they would like the attorneys to act ‘jointly’ (when they must act together) or ‘jointly and severally’ (when the attorneys could act together or alone). Donors of LPAs may provide that attorneys may act jointly when making certain decisions and jointly and severally with regard to others.

Trustees can appoint attorneys, in some circumstances, to take up their trustee powers.

G. Probate Matters

On the testator’s death, it is the duty of the testator’s executors to administer the estate. In order to collect assets, pay liabilities (including taxes) and distribute the estate in accordance with the will, it is usually necessary for executors to obtain a grant of probate.

The process involves the executors’ confirming that they are willing to act and, having previously obtained details of the assets, liabilities and any tax due in an estate, swearing a prescribed form of oath containing these details. Depending on the size and nature of the estate, it may also be necessary to give details of it to Her Majesty’s Revenue and Customs.

If a person dies intestate or makes a will where none of the executors is able or willing to act, then statute prescribes a list of people who may apply to administer the estate. In this case, application to the Probate Registry is for a grant of letters of administration.

If a deceased owned assets in other jurisdictions, it may be necessary to obtain probate in that jurisdiction also, and local advice should be sought.

Other assets, such as certain pensions; death-in-service benefits; joint property held as ‘joint tenants’ which passes by survivorship; nominated assets; and trust assets may pass on death but not in accordance with a will or intestacy. These assets do not require probate.


Article Search

© 2012 Society of Trust & Estate Practitioners