Case Study Outcome.
Whether Liam's will is valid
In order to ascertain the validity of the Will it is necessary to examine section 9 of the Wills Act 1837, which sets out the formal requirements for a valid Will . The first requirement is that the Will is in writing and signed by the testator. Secondly that the testator intended by his signature to give effect to the Will. The signature made by the testator must be done so in the presence of two witnesses. The two witnesses must be over 18 and of sound mind and must then sign the will in the presence of the testator. Liam's Will contains his full signature; it appears as though he meant to give effect to the will. There also appears to be clear general and specific intention. It also contains the attestation clause ‘Signed by Liam Wingate in our presence and then by us in his’ confirming the signature sequence required by section 9 has been followed. The formalities appear to have been complied with.
Liam must have also had legal capacity in order to make a valid will set out in the leading case of Banks v. Goodfellow (1870) LR 5 QB 549 . The test consists of three elements; firstly, understanding the nature of the will and its effect; secondly understanding the extent of the property in their estate, not necessarily the exact value. Thirdly the testator must be able to comprehend and be aware of the persons for whom he would usually be expected to provide and that no disorder or delusion of his mind would cause reason not to benefit those people. On the facts there is nothing to suggest Liam lacked capacity and there has been no historical question about his capacity. Section 1(2) of the Mental Capacity Act 2005 states 'A person must be assumed to have capacity unless it is established that he lacks capacity'. Liam's capacity is therefore assumed unless the contrary is proven.
Revoking a Will
Liam formed his civil partnership under the Civil Partnership Act 2004 section 1(1)(a) after making his will. Section 18(b)(1) of the Will Act 1837 states a Will is revoked by the formation of a civil partnership between the testator and another person. The Will however will not be revoked if the formalities set out in section 18B(3)(a) are met, in that at the time the Will was made the testator was expecting to form a civil partnership with a particular person. It is clear from the Will Liam was expecting to form a civil partnership with Daniel Frost therefore the will was not revoked.
A will can also be revoked by marriage under section 18 of the Wills Act therefore was Liam's Will revoked by his marriage to Daniel in January 2015? On the 13th March 2014 the Marriage (Same Sex Couples) Act 2013 came into force and allowed civil partners to convert their civil partnership into marriage. The Act made an amendment to the Wills Act 1837 which provides that on conversion to marriage where there is an existing Will it will not be revoked. Liam's Will therefore was not revoked by his marriage.
Badly burned will
Section 20 of the Wills Act 1837 requires intentional physical destruction of a Will in order to revoke the Will. A Will damaged by accident that is still legible is not revoked and will remain valid. Liam’s estate therefore can still be dealt with by the Will.
Appointment of executor
Clause 3 appoints Liam’s brother Samuel as his sole executor. Samuel predeceased Liam making this appointment ineffective. Liam’s estate therefore will be dealt with by ‘administrators with the will annexed’ which is governed by the Non Contentious Probate Rules 1987. The legislation sets out who has the right to deal with the estate. Section 20 of the 1987 Act sets out the order of priority. Broadly speaking this follows the entitlement to Liam’s estate. Daniel Frost as the civil partner and major beneficiary would generally be appointed after giving consideration to any person in a higher category of entitlement set out in section 20(c) of the 1987 Act. Daniel will also have an incentive to deal with the estate expediently. Tara as a minor will not be able to take out the grant. Once Daniel receives the grant it will provide conclusive proof of the contents of his Will and give him the authority to administer the estate and distribute Liam’s assets. Inheritance tax (IHT) that may be applicable must be paid before applying for the grant. IHT will be considered later.
Liam’s assets will pass as follows:
Clause 4 is a specific gift to Daniel Frost. When Liam died in October 2015 he no longer owned the painting. The gift is therefore considered adeemed held in Re Slater  1 Ch 665. Daniel Frost will not receive the gift and will not be entitled to anything in substitution. Daniel will also have no entitlement to the £450,000 insurance pay out. The gift fails.
The gold watch
Clause 5 is a specific gift to Samuel. Liam owned the watch when he died however Samuel predeceased him. Liam did not name a substitute beneficiary to receive the gift in the event of it failing. The law does not imply any substitution under section 33 of the Wills Act 1837, as Samuel was not Liam’s direct descendent. The gift cannot take effect, therefore fails. The gold watch will now fall into the residuary estate, which will be considered later.
£5,000 to Kathleen
Due to the unique opportunity a witness has to coerce the testator into including a legacy for them, section 15 of the wills Act 1837 enforces a principle that a beneficiary cannot legally benefit from a Will they have witnessed. Kathleen Wingate has witnessed Liam’s Will, the gift of £5,000 in clause 6 will be ‘utterly null and void’ however this does not affect the validity of Liam’s will. The £5,000 will now fall into the residuary estate.
Liam’s Will does not contain a residuary gift i.e. everything else that remains in his estate. The Will therefore does not dispose of all Liam’s property and will be referred to as partial intestacy. The result is that the residue will be subject to the body of law found in sections 46 and 47 of the Administration of Estates Act 1925 (as amended) (AEA1925) which determines who is lawfully entitled to Liam’s estate. Under the legislation Liam’s estate will now be subject to a set of rules governing succession, commonly referred to as the intestacy rules set out in section 46. Section 47 sets out the details of any statutory trusts created following intestacy. The rules are intended to reflect the values of society, a hierarchy list giving preference to close relatives. They generally provide an acceptable solution as to who should receive a person’s property when they die. The rules apply to both realty and personality.
Liam's estate will be distributed according to the order of priority. Under survivorship rules, the first identifiable beneficiaries appear to be his spouse Daniel and his daughter, Tara. As Tara is 12 years of age, her entitlement under the will and any entitlement to the residue will be held in a Trust in accordance with the section 47(1) of the Administration of Estates Act 1925 conditional on Tara reaching eighteen years of age or upon marriage/formation of a civil partnership before that. Liam’s residuary estate, everything except Tara’s general gift of money will be distributed as follows:
Residuary estate: £825,000-Intestacy rules
The AEA1925 as amended by the Family Provision Act 1966 and the Civil Partnership Act 2004 sets out the statutory legacy Daniel and Tara are entitled to. Daniel receives £250,000 plus all Liam’s personal chattels valued at £20,000. The gold watch will also be included as a chattel. Daniel is Liam’s spouse and therefore also entitled to an absolute interest in half the remainder. Daniel will also be entitled to ‘home rights’ with regard to the matrimonial home set out in the Civil Partnership Act 2004. Half the remainder is £275,000 therefore Daniel will receive £550,000 in total. Tara’s trust receives the remaining half, £275,000.
Inheritance tax consequences
Part of Liam’s estate has passed under the terms of his will with the remainder passing under the rules of intestacy. The way his estate passes will have no impact on the inheritance tax (IHT) implications. The estate exceeds the nil rate band of £325,000 and will be subject to inheritance tax at a flat rate of 40% on assets that exceed the nil rate band less any liabilities, exemptions and reliefs. It is assumed from the facts Liam made no gifts or gifts into trust within seven years of his death.
The IHT on Liam’s estate is calculated as follows:
Mill House £700,000
Gold Watch £5,000
Bank account £600,000
Value of estate for tax purposes £1,325,000
Calculate tax: £1,325,000
Less civil partner exemption £550,000
Less debts and funeral expenses £0
The first £325,000 Nil rate band £325,000 X 0% =0
The remaining £450,000 subject to IHT @40% £450,000 X 40% = £180,000
Inheritance tax bill £180,000
It is the responsibility of the administrator dealing with the estate to submit tax forms to the HM Revenue & Customs detailing the value of Liam’s estate and pay the inheritance tax. Accounts must also be produced for the beneficiaries. Unless otherwise stipulated in the will the tax is paid from the residue. It will be from Tara’s inheritance that the tax is paid, Daniel’s is exempt. As a consequence, Tara will receive a net inheritance of £595,000 into her statutory trust. The inheritance tax payment must be paid by the end of the sixth month after Liam’s death.