SQE 1 – Wills and the Administration of Estates Notes
Week 1 – Success & Intestacy
Introduction to Estates
- This element explores the distribution of estates and how to identify the deceased’s succession estate.
- ‘It shall be lawful for every person to devise, bequeath, or dispose of, by his will….. all real estate and all
personal estate which he shall be entitled to, either at law or in equity, at the time of his death, and which, if
not so devised, bequeathed, or disposed of, would devolve.....upon his executor or administrator.
- Section 3 Wills Act 1837
- But what property actually passes to the executor or administrator?
Distribution of estates
- When a person dies it is necessary to consider two key issues before you can ascertain how, and to whom,
their estate will pass:
- Whether the deceased left a valid will. If so, they are known as a ‘testator’ and the will determines how their
assets are distributed. If not, the intestacy rules are followed. (In some cases, it is necessary to look at both
the will and the intestacy rules, because the will does not deal with all the assets that it should.)
- The nature of the assets owned by the deceased. Assets capable of passing under a will or by intestacy are
referred to collectively as the deceased’s ‘succession estate’or ‘distribution estate’. A number of assets
are excluded from the succession estate and are distributed in accordance with their own specific rules.
Testacy
- If the deceased’s will covers their entire succession estate, they are ‘testate’.
- Only the will is relevant when determining how to distribute their succession estate.
Partial intestacy
- If the will does not cover the entire estate, the deceased is ‘partially intestate’. Partial intestacy often
arises as a result of poor will drafting rather than intentionally
- The will is followed but the intestacy rules apply to any remaining property.
Intestacy
, - A person who dies without making a valid will is said to have died ‘intestate’.
- The intestacy rules apply to their entire succession estate.
- The ‘intestacy rules’are found in the Administration of Estates Act 1925 (‘AEA’) (as amended by the
Inheritance and Trustees’ Powers Act 2014 (‘ITPA’)).
- They determine who inherits and what each beneficiary receives.
Example
Cassie drafted her own valid will which contains only the following gifts:
1. the house I own at the date of my death to my sister Siobhan
2. the balance of my Nat West account to my nephew Rylan
Cassie’s succession estate comprises the following assets:
1. Her house
2. The balance on a current account at Nat West Bank
3. Other personal possessions
Siobhan and Rylan inherit the house and bank account respectively under the will.
As Cassie had personal possessions which are not disposed of by the will, she died partially intestate. The
personal possessions will pass in accordance with the intestacy rules.
Identifying the succession estate
- Some types of property that the deceased owned during their lifetime do not form part of the succession
estate.
- The destination of this property is governed by other rules and therefore will not be distributed under the will
or the intestacy rules.
- It is possible to deal with such assets before obtaining a grant of representation.
- This is helpful because it allows you to distribute some assets very early on in the administration of an
estate.
- The main types of property which will not pass to the succession estate are:
o Donationes mortis causa
o Discretionary pension scheme benefits
, o Insurance policies written in trust
o Statutory nominations
o Property held as beneficial joint tenants
o Some other beneficial interests under trusts
Donationes mortis causa
- A donatio mortis causa (‘DMC’) is a gift made in contemplation of death. A valid DMC has 3 requirements:
- The gift is made because the donor believes they may die imminently of a particular cause.
- The donor makes it clear that the gift is conditional upon them dying, and that the property reverts to them if
they survive.
- The donor either parts with the property or something representing ownership of it.
Example
- Kian is in hospital with a terminal illness. He hands his designer watch to his friend, Caitlyn and tells her that
he wishes her to keep it if he dies.
- If Kian dies as expected, the condition is satisfied and Caitlyn becomes the owner of the watch (but if he
recovers, she must return it).
- The watch does not form part of Kian’s succession estate as it has already been validly disposed of.
Discretionary pension scheme benefits
- If the deceased was a member of an employer’s discretionary pension scheme then payments made by the
trustees will not be included in his or her estate for distribution purposes. These rules only apply to
discretionary pension schemes.
- Many pension schemes allow contributors to ‘nominate’ a third party to receive any benefits due after the
contributor’s death (often by completing an ‘Expression of Wish’ form). Such a nomination is not binding on
the trustees (although in practice they almost always make it). As payment is entirely at the discretion of the
trustees, the deceased is not deemed to have any entitlement to any payment from the scheme and any
payment which is made does not form part of the deceased’s estate for distribution purposes.
- The benefit of the discretionary pension scheme will be released upon the production of a death certificate.
Insurance policies
- Insurance policies must be looked at carefully to see whether the proceeds form part of the succession
estate.
, - If the deceased had a simple life insurance policy, the proceeds of the policy pass to the succession estate.
- If the benefit of the policy was written in trust for another person, the proceeds will not form part of the
succession estate. The insured has no beneficial interest under the policy. The proceeds belong to the
beneficiaries nominated in the policy and vest on the insured’s death.
- Life policies can be written in trust in three ways:
o Under s.11 Married Woman’s Property Act 1882 for the benefit of spouse and/or children.
o Expressly for the benefit of any nominated third party, e.g. grandchildren.
o Into an existing trust for the benefit of the named beneficiaries in the trust deed.
Benefits are released on production of a death certificate.
- Statutory nominations
o A person can make a nomination in any of the following accounts:
o Friendly Society.
o Industrial Society.
o Provident Society.
o The amount nominated cannot exceed £5,000
o On the death of the deceased, the monies in the relevant account(s) pass to the nominee rather than
under the will or intestacy of the deceased.
o The benefit of the nominated account will be released upon the production of a death certificate.
Beneficial co-ownership
- Joint Tenants
o If the deceased was a beneficial joint tenant, the property will automatically pass to the other joint
tenant(s) by survivorship.
o It therefore does not pass into the succession estate
Tenants in Common
- If the deceased was a beneficial tenant in common, they have a separate, divisible share in the trust
property which is not extinguished upon their death.
- This share will pass into the succession estate.
Beneficial co-ownership: The family home
Week 1 – Success & Intestacy
Introduction to Estates
- This element explores the distribution of estates and how to identify the deceased’s succession estate.
- ‘It shall be lawful for every person to devise, bequeath, or dispose of, by his will….. all real estate and all
personal estate which he shall be entitled to, either at law or in equity, at the time of his death, and which, if
not so devised, bequeathed, or disposed of, would devolve.....upon his executor or administrator.
- Section 3 Wills Act 1837
- But what property actually passes to the executor or administrator?
Distribution of estates
- When a person dies it is necessary to consider two key issues before you can ascertain how, and to whom,
their estate will pass:
- Whether the deceased left a valid will. If so, they are known as a ‘testator’ and the will determines how their
assets are distributed. If not, the intestacy rules are followed. (In some cases, it is necessary to look at both
the will and the intestacy rules, because the will does not deal with all the assets that it should.)
- The nature of the assets owned by the deceased. Assets capable of passing under a will or by intestacy are
referred to collectively as the deceased’s ‘succession estate’or ‘distribution estate’. A number of assets
are excluded from the succession estate and are distributed in accordance with their own specific rules.
Testacy
- If the deceased’s will covers their entire succession estate, they are ‘testate’.
- Only the will is relevant when determining how to distribute their succession estate.
Partial intestacy
- If the will does not cover the entire estate, the deceased is ‘partially intestate’. Partial intestacy often
arises as a result of poor will drafting rather than intentionally
- The will is followed but the intestacy rules apply to any remaining property.
Intestacy
, - A person who dies without making a valid will is said to have died ‘intestate’.
- The intestacy rules apply to their entire succession estate.
- The ‘intestacy rules’are found in the Administration of Estates Act 1925 (‘AEA’) (as amended by the
Inheritance and Trustees’ Powers Act 2014 (‘ITPA’)).
- They determine who inherits and what each beneficiary receives.
Example
Cassie drafted her own valid will which contains only the following gifts:
1. the house I own at the date of my death to my sister Siobhan
2. the balance of my Nat West account to my nephew Rylan
Cassie’s succession estate comprises the following assets:
1. Her house
2. The balance on a current account at Nat West Bank
3. Other personal possessions
Siobhan and Rylan inherit the house and bank account respectively under the will.
As Cassie had personal possessions which are not disposed of by the will, she died partially intestate. The
personal possessions will pass in accordance with the intestacy rules.
Identifying the succession estate
- Some types of property that the deceased owned during their lifetime do not form part of the succession
estate.
- The destination of this property is governed by other rules and therefore will not be distributed under the will
or the intestacy rules.
- It is possible to deal with such assets before obtaining a grant of representation.
- This is helpful because it allows you to distribute some assets very early on in the administration of an
estate.
- The main types of property which will not pass to the succession estate are:
o Donationes mortis causa
o Discretionary pension scheme benefits
, o Insurance policies written in trust
o Statutory nominations
o Property held as beneficial joint tenants
o Some other beneficial interests under trusts
Donationes mortis causa
- A donatio mortis causa (‘DMC’) is a gift made in contemplation of death. A valid DMC has 3 requirements:
- The gift is made because the donor believes they may die imminently of a particular cause.
- The donor makes it clear that the gift is conditional upon them dying, and that the property reverts to them if
they survive.
- The donor either parts with the property or something representing ownership of it.
Example
- Kian is in hospital with a terminal illness. He hands his designer watch to his friend, Caitlyn and tells her that
he wishes her to keep it if he dies.
- If Kian dies as expected, the condition is satisfied and Caitlyn becomes the owner of the watch (but if he
recovers, she must return it).
- The watch does not form part of Kian’s succession estate as it has already been validly disposed of.
Discretionary pension scheme benefits
- If the deceased was a member of an employer’s discretionary pension scheme then payments made by the
trustees will not be included in his or her estate for distribution purposes. These rules only apply to
discretionary pension schemes.
- Many pension schemes allow contributors to ‘nominate’ a third party to receive any benefits due after the
contributor’s death (often by completing an ‘Expression of Wish’ form). Such a nomination is not binding on
the trustees (although in practice they almost always make it). As payment is entirely at the discretion of the
trustees, the deceased is not deemed to have any entitlement to any payment from the scheme and any
payment which is made does not form part of the deceased’s estate for distribution purposes.
- The benefit of the discretionary pension scheme will be released upon the production of a death certificate.
Insurance policies
- Insurance policies must be looked at carefully to see whether the proceeds form part of the succession
estate.
, - If the deceased had a simple life insurance policy, the proceeds of the policy pass to the succession estate.
- If the benefit of the policy was written in trust for another person, the proceeds will not form part of the
succession estate. The insured has no beneficial interest under the policy. The proceeds belong to the
beneficiaries nominated in the policy and vest on the insured’s death.
- Life policies can be written in trust in three ways:
o Under s.11 Married Woman’s Property Act 1882 for the benefit of spouse and/or children.
o Expressly for the benefit of any nominated third party, e.g. grandchildren.
o Into an existing trust for the benefit of the named beneficiaries in the trust deed.
Benefits are released on production of a death certificate.
- Statutory nominations
o A person can make a nomination in any of the following accounts:
o Friendly Society.
o Industrial Society.
o Provident Society.
o The amount nominated cannot exceed £5,000
o On the death of the deceased, the monies in the relevant account(s) pass to the nominee rather than
under the will or intestacy of the deceased.
o The benefit of the nominated account will be released upon the production of a death certificate.
Beneficial co-ownership
- Joint Tenants
o If the deceased was a beneficial joint tenant, the property will automatically pass to the other joint
tenant(s) by survivorship.
o It therefore does not pass into the succession estate
Tenants in Common
- If the deceased was a beneficial tenant in common, they have a separate, divisible share in the trust
property which is not extinguished upon their death.
- This share will pass into the succession estate.
Beneficial co-ownership: The family home
