New Bills for Intestacy and Family Provision Claims on Death

 In Wills

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The Law Commission released its final report on Intestacy & Family Provision Claims on Death on 14 December 2011:

( ). In summary it recommends a package of reforms modifying the current legal rules to reflect modern social expectations and where possible to remove arbitrary or unduly technical aspects whilst retaining the fundamental English concept of ‘succession’ to an estate.

There are two parts to the proposals:

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  • The draft Inheritance & Trustees’ Powers Bill and
  • The draft Inheritance (Cohabitants) Bill

Since views differ strongly on the more controversial Bill dealing with cohabitants it was a sensible move to divide the issues between two separate Bills in the hope that the less controversial Bill might be presented using the short procedure in the House of Lords whilst the Cohabitants Bill, which might take rather longer and need greater political will, need not delay the core proposals. Ironically, the Cohabitants Bill has been taken under the wing of Lord Lester already and presented by him as a private members Bill.

The Inheritance & Trustees’ Powers Bill (ITP Bill)

Clause 1 of the ITP Bill alters the provisions on intestacy in s.46 Administration of Estates Act 1925 for spouses and civil partners. If the deceased leaves no issue then the spouse or civil partner takes the whole estate instead of parents and siblings of the deceased having an interest. Where the deceased left issue the spouse or civil partner takes the deceased’s personal chattels as before and a statutory legacy but then they receive half of any balance of the estate outright, which avoids the complication of the life interest structure.

This means the amount of the statutory legacy (or the fixed net sum as defined in clause 2 and Schedule 1) must be updated more frequently than recently has been the case. Schedule 1 provides new powers for setting this figure and determining the rate of interest payable on it.

Clause 3 substitutes a new definition of personal chattels as follows:

“personal chattels” means tangible movable property, other than any such property which

  • consists of money or securities for money, or
  • was used at the death of the intestate solely or mainly for business purposes, or
  • was held at the death of the intestate solely as an investment

Clause 4 deals with adopted children and ensures that children who are adopted after the death of a parent do not lose their entitlement to share in that person’s estate because of the adoption – a factor which is often apparently overlooked in the adoption process.

Clause 5 provides for a situation where a person whose mother and father were not married to each other dies intestate. This allows the administrators of the estate to presume the father has also died in circumstances where the identity of the father is unknown. However, the presumption does not apply where the father is named on the deceased’s birth certificate or equivalent official birth record.

Schedule 2 amends the Inheritance (Provision for Family & Dependants) Act 1975 (IPFD) to allow claims by a child of the family where the deceased was not married or in a civil partnership since it is the quality of the relationship between the deceased and the claimant which is paramount, not whether the deceased was married or not.

Perhaps more radically, the changes also remove certain hurdles to claims by dependants who were being maintained by the deceased immediately before death. The case law has shown that the applicant had to prove the deceased assumed responsibility for the maintenance of the applicant and also that he or she contributed more to the relationship in terms of financial value than did the applicant. Whilst the Bill would still expect a court to take these matters into account they not be sufficient to prevent a deserving applicant from making a successful claim.

Also, it is a pre-condition of making a claim under the IPFD that the deceased died domiciled in England & Wales. Of late this hurdle has been the source of litigation to resolve the deceased’s domicile as a precursor to being able to bring a claim under the Act even where the deceased left assets governed by the laws of administration of this country. The Schedule does not remove the requirements to die domiciled in England & Wales but it introduces an alternative pre-condition where the deceased left assets governed by English succession law so that an IPFD claim can be made.

As part of the review of intestacy and the IPFD the Law Commission also investigated the two important default trustees’ powers appearing in ss 31 and 32 Trustee Act 1925. This was because the intestacy rules establish continuing trusts to manage assets where the recipients are under 18. Clause 8 amends s.31 Trustee Act 1925 by leaving the application of income to the trustees on the basis of “as the trustees think fit” as opposed to “as may in all the circumstances, be reasonable” and also by removing the whole of the proviso to s.31(1)(i).

Clause 9 amends s.32 Trustee Act 1925 to permit the advancement of the whole of a person’s prospective share. It also makes it clear that trustees are able to not only pay cash in exercise of the statutory power but also to transfer or apply property – this clarifies and extends the current case law. Subsection (3)(a) amends s.32 (10(a) to make it clear that advancements may not exceed the beneficiaries prospective share of the capital of the trust fund and in particular requires that all the cash and non-cash advancements must be added together to find the total amount advanced for this purpose.

Inheritance (Cohabitants) Bill

This Bill reflects the growing prevalence and public acceptance of cohabitation and brings English law into line with the law in other Commonwealth jurisdictions.

The Bill proposes to enable a surviving cohabitant to share in the deceased partner’s estate in the same way as a spouse or civil partner, without having to bring an IPFD claim, where the deceased was not married or in a civil partnership and where the cohabitation had lasted for at least five years or at least two years if the couple had a child who was living in the same household at the date of death. Clause 2 also extends the same spousal rights to the home to the qualifying cohabitant. Clause 3 simply amends the IPFD to bring earlier amendments into section 1 of that Act without changing the law but also permits a person who was the other parent of a child of a deceased to make a claim under the IPFD if at the date of death he or she was living in the same household as the deceased and as the deceased’s husband or wife or civil partner without the requirement to have lived together for two years.

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