The Law Governing the Bequest of Testators Property - Essay Example

? Equity and Trusts and Contents Introduction 3 Executor and executorships responsibilities 3Trustee and his responsibilities 6 Conclusion 11 Reference List 12 Introduction Globally, the law governing bequest of testators’ property has been a controversial issue in the present times. In this light, reform of inheritance laws has caused intensive scholarly and political debates. Acting as an executor sometimes poses a big challenge to people. Executors are normally called upon to settle the estate of the deceased and are, therefore, charged with the responsibility of making critical, timely and life changing decisions relating to distribution of deceased person estate to the beneficiaries. However, at times, it can be stressful and intimidating depending on the experience of the chosen executor. As such, those who are inexperience in estate distribution may inadvertently land themselves or the estates under their watch at risk. According to Beckert (2007), estate administration or settling an estate is defined as the process in which a deceased person estate and financial affairs are brought to a close. This paper focus on distribution of Adams will in line with British trust laws. Executor and executorships responsibilities The role of an executor is to implement what is stipulated in the will in accordance with laid down trust law. According to Dauncey (2005), all beneficiaries must be treated fairly and equitably. The executor should gather information about all assets, locate them and ensure their protection. In addition, liabilities, debts and any unpaid taxes must also be assessed and payments made. In Williams v Williams, the judge upheld that the executor must have the ability, knowledge and clear understanding of testators’ estate in order to properly oversee investments, business interests, and real estate holdings and manage them in an effective manner. In order to ensure distribution of the deceased person estates, the executor may engage agents such as lawyers, accountants and trust professionals to assist in interpretation of the will provisions and the law for proper administration. Laws of succession are concerned with transfer of personal and real property from the testator to the successor. In 19th century, the British enacted Married Women Property Act that gave married women the right to own and control property inherited from their husbands. According to Succession Act 1981, section 45(1), in the event that a testator is a trustee, the clause excludes the vesting powers of a personal representative to act as the trustee of the property. In Adam’s case, the testator was a trustee, but in addition, had appointed two other trustees, Ahmed and Jake to manage his property. Therefore, the appointed trustees assumed powers, authorities and discretions of a trustee since they had been given powers upon creation of a trust. The Wills, Estates and Succession Act, 2009, provides that only property within the deceased estate shall be allocated to the beneficiaries in line with the will, trustees deed or by following scheme of intestate succession. Section 42 through to 50 of Wills, Estates and Succession Act, 2009 provides that testators property included in the will, trustees deed is said to “pass “ by the instrument in which it is bequeathed. However, any property that is subject to bequeath in respect of Family Law Act, 2009 may pass to the surviving dependants directly. Adam and with his family were involved in a plane crash and unluckily, Adam and his three children succumbed to injuries. However, the wife Alexandria who was pregnant survived though the doctors termed her condition as critical. Alexandria was pregnant and later on gave birth to twins. Luckily, Adam had written a will which was witnessed by two persons, that is personal assistant and the secretary. Additionally, the deceased had also issued some oral instructions on administration of his estate. However, Ahmed and Jake who were appointed as executors will execute the written will based on the common law. The common law provides, for a will to be valid, it has to be written and appended two signatures which should be placed conspicuously on the will document (Combs, 2005). However, Adam had drafted a will at the back of a company’s meeting agenda and had issued some verbal instructions on estate distribution which could only be valid if issued in the presence of a third party; otherwise such instructions could be difficult to confirm since they were issued to the beneficiary only (Kendrick, 2011). The case study provides that Adam had a premonition about the fateful occurrence. In this regard, the deceased gave some oral instructions to the secretary that she would inherit a car parked in the office garage. In addition, the deceased also owned a small private residential mews and a large freehold retail outlet which was also orally bestowed to Louisa and Peter both of whom also acted as the property managers. However, none of such instructions were given in the presence of a third party and could therefore stand as null and void. The Wills Act, 1996 sets out the basic requirements for a will to be valid. First, the will has to be in writing and has to be signed by the testator and two witnesses. However, where the court feels that such requirements are not adequately met, the will can be rendered invalid. In Bolton V. Tartaglia, the court allowed some degree of latitude when the will failed to satisfy all the requirements spelt under the Wills Act. The testator’s signature must be made by him in the presence of two witnesses both present at the same time and all the signatures should appear in a reasonable place on the paper. The will drafted provides that Adam had formed a charitable foundation to which some of the assets were to be transferred. As such, these assets will be managed under the charitable foundation in line with the desires of the deceased. However, those items that had not been transferred will be taken up by the executors and distributed accordingly. The law provides that where dependants or relatives are born after the testator’s death, they shall inherit as if they were born in the life time of the testator (Brophy, 2008). In line with court’s decision in Bates v Messner case, the minister if satisfied beyond doubt that any children of the testator born before or after the testator’s demise is not adequately bequeathed, he may authorize the percentage deemed appropriate to be distributed to the beneficiary in question. Trustee and his responsibilities It is provided that Adam had instructed his solicitor to form a trust to which his companies were to be transferred. The trust deed provided that the appointed trustees were to manage income from Farley Green Holdings and A and L Finance Ltd for Adam’s Wife Alexandria, the children and any grandchildren and distribute in equal shares. The Estates Administration Act, 1996 defines a wife as a female who is united to a male by virtue of marriage under the common law. Further, the Act also defines a wife as a person who has cohabited by way of living with a male partner in a relationship that resembles marriage for a period not less than two years before the death of a testator. The law provides that in circumstances where the estate is bequeathed to the next of kin, the executor shall therefore distribute it equally and with equal degree of consanguinity to those who legally represent the beneficiaries (Adams, 1999). In this vein, the executor will therefore transfer the two companies to the trustee considering that Adam’s Wife Alexandria got incapacitated after the tragic air plane accident. This shows that she did not have the capacity to manage the companies and since Adam’s surviving children were below the age of majority, it could only be in order to transfer the entities to the trustees. The trust deed however, had specified Adam’s three children who could claim a share of profit from the two companies. The others were the grand children who were not born at that time. Considering this, the companies will be in the hands of the trustees as stipulated on the trust deed and it shall be the duty of the managing trustee to make decision on how to share profits amongst Adam’s wife, the two newborns and any grand children that will be born in future. Notably, other than sharing the proceeds from the two companies the trustees have been given the powers to decide on the appropriate amounts that can be deducted from derived profits to cater for maintenance and education of Adams children that survived him. In line with Mackay v Mackay case law, the two newborns will be maintained and educated by the trustee until they reaches the ages of majority at which point the trustees may decide to transfer their fathers property to them, Adam’s wife and any grand children that ma could have been born by that time. However, it is paramount to distinguish the purpose of forming a trust and that of appointing an executor to distribute the estates of the deceased (Pammer, 2000). In this regard, some provisions of the trust deed seem to be duties of the executor since they involves distribution of testators estates. For instance, Adam had expressed through the trust deed that family home and personal savings should go to the wife, Alexandria. However, as pointed out before, the wife was not properly written despite being appended by two witnesses. As stated earlier, the executors could dispute the will since it was written at the back of companies meeting agenda leaving every person with sound mind to wonder if Adam was of sound mind by the time of drafting the will. Nevertheless, in line with the provisions of Estates Administration Act, the personal home and Adams savings and family home could be given to the wife Alexandria on condition that she doesn’t remarry. Properties that are bequeathed on conditions (donation mortis causa) only pass to the beneficiary only when the specified conditions are fully met. In Costiniuk vs Cripps Estate, the court stipulated the circumstances which must be fulfilled for such provisions to hold. However, on the event of remarrying, the property and the remaining personal savings could be transferred to the two surviving children id f they will have attained the age of the majority. Otherwise, if below that age, they will be transferred to the appointed trustees to manage them until the children attains the required age. The trust deed provides that 20% of all Adam’s company’s shares will be held by the appointed trustees on trust for the children. Learning from Halbert v Mynar, the trustees will therefore hold the said percentage of shares for all companies on trust until such time the two surviving children reaches the age of the majority. It is only at this point that the share ownership can be transferred to the children. Property that cannot “pass” by the will or even not subject to a scheme of intestate distribution is distributed in line with the provisions of the law after the death of the testator. The assets that fall within this category are not part of the deceased person estate are instead are distributed to the beneficiaries following the legal rule (Scott, 2002). Adam owned a freehold premise in Urmston Road at York which the trustee deed had empowered the trustee to hold at their discretion for Adam’s grandchildren, nephews, nieces, current employees and dependants. In line with British common law, the item in question is well identified, but the beneficiaries are generally stated. In this regard, the trust deed goes ahead to give the appointed trustees the powers to decide how to distribute the said property (Patton, 1996). Having been given powers, the trustees at their discretion may decide to sell the property and agree on ratio in which to distribute the proceeds. Current employees and dependants will only include those serving at the time of Adam’s demise. However, if a person had ceased being a dependant or was appointed an employee after the demise of Adam, such person may not be among the beneficiaries (Morgan, 1996). According to the trust deed, Adam owned photographic arts of 1960. Through the trust deed, Adam had expressed his wish for his brother Max to inherit the 1960 art collections. It further provided the remainder of such art collections should go to sisters Maisy and Emily. Such provision will only be effective if such art collections existed at the time of Adam’s death. As such, Max will inherit the art collections to the extent that he wishes and any remainder will b shared between Maisy and Emily. According to section 52 (k) of Wills, Estates and Succession Act, a testator can offer part of the estate for public welfare. As such, Adam through the trust deed had expressed his wish of allocating ?1m towards creation of a literary museum and a dram school for the underprivileged children of Bradford. However, such provision can only be valid if the testator had ? 1m at the time of his demise. Notably, even though Adam had allowed, the wife Alexandria to inherit his personal saving, such personal saving is net of any other payment that the testator had expressed his wishes on (Leslie, 2000). For instance, in the presence of the testators saving, the trustees will provide the ?1m for building the literary museum and a drama school. The remaining of such savings will then go the wife Alexandria as provided in the trust deed. After distribution of all testators’ property as provided by the trustee deed, the trustee will hold the remaining estate for the two surviving children. Based on other facts provided, Jake, the executor owed Adam ? 300,000. This amount represent debtors which as an executor, Jake should recover and add to other assets at his disposal to enable payment of outstanding debts and the remainder for distribution as provided by the trust deed. Realistically, despite Jake being the executor and debtor to the testator should acknowledge that the ? 300,000 is part of the remaining legacy which should be by the executor for distribution to the beneficiaries. The Probate and Administration Act, 1898 provides that, an executor is charged with the responsibilities including collecting assets of the estate, pay the estates creditors including taxes, administer the estate and finally distribute the estates assets to the stipulated beneficiaries according to will or applicable law (Sanders, 2010). However, an executor is remunerated for the work done either as stipulated in the will, by legislation as provided in section 88 of the Trustee Act, 1996 or as earlier agreed with the testator. Notably, Adam had not negotiated any remuneration package with his trustees and therefore they could determine their remuneration on the legal basis. Section 88 of the Trustee Act provides that an executor is entitled to a maximum of 5% of income and capital as the benefits salary in addition to 4% of the market value of all assets under his care as the management fee. However, in the event of any serious mismanagement or misconduct, the executor my forfeit a given percentage that the court may find appropriate as fines. Basically, executors’ remuneration is known to be one of the common sources of disagreement between the beneficiaries and the executor. For this case, Jake had borrowed money from Adam and their terms of agreement were to refund. As such, the amount borrowed cannot be substituted to executors’ remuneration and as such the executor should make good his debt to the beneficiaries of the deceased. Therefore, Adam’s surviving children are right in their claim that the amount owed by Jake form part of the remaining legacy which they have a claim on. In the event that the executor refuses to pay the debt, then it can form a solid base for his removal. This is because the executor will have prejudiced the testators’ estates or the welfare of the beneficiary which he was employed to safeguard. Nevertheless, removal of an executor especially one that was appointed by the testator involves some stringent processes that cannot be simply interfered with even in circumstances of unsavoury behaviour on the part of such executor (Anderson, 2007). The additional facts also provide that Adam’s wife Alexandria also died leaving the two children. The common law provides that on the death of a husband, the wife is the next person to inherit the property other than what has been distributed otherwise by the will. Further, it continues to state that upon death of the wife, the property goes to the surviving children. This can only take place if the surviving children has attained the age of the majority. However, if such children are still below the age of the majority, then such property is place under a trust to manage it until the beneficiaries attained the age of the majority. Conclusion The duties of an executor and those of a trustee must be clearly distinguished (Kershnar, 2002). An executor can also be a trustee but assumes two different responsibilities. Notably, an executor is charged with the responsibility of distributing testator’s estates while the trustee is appointed to hold, manage or invest testator’s estate on behalf of testator’s underage children until they achieve the age of majority. On the same note, requirements of drafting a will must be clearly understood. According to Knafla (1997), these requirements include, the will should be in writing and appended a signature by the testator together with those of two witnesses who should be present at the time of signing. In addition, the will should be properly written and signatures appended in such a way that does not reflect the testator to be of unsound mind. However, in the event that a testator did not leave a will or the will left is ruled as invalid by the court, then the estates can only be distributed in line with the laid down laws. According to Hirsch (1999), a court might exercise a degree of latitude in the event that will left by a testator does not meet all the requirements in totality. As such, the court will examine the nature of the will and then decide whether it represents the wish of the testator. Reference List Adams, R., 1999. Heir of propriety: Inheritance, the impressions of a cousin, and the proprietary vision of Henry James. American Literature, 71(3), pp. 463-491. Anderson, J.L., 2007. Britain's Right to Roam: Redefining the Landowner's Bundle of Sticks, Georgetown International Environmental Law Review, 19 (3), pp. 375-435. Beckert, J., 2007. The longue duree of inheritance law. Archives Europeennes De Sociologie, 48(1), pp. 79-120. Brophy, A. L., 2008. What should inheritance law be? Reparations and intergenerational wealth transfers. Law and Literature, 20(2), pp. 197-211. Combs, M. B. E. T. H., 2005. A measure of legal independence: The 1870 married women's property act and the portfolio allocations of British wives. The Journal of Economic History, 65(4), pp. 1028-1057. Dauncey, T., 2005. The UK's legacy promotion campaign: A review after nearly two years of public influence. International Journal of Non-profit and Voluntary Sector Marketing, 10(1), pp. 53-58. Hirsch, A. J., 1999. Bequests for purposes: A unified theory. Washington and Lee Law Review, 56(1), pp. 33-110. Kendrick, L., 2011. THE LOCKEAN RIGHTS OF BEQUEST AND INHERITANCE. Legal Theory, 17(2), pp. 145-169. Kershnar, S., 2002. THE INHERITANCE-BASED CLAIM TO REPARATIONS, Legal Theory, 8 (2), pp. 243-267. Knafla, L.A., 1997. Law, Land, and Family: Aristocratic Inheritance in England, 1300 to 1800, Canadian Journal of History, 32 (3), pp. 452-454. Leslie, M. M., 2000. Charity and the bequest motive: Evidence from seventeenth-century wills. The Journal of Political Economy, 108(6), pp. 1270-1291. Morgan, D.H.J., 1996. Family theory and research in Great Britain, Marriage & Family Review, 23 (1-2), pp. 457-486. Pammer, M., 2000. Death and the transfer of wealth: Bequest patterns and cultural change in the eighteenth century. Journal of Social History, 33(4), pp. 913-934. Patton, B., 1996. Preserving property: History, Genealogy, and Inheritance upon Appleton House, Renaissance Quarterly, 49 (4), pp. 824-839. Sanders, A., 2010. PRIVATE AUTONOMY AND MARITAL PROPERTY AGREEMENTS, The International and Comparative Law Quarterly, 59 (3), pp. 571- 603. Scott, W.O., 2002. Landholding, leasing, and inheritance in Richard II, Studies in English Literature, 1500 - 1900, 42 (2), pp. 275-292. Case laws and Acts Bates v Messner (1967) 67 SR (NSW) 187, 191 (Asprey JA). Bolton V. Tartaglia (2000), 33 E.T.R. (2d) 26 (B.C.S.C) Costiniuk vs Cripps Estate (2000); E.T.R. (2nd) 199, 2000 BCSC 1372 Estate Administration Act [RSBC 1996] - BC Laws Family Statute Law Amendment Act, 2009, S.O. 2009, c. 11 - Bill 133 Halbert v Mynar [1981] 2 NSWLR 659. Mackay v Mackay (1901) 18 WN (NSW) 266, 268-269. Probate and Administration Act 1898 No 13 Succession Act 1981 (No. 15 of 1981) Trustee Act [RSBC 1996] c. 464 - BC Laws Wills Act [RSBC 1996] c. 489 - BC Laws Williams vWilliams [2004] QSC 269 [13]. Wills, Estates and Succession Act, S.B.C. 2009, C. 13 (Bill 4) Read More