#15503 - Distribution Of A Person's Property On Death - Private Client

Wills & Administration of Estates

LPC Exam Revision

Distribution of a Person’s Property on Death

General Rules

When a person dies you have to determine whether they have died testate or intestate (i.e. with or without a will which determines who inherits the succession estate). A person can die partially intestate where they leave a will but do not deal with all of the assets in the succession estate, such assets will be dealt with by the intestacy rules.

Succession Estate

A ‘succession estate’ is all of the assets owned by the person who has died. The Personal Representatives will pay the deceased debts, funeral and administrative expenses and will distribute the remaining assets to those who are to inherit the assets.

All property comprises the succession estate apart from:

1. Property (including bank accounts) held as joint tenants: the remaining joint tenant will have the whole of the asset. If property was held as tenant in common they will have their proportion of the asset as part of their succession estate.

2. Insurance policies written in trust: life assurance policies where there is a nominated person to receive the benefits

3. Pension benefits: the deceased has likely nominated a person to receive such fund and will be paid to the identified individual.

4. Statutory nominations: amounts of money (limited to 5,000) transferred to an individual

5. Donatio Mortis Causa: a gift made during the deceased’s lifetime in contemplation and conditional of the donor’s death.

6. Trusts/Settlements: the deed of the trust controls the destination of the trust property. A life tenant of a trust has the right to receive all income from the test during their lifetime. When the life tenant dies the remainderman has the right to the capital of the trust.

Intestacy

If a person dies wholly or partially intestate then the following rules apply:

However, issues (i.e. children or grandchildren) must survive the estate and reach the age of 18 or marry earlier; they will only have a contingent interest until then. If they are already married or over the age of 18 then they will inherit immediately.

If a beneficiary dies before the intestacy then their issue can inherit the trust (called ‘substitution’).

If a couple divorces the treat is as though they have no spouse.

Family Homes & Survivorship

An intestate’s surviving spouse has the right to the family home and must exercise this right within 12 months of the grant of representation. If the spouse’s entitlement is less than the value of the property then the PRs can require the spouse to pay the difference to the PRs.

This only applies where the deceased owned the family home outright or where they held the homes as tenants in common.

Wills

Structure

Validity of a Will

A testator must be 18 years or older, have the capacity to make a will and have the requisite intension. They must also meet certain formalities.

To have capacity, the individual must have ‘soundness of mind, memory and understanding’ in relation to the nature of the act, extent of the property and the moral claims at the time the will is executed. Capacity is presumed unless evidence to the contrary is produced.

The necessary intension takes two forms:

1. The general intension to make a will; and

2. A specific intension to make the particular will they are signing with its contents.

The relevant formalities include the fact that the will must be in writing and signed by the testator and also made in the presence of two witnesses who each attest and sign the will. Beneficiaries should not be a witness to the will (unless there are two other witnesses).

Attestation Clauses

Attestation clauses state that the relevant formalities have been complied with and the attestation clause means there is an assumption the will was properly executed. If there are special circumstances then these will be explained in the will.

Incorporating Documents into a Will

An unexecuted document can be incorporated into a will and become part of a will if the document is:

1. Clearly identified in the will;

2. Already exists at the date of the will; and

3. Is referred to in the will at the time of its execution.

Codicils

A codicil is an ‘add-on’ to an existing will, which complies with all the relevant formalities (e.g. age, capacity, intension etc.). Codicils add provisions, amend provisions or revoke provisions.

The codicils republish the will so the existing will is deemed to have been executed on the date of the latest codicils.

Valid Alterations

An alteration to a will made before execution is valid.

An alteration made to an executed will which is...