Financial Matters On Death | Family Law Study Area | Law Teacher

Financial Matters on Death

These Family Law pages were originally prepared by the Law Department at St. Brendan’s Sixth Form College.  They are no longer being updated and no responsibility is accepted for them by St. Brendan’s College or LawTeacher.net

Any adult of sound mind, whether married or not, can dispose of his or her own property by making a will. The law generally respects the testator’s freedom of choice in this matter, and if the testator chooses to leave everything to a favourite charity, a disappointed beneficiary rarely has any legal remedy. In Banks v Goodfellow (below), Cockburn CJ said English Law prefers to let a man dispose of his own property as he wishes, rather than make the disposition for him. This chapter deals with some of the formalities of making a will and with certain exceptions to the general principle of testamentary freedom.

We note first, however, that jointly owned property cannot be disposed of by will, but passes automatically to the co-owner by jus accrescendi. It follows in particular that any property owned jointly by the deceased and his or her spouse – the matrimonial home, for example, in many cases – passes automatically to the surviving spouse irrespective of any provisions in the will.

MAKING A WILL

Any adult of sound mind can make a valid will. Under s.7 of the Wills Act 1837, as amended, a person under 18 cannot make a valid will unless he is a soldier on active service or a sailor at sea or about to set sail. Such “privileged wills” give rise to some interesting problems in the law of succession, but need not trouble us further in a course concerned primarily with family law.

The testator at the time of making the will must also have been of sound mind, memory and understanding. In theory the burden of proving this rests on the person seeking probate, who may have to call evidence of the testator’s state of mind at the time. In practice, however, so long as the will is not irrational on its face, the testator’s competence is normally taken for granted unless it is called into question by a disappointed beneficiary.

Banks v Goodfellow (1870) LR 5 QB 549, Cockburn CJ

T suffered from a recurrent delusion that he was being pursued by evil spirits, and the validity of his will was challenged. The judge said it is essential that a testator understand the nature of the act he is performing and its effects, understand the extent of the property of which he is disposing, and be able to comprehend and appreciate the claims to which he ought to give effect, and that no insane delusion shall influence his will. In this case, however, T’s delusion would not have affected the provisions of his will, and his testamentary capacity was therefore unimpaired.

Boughton v Knight (1873) LR 3 P&D 64, Hannen P

T made a will leaving most of his estate to PP, and after his death his relatives DD claimed he had not been of sound mind. The judge said a man is not incapacitated by capricious, frivolous, mean or even bad motives, and the court’s duty is to give effect to the true expression of his real mind. But he must have a memory to recall the several persons who may be fitting objects of his bounty (which is not to say that they must all be beneficiaries of his will). Whatever degree of mental soundness might be required for responsibility for crime, capacity to marry, capacity to make a contract, or capacity to give evidence, the highest degree of all is needed to constitute capacity to make a testamentary disposition, since it involves a wide survey of facts. In the light of this instruction, the jury found that T had not been of sound mind, memory and understanding when he made the will, and it was duly set aside.

The testator must also have had “knowledge and approval” of the contents of the will, but there is (in most cases) a rebuttable presumption that this was the case. Where suspicious circumstances exist, the strength of evidence needed to show knowledge and approval depends on the depth of the suspicion. A will (other than a privileged will) must be made in writing, signed and witnessed. This is intended to guard against fraud, but the statutory provisions are quite strictly enforced even where there is no real doubt that the will represents the testator’s true intentions.

Wills Act 1837 s.9 (as amended)

No will shall be valid unless

1. it is in writing, and signed by the testator or by some other person in his presence and at his direction; and
2. it appears that the testator intended by his signature to give effect to the will; and
3. the signature is made or acknowledged by the testator in the presence of two or more witnesses present together at the same time; and
4. each witness either attests and signs the will, or acknowledges his signature, in the presence of the testator (but not necessarily that of the other witness)

The courts take a fairly generous view of what constitutes a signature, and are prepared to accept almost anything intended to serve as such.

Re Finn (1935) 52 TLR 153, Langton J

An illiterate testator T dictated his will to a clergyman, who read it back to him. T then “signed” his will by making a thumbprint in ink (which was smudged because his hand slipped), and it was duly attested. The will was admitted to probate: the judge said this was no less a “signature” than a cross, though it was not something he would consider a good idea generally.

The testator’s signature must be such as to make it plain that he intends thereby to give effect to the will. Before 1983 it had to appear at the end of the will, anything appearing below the signature being disregarded, but the courts were fairly generous in their application of this rule. The formal rule has now gone, but where the signature appears anywhere other than the bottom there may still be some uncertainty as to the testator’s intention.

Re Coombs (1866) LR 1 P&D 302, Sir James Wilde

T made a will, the text of which filled the first and third sides of a folded sheet. Since there was no room to sign at the foot of the third side, he signed (and the witnesses attested) on the second side near the fold, writing perpendicular to the other text. The judge admitted this as a valid will: T’s intention to give effect to the will was clear, and the witnesses confirmed in evidence that the whole text had been written before the will was executed.

Re Roberts [1934] P 102, Merriman P

The text of T’s will filled the page, and his and the witnesses’ signatures appeared in the left-hand margin at right angles to the text. The judge applied Re Coombs and said the will had been duly executed.

Wood v Smith [1993] Ch 90, CA

T signed his name at the top of a sheet before writing any details of the dispositions, and subsequently acknowledged his signature before two witnesses. The Court of Appeal, reversing the trial judge, said that by writing “My will by Percy Winterbone” as he had, T clearly had meant to give testamentary effect to the dispositions which followed. The writing of the document, from the title and signature through the dispositions to the acknowledgement and attestation, had all been part of one operation, and the will had been validly executed.

A witness to the testator’s signature must know that the testator is writing something, but need not know that what the testator is signing is a will. He must be mentally competent and physically able to see the testator: a blind person cannot therefore serve as a witness even though he can make a valid will for himself. There is no rule of law that a witness must be an adult, but a young child would be unlikely to be a credible witness.

Smith v Smith (1866) LR 1 P&D 143, Sir James Wilde

Two witnesses WW saw a testatrix T writing something on a piece of paper, but could not see what she was writing and did not know it was a will. WW subsequently attested, T having covered the writing (including her signature) while they did so. The judge said the will had been validly executed and attested: it was not disputed that what WW saw T write was in fact her signature, and it was sufficient that they had witnessed the act of writing.

Re Benjamin (1934) 150 LT 417, Langton J

A woman T left most of her estate to charity, and her relatives challenged the validity of the will. The facts were disputed, but the judge was satisfied that T’s signature had been duly witnessed and attested. The fact that one of the witnesses said she did not know the document was a will was immaterial as long as she knew she was attesting to T’s signature.

Where a testator acknowledges his signature rather than signing in front of the witnesses, this need not take any specific form.

Although it is not spelled out in the Act, it is generally understood that the witnesses’ attestation in s.9(d) must happen after the “magic moment” required by s.9(c).

Wyatt v Berry [1893] P 5, Gorell Barnes J

A man T made a will and sought to have it attested by two workmates. He went first to W1 and acknowledged his signature, and W1 then attested. W2 was then called into the room, T and W1 each acknowledged their signatures, and W2 attested. The judge said the will had not been properly executed: both witnesses had not been present when T first acknowledged his signature.

An attesting witness, or the spouse of a witness, cannot take any benefit under a will unless there are at least two other witnesses not in that position. However, the attestation of a witness-beneficiary remains valid as regards the will taken as a whole, and only the offending gift(s) need fail.

Mette v Mette (1859) 164 ER 792, Sir C Cresswell

T was German-born but British by naturalisation, He made a will during his marriage to W1, but shortly after W1 died he married W1’s half-sister W2 in Germany (where such a marriage was lawful) and subsequently had children by her. When T died, his uncle sought letters of administration for the benefit of the children, arguing that the will had been revoked by the marriage to W2. The judge found that T had been domiciled in England at the time of the second “marriage”, which (according to English law) was therefore void. Since it was void ab initio, it could not have revoked the earlier will, which therefore stood as valid.

Marriage is the only change in circumstances that has the effect of revoking all previous wills: other events such as the death of a spouse or the birth of a child leave the will intact, though they may clearly affect its application. However, s.18A of the Wills Act 1837 as amended provides that following divorce or annulment, any bequest to a spouse lapses as if the spouse had died, unless a contrary intention is shown.

DISTRIBUTION ON INTESTACY

If the deceased person did not make a valid will (or made an incomplete will disposing of some but not all of his property), the intestacy rules in Part IV of the Administration of Estates Act 1925 (as amended) come into effect. Having paid the deceased debts and funeral and testamentary expenses, his personal respresentatives distribute the remainder of his estate according to these rules.

• If the deceased leaves a spouse, but no issue (that is, no children, grandchildren &c) and no “specified relatives” (that is, parents, whole brothers and sisters, and their issue), the spouse takes the whole estate absolutely. [Here, as elsewhere, children en ventre sa mere at the time of the death are taken into account, but no child acquires a vested interest until he or she reaches the age of 18 or marries under that age. Any share due to a minor child is held on trust until his interest vests; the trustees have power under ss.31-32 of the Trustees Act 1925 to make interim payments by way of maintenance or advancement, but if the child dies before his interest vests, the balance of his share is re-absorbed and re-distributed to the survivors.]
• If the deceased leaves a spouse and issue, the spouse takes:
  • all D’s personal chattels absolutely;
  • the fixed net sum (currently £;125 000); and
  • a life interest in half the residuary estate;

  and the remainder (including the reversion on the spouse’s life interest) is divided among the issue as explained below.

• If the deceased leaves a spouse, no issue, but a “specified relative”, the spouse takes:
  • all D’s personal chattels absolutely;
  • the fixed net sum (currently £;200 000); and
  • half the residue absolutely;

  and the other half of the residue is divided among the specified relatives (or held on trust) as explained below.

• If the deceased has no surviving spouse but leaves issue, the whole estate is divided among the issue (or held on trust) as explained below.
• If the deceased leaves no surviving spouse, issue or “specified relatives”, the estate is divided among other more distant relatives, such as half-brothers and half-sisters, grandparents, uncles and aunts, and cousins. If none of these survive to achieve a vested interest, the Crown takes the estate as bona vacantia, but may in its discretion make provision for a cohabitee or any other person for whom D might reasonably have been expected to make provision.

Where the surviving spouse dies within 28 days of the intestate, s.46(2A) of the Administration of Estates Act 1925 (introduced as an amendment in 1995) provides for the estate to be distributed as if there had been no surviving spouse. This avoids the former situation in which husband and wife (both intestate) could die in quick succession, with all their property going to the family of the second to die and nothing to the relatives of the first.

The spouse

If the deceased leaves a surviving spouse, the spouse takes the first beneficial interest in the estate. Only a lawfully married spouse can inherit under the rules for intestacy; a divorced or judicially separated spouse (or one whose marriage was void from the beginning) is ignored altogether, as is a “common law wife” or other cohabitant.

Personal chattels are defined in s.55(1)(x) of the 1925 Act and include horses and cars not used for business purposes, pets, housewares, plate, furniture, pictures, jewellery, instruments, and items of food and drink, but not items used (even partly) for business, nor money.

The fixed net sum has been increased over the years. It was originally set at £;1000, but had increased by 1972 to £;15 000 where there were issue and £;40 000 where there were not, and stands now (since 1993) at the levels above. It is payable free of all duties and costs, with interest at the statutory rate from the date of D’s death. A spouse entitled to a life interest has a statutory right to redeem this and to receive instead its actuarial capital value, as long as she gives notice to the personal representatives within twelve months of D’s death.

The Second Schedule of the Intestates’ Estates Act 1952 allows a surviving spouse to acquire any dwelling house belonging to the deceased in which she was resident at the time of his death (usually, but not necessarily, the matrimonial home), by taking this as part of her share. If its value is more than the “fixed net sum” she will be expected to pay “equality money” to the estate to make good the difference.

The issue

Subject to the interests of the spouse, as described above, the residue of the estate passes to the issue of the deceased: his children, grandchildren and any remoter descendants living or en ventre sa m£;re at the time of his death; this includes illegitimate as well as legitimate children. Since the Adoption Act 1976 an adopted child is treated for the purposes of intestate succession as the legitimate child of its adoptive parents and as the whole brother or sister of their other adopted or natural children; its connection with its natural parents is wholly disregarded.

All such issue (having reached 18 or married under that age) take in equal shares, except that no one takes anything whose relevant parent is still alive, and the living issue of a deceased child divide that child’s share between them.

For example, suppose the deceased had three children A, B and C. A has died leaving two grandchildren D and E; B is alive with three children F, G and H; and C is childless. Each of A, B and C is entitled to one-third of the residuary estate, and B and C will receive this share. A’s one-third is divided between D and E (who thus get one-sixth each). F, G and H get nothing: their rights would come only through B, who is still alive.

Other specified relatives

If the deceased leaves no issue who survive to acquire a vested interest, then (subject to the interests of the spouse) the residuary estate passes to the “specified relatives”. These are the deceased’s parents, or the deceased’s whole brothers and sisters, or their issue. If either parent is alive they take everything (in equal shares if both survive). If not, the estate passes to the brothers and sisters or their issue, on the same principles as above in relation to the issue of the deceased.

FAMILY PROVISION

Although in principle a testator is free to dispose of his estate as he chooses, subject to taxes, the Court has power under the Inheritance (Provision for Family and Dependants) Act 1975 (which replaces a similar Act of 1938) to order that provision be made out of the estate for the close family and other dependants of the deceased. These powers exist no matter whether D dies testate or intestate, but are exercised only on application by or on behalf of a person entitled to have provision made. Application must be made to the Chancery Division or Family Division of the High Court, or to the County Court where D’s net estate is under £;30 000, within six months of the grant of probate or letters of administration.

Provision under the Act can be made for the deceased’s spouse, unmarried former spouse, or child, for anyone treated as a child of the family with respect to the deceased’s marriage, for a cohabitant, or for any other dependant.

Standards of provision

The Court will order some provision to be made if it is satisfied that the disposition of the deceased’s property made under his will, or under the intestacy rules, fails to make reasonable financial provision for the applicant. This is an objective test, depending on the provision actually made and not on what it would have been reasonable for the deceased to do in the light of his actual or supposed knowledge at the time. Moreover, reasonableness (or not) is judged in the light of circumstances at the date of the hearing, rather than at the date of execution or even the date of T’s death.

Snapes v Aram (1998) Times 8/5/98, CA

T made a will in favour of his wife and five children DD, in which he made no provision for another daughter P; the value of his estate at the time of his death was assessed at about £;200k. P sought provision under the 1975 Act, and by the time of the hearing (some ten years later!) the value of the estate had rised to about £;700k because of the sale of a plot of land for commercial development. Affirming the judge’s order for maintenance of £;3k a year, Butler-Sloss LJ said s.3(5) required the court to consider the circumstances as they were at the time of the hearing.

The Court has therefore two tasks to perform:

• first, to satisfy itself that the testamentary and statutory dispositions fail to make reasonable financial provision for the applicant;
• second, if thus satisfied, to decide what provision (or what further provision) should be made for the applicant to reach that reasonable level.

There are in fact not one but two standards of “reasonable provision” set out in s.1(2) of the Act, the first applied to a surviving spouse and the other to any other applicant. The surviving spouse standard requires such provision as it would be reasonable in all the circumstances for a surviving husband or wife to receive, whether or not required for his or her maintenance. (Where the deceased and the surviving spouse were living apart under a judicial separation order, however, the stricter maintenance standard is applied unless the Court exercises its discretion under s.14 of the Act.)

The maintenance standard, applied to all applicants except current spouses, is provision such as it would be reasonable in all the circumstances for the applicant to receive to maintain himself in a manner suitable to those circumstances. This falls somewhere between a mere subsistence level and the level of provision which the applicant might (even reasonably) desire.

Re Abram [1997] 2 FCR 85, Judge Cooke

A wealthy woman T died leaving most of her money to charity, and her son S applied for reasonable provision. S had worked in the family business for many years at a low wage, expecting to take it over in due course; a few years before T’s death S had left the business through force of circumstances and was now bankrupt. The judge ordered provision to be made for S to take a life interest in half the estate on protected trusts, giving him an income of about £;10k a year.

Points to consider

In determining whether the existing disposition makes reasonable provision, the Court is required by s.3(1) of the Act to have regard to a number of general matters, namely

1. the financial resources and financial needs which the applicant has or is likely to have in the foreseeable future,
2. the resources and needs similarly of any other applicant, and
3. the resources and needs similarly of any beneficiary under the will or the intestacy rules, bearing in mind in each case the person’s earning capacity, capital resources and expectations;
4. the deceased’s obligations (moral as well as legal) and responsibilities towards any applicant or beneficiary,
5. the size and nature of the deceased’s net estate, the courts being disinclined to order any provision that will do no more than reduce social security payments and wishing in any case to discourage applications where the whole estate is likely to be eaten up in costs;
6. any physical or mental disability of any applicant or beneficiary, particularly where this affects his needs and/or earning capacity; and
7. any other relevant matter, including particularly the conduct of the applicant or of any other person.

There is no express requirement that the Court consider the deceased’s wishes nor his reasons for disposing of his property as he did: if his reasons were good ones the Court may take them into account under this or another subsection, and if not will disregard them anyway.

The spouse

The surviving spouse of the deceased is potentially eligible for a standard of provision higher than that accorded to any other applicant, though if the deceased and the spouse were separated this higher standard applies only at the Court’s discretion. The description of “spouse” covers not only a legal spouse but also a partner in good faith of a wholly void or voidable marriage (unless during D’s lifetime the marriage was formally annulled) and any of the several wives of a polygamous marriage

Re Snoek [1983] Fam Law 18, Wood J

A man H died leaving an estate of £;40 000 to his children, with nothing for his wife W. W claimed the entire estate as “reasonable provision” for herself under the 1975 Act. Evidence was given of W’s “atrocious and vicious” conduct towards H, particularly in the later years of the marriage: inter alia, she had hit him with a bottle, punctured the tyres of his car, and written abusive letters to his friends and business colleagues. Setting this against her earlier work in homemaking and raising the children, the judge awarded her just £;5000 from the estate, in addition to shares worth £;13 000 which the children were determined to give her from their own legacies.

Kusminow v Barclays Bank [1989] Fam Law 66, Brown P

A Russian H and a Pole W were married but childless and lived in England. H made a will leaving all his estate to a niece and nephew living in poverty in Russia, and subsequently died. W (who still lived in the couple’s rented flat, and who had a retirement pension and savings of some £;20k) sought reasonable provision. The judge ordered that W receive £;45k, slightly under half the joint assets. Although the “divorce test” was relevant, the niece and nephew were also in need, and W’s assets when she died (she was now 78) would probably go out of the family altogether.

Davis v Davis [1993] 1 FLR 54, CA

A man T made a will shortly before his death, leaving most of his substantial estate to trustees TT with a life interest to his wife W. TT bought a house for W to live in, but W sought the transfer of the freehold. Her application failed: the judge had found that the will provided W with a reasonable income for her maintenance and TT had ensured she was properly rehoused, and the Court of Appeal saw no reason to disturb his finding that this was “reasonable provision”.

Re Krubert [1997] Ch 97, Times 16/7/96, CA

H and W were childless and lived in a house owned by H only. H’s will left W the personal chattels, a lump sum of £;10k, and the right to remain in the house for life; the residue (including the house) went to trustees on a life interest for W and thereafter to H’s brother and sister. When H died W, now 87, applied for provision under the 1975 Act. The judge ordered that the house and most of the residue go to W absolutely, but the Court of Appeal reversed this in part and ordered that W have a life interest in the house and the rest absolutely. The “surviving spouse” standard (rather then the “maintenance” standard) should be applied, but W had not shown any financial need for an absolute interest in the house.

The former spouse

D’s former spouse under a marriage which has been dissolved may apply as of right for provision under the maintenance standard, provided he or she has not remarried. Where the death occurs within twelve months of the decree absolute, and no final property settlement has yet been made on the dissolution, the Court has a discretion under s.14 to apply the surviving spouse standard as if the marriage were still in existence. The particular matters in [a] and [b] above are then considered along with the general matters listed earlier and the financial provision (if any) made in connection with the divorce.

Children

Any child of the deceased, including an adopted child, an illegitimate child, or a child en ventre sa m£;re, is eligible to apply for provision under s.1(1)(c) of the Act. In considering such an application, s.3(3) requires the Court to consider not only the general matters above but also the manner in which the applicant was being (or might have expected to be) educated or trained. An adult child is eligible to apply, but is unlikely to succeed unless he or she was financially dependent on the deceased.

Re Debenham [1986] 1 FLR 404, Ewbank J

A woman W had an unwanted daughter D, with whom her relationships were never good. As an adult, D developed epilepsy to a degree that made it hard for her to find suitable work, and her husband was also disabled. W died leaving an estate of £;172 000; she left £;200 to D (now aged 58), and most of the rest to various charities. D applied for provision under the Act. The judge said W had no obligation towards the charities and no legal obligation to D, but did have a moral obligation towards her daughter in view of D’s disability. He therefore ordered provision to be made of £;3000 in capital to meet D’s immediate needs, together with £;4500 per annum for the rest of D’s life.

Stepchildren

The 1938 Act allowed provision to be made only for a spouse, a former spouse, or a minor child of the deceased: this category and the next were added by the 1975 Act on the recommendation of the Law Commission. Section 1(1)(d) allows an application to be made by a person other than a child of the deceased who was treated as a child of the family in relation to any marriage to which the deceased was at any time a party: that is, normally, by a step-child treated by the deceased as if he were his own. Note the requirement of a marriage, which excludes from this category any children brought up by an unmarried couple or (for example) by a widowed grandparent.

Section 3(3) says that the Court in considering an application under this heading should consider (in addition to the general matters above)

1. the manner in which the applicant was being or might have expected to be educated or trained;
2. whether (and to what extent) the deceased had assumed responsibility for the applicant’s maintenance;
3. whether in assuming this responsibility the deceased knew the applicant was not his own child; and
4. whether (and to what extent) any other person is responsible for the applicant’s maintenance.

Cohabitants and other dependants

The second and more controversial addition in the 1975 legislation extended eligibility for provision to other dependants of the deceased, so earning it the name of “the mistresses’ charter”. This is clearly an important extension in modern times when so many couples live together in stable relationships without the formalities of marriage, but it is by no means limited to cohabitants.

Section 1(1)(e) of the 1975 Act allows an application to be made by any person who immediately before the deceased’s death was being maintained wholly or partly by the deceased, and s.1(3) explains this as meaning that the deceased (other than for full valuable consideration) was making a substantial contribution in money or money’s worth towards the applicant’s reasonable needs.

Bouette v Rose (2000) Times 1/2/00, CA

A mother P who looked after her brain-damaged daughter X full time from X’s birth until her death at age 14 was held to be financially dependent upon X. She was thus entitled to reasonable provision from X’s estate (consisting of £;33 000 that remained from £;250 000 damages awarded for the medical negligence that led to her condition) following X’s death, before the residue was divided equally according to the intestacy rules between P and the child’s father D (who had left shortly after the birth).