The Law of Succession - Intestacy Rule - Essay Example

INTESTACY RULE - A WILL MADE BY PARLIAMENT BASED ON PRESUMED WISHES OF THE DECEASED Introduction The law of succession, which includes the rules of intestacy, is perhaps the most universally applicable of all laws. It is also the most archaic of civil laws and a subject of reform in many countries in the recent years. Apparently eight law reform agencies, including Law Reform Commission (England) and Scottish Law Commission and other jurisdictions based on English common law, have addressed the inadequacy of their intestate succession laws in the past ten years.1 Under the English common law, realty being owned 'legally'- principally via a 'joint tenancy,' or as an equitable interest, say via a trust - realty owners tend to make wills for the distribution of their wealth and assets in the event of their death. However, in cases where the deceased dies intestate, that is to say, if he/she fails to make a valid will before his or her death, the rules of intestacy applies.2 Legal researchers in the UK have observed that almost 60-65 per cent of deceased persons do not make or leave a valid will.3 In deciding the division of deceased's property in these cases, the Parliament has set out the rules of intestacy, that is to say the Parliament makes a will on behalf of the deceased. The intestacy rules, subject to reforms/amendments from time to time, being primarily governed by statues, are cited as a "will made by Parliament based upon the presumed wishes of the deceased." The present paper shall attempt to analyse the proposition to understand how rules of intestacy are indeed a "will made by the Parliament" and to examine whether, and to what extent the rules reflect the will of the deceased. In doing so, it shall first understand the provisions of intestate wealth distribution covered in statues and leading case laws and then examine the public opinion as well as reform proposals and other recommendations. Intestacy Rules in the U.K. - An Overview The current law of intestacy in the U.K. is enacted in the Administration of Estates Act 1925 (AEA 1925) as amended, bounded by procedural legislations. Before analysing the provisions of AEA, 1925, a brief understanding of the evolution of intestacy rules may be worthwhile as a backdrop to the analysis. Before 1926, intestate succession to realty was governed by the rules of inheritance, accordingly realty passed to the heir-at-law, who was usually the eldest son. If there were no surviving sons, or their issue, realty devolved equally on the daughters of the intestate. The next entitled were the brothers and sisters of the intestate, or their issue; however, after the Inheritance Act 1833 the intestate's parents were given priority over brothers and sisters. If there were no next-of-kin, the realty passed to the intestate's lord or the Crown as 'bona vacantia.' The intestate's widow was strictly not entitled, but under the customary rules of dower, the widow became entitled to one-third of her husband's realty on his death. A widower took a life interest - defined as curtesy -- in the whole of his wife's realty. Similar rules applied to personalty, being distributed under the statutory scheme covered under the Statutes of Distribution 1670-1685.4 The AEA 1925 repealed the previous rules, both as regards succession to realty and personalty, giving primacy to the surviving spouse, and also ending the customary difference between widows and widowers as to entitlement. After 1925, the surviving spouse took the whole estate, the spouse being entitled to a statutory legacy of 1,000, the personal chattels of the intestate and a life interest in half the residue if there were issue. The Intestates' Estates Act 1952, which followed the "Morton report,"5 introduced major changes --the surviving spouse was also given the right to appropriate the matrimonial home and the statutory legacy was increased to 5,000. However, the 1952 Act also made Inheritance (Family Provision) Act 1938 applicable to intestacy, introducing flexibility by allowing certain family members of the intestate to claim provision out of the estate by way of maintenance. Following a review by the Law Commission in the late-1980s, the Law Reform (Succession) Act 1995 was introduced, which significantly changed the law of intestate succession in the UK. At this point, it may be worthwhile to examine the provisions of the AEA as amended. Distribution on Intestacy As the law stands today in the UK, with reference to persons dying intestate from 1 January 1996, the intestacy distribution, as said earlier is governed by AEA, 19256. On total intestacy, that is if the deceased dies without leaving a valid will or if the deceased leaves a will which contains no disposition of property, as explained in Re Skeats [1936] Ch 683, the estate is initially held on trust by the deceased's personal representatives - usually the surviving spouse and/or close relations - with power to sell it as provided by s.33 AEA 1925. The residuary estate, after paying for the funeral, testamentary and administration expenses, as well as the debts and other liabilities of the intestate, is distributed according to the order of entitlement specified by s.46 and 47 AEA 1925, as discussed herein. 1. Where the intestate leaves a surviving spouse, but no issue (i.e. children or their descendants), and no parents or brothers or sisters of the whole blood or their issue: (a) The spouse takes the whole estate absolutely. 2. Where the intestate leaves both a spouse and issue: (a) The spouse takes: a statutory legacy of 125,000 absolutely, with interest at 6 per cent per annum payable from date of the deceased's death until the legacy is paid the intestate's personal chattels absolutely 7 a life interest in half of the residue - accordingly the income from this half share of residue is payable to the spouse, who is not entitled to the capital. As regards the matrimonial home, the surviving spouse has the right to require the personal representatives to appropriate the home in or towards satisfaction of any absolute interest of that spouse in the intestate estate.8 The surviving spouse must have been resident in the home when the intestate died. (b) The residuary estate (half the residue immediately plus half the residue on the death of the spouse) goes to the 'issue' on 'the statutory trusts'9. Property held under statutory trusts for issue is divided in equal shares among such of the children of the intestate, living at the intestate's death and who either attain the age of 18 years or marry under that age. If a child predeceases the intestate, but leaves issue at the intestate's death, then those children will take the share in the residuary estate, when they attain the age of 18 or marry, which their parent would have taken had such parent survived the intestate and married or attained the age of 18. The principle is termed as "per stirpes" succession.10 3. Where the intestate leaves a spouse and no issue, but leaves a parent, or brother or sister of the whole blood or their issue: (a) The spouse takes: the personal chattels absolutely; a statutory legacy of 200,000 absolutely; half the residue absolutely. (b) The other half of the residue goes to the parent(s) or, if none, to the brothers or sisters of the whole blood on the statutory trusts, which is distributed according to "per stirpes" explained in 2(b) above. 4. Where the intestate leaves no surviving spouse: One of the following eight classes takes equally in the order listed on 'statutory trusts': issue(s) parent(s) brother(s) and sister(s) of the whole blood; brother(s) and sister(s) of the half blood; grandparent(s); uncles and aunts of the whole blood ; uncles and aunts of the half blood; the Crown, as "bona vacantia" - meaning property to which none is entitled. Under section .46 AEA 1925, the Treasury Solicitor is entitled to make payments 'for dependants of the intestate and other persons for whom the intestate might reasonably have been expected to make provision' Partial Intestacy In the case of partial intestacy, that is, if there is a valid will that disposes only of part of the testator's estate, as per s.49 AEA 1925 the undisposed property is distributed according to the rules applicable on total intestacy, subject to the provisions of the will.11 However, it is significant to note that in cases where the provisions of the will become ineffective for any other reason, as in cases such as Re Thornber [1937] Ch 29 and Re Sullivan [1930] 1 Ch 84. Hotchpots in Intestacy Rules Though the Law Reform (Succession) Act 199512 has abolished the hotchpot rule contained in s.47 AEA 1925 as regards persons dying intestate from 1 January 1996, cases continue to be filed where the deceased died before 1 January 1996 and hotchpot therefore has to be applied. Under section 47, when property was shared on statutory trusts by issue, if money or property had been paid or settled by the intestate inter-vivos on a child by way of advancement13, then the child, or an issue who took on intestacy per stirpes, had to account for that benefit. The hotchpot rule applies to partial intestacy as well.14 In the case of partial intestacy surviving spouses had to account for any beneficial interests received under the will as against their entitlement to the statutory legacy. Also, in applying a "stirpital" interpretation of s.49 (1)(a), a issue had to account for everything acquired, not only by him, but by all issue in that particular branch of the deceased's family as decided in Re Young [1951] Ch 185.15 The hotchpot rule was often applied subject to a contrary intention by intestate. In Hardy v Shaw [1975] 2 All ER 1052 it was held that the test was whether, looking at all the circumstances, it should be inferred that the intestate's intention was that the benefit should not be brought into hotchpot. Reportedly the courts have been reluctant in applying the hotchpot provisions in subsequent cases such as Re Morton [1956] Ch 644 and Re Grover's WT [1971] Ch 168, until finally the Law Commission recommended the abolishment of the rule. 16 Intestacy Rules: Will by Parliament's based on Presumed Wishes of the Deceased As said earlier, intestacy rules, being governed by statutes, create a default will for many people; hence they are indeed considered a 'will' made by the Parliament.17 However, in analysing whether the will reflects the 'presumed wishes' of the deceased, the rules, both total and partial, present significant aspects such as the predominance of the spouse on intestate, the "per stripes" rules per se, as well as the per stirpital interpretation, the forfeiture rule, and the provision of "bona vacantia" needs consideration. Given the suggestion that the presumes wishes of the deceased is best measured using surveys of public opinion and the conduct of testators,18 research in those lines may be helpful, as well as the informed opinion of researchers in the field. While most of the studies have originated in the U.S,19 in 1988-89, the L aw Commission (England) commissioned a public opinion survey of 1001 individuals on intestacy.20 The survey revealed that the public thought the surviving spouse should receive a share larger than that can be justified on need alone. However, the Commission found no agreement among observers as to a single purpose to be served by intestacy rules, except that they wanted the rules to be certain, simple and clear to understand and operate and that the surviving spouse should receives "adequate provision." Adequate provision meant that the surviving spouse should be entitled to remain in the matrimonial home, without needing to sue for achieving the result, and receive sufficient income to support himself or herself in the home. In its review21 the Commission found that doctrine of "per stirpes" often worked against the intentions of the intestate, as 'advancement' is usually proven using assumptions. Also, providing details of all benefits received by issue(s) during the lifetime and at the death of the deceased was deemed difficult, if not impossible. The Commission also found that the rules were highly unfair to co-habitants and unmarried partners of the deceased, often against the wishes of the deceased. Reckoning that the rules of intestacy should reflect the 'presumed wishes' of the deceased, the Commission recommended fundamental changes to the law. The parliament, through the enactment of Law Reform (Succession) Act 1995, ratified most of the recommendations and made cohabitants eligible for a reasonable financial provision.22 However, the Commission's central recommendation that the entire residuary estate should pass to the surviving spouse of the intestate was not enacted. While it may have significantly simplified the law and reflected the public choice, as revealed by testator conduct and public opinion, the reason for rejecting the recommendation lies in the fact that such a provision would severely jeopardise the interests of children, particularly when the intestate was survived by a second or third wife. With the high rate of divorce and the findings that, by the year 2010, there will be more stepfamilies in the UK than any other form of family,23 the Parliament stance on the issue can only be justified. Nonetheless, researchers studying the improvement of intestacy rules have suggested that fractional division of the estate and resolution of the issue of ownership of the matrimonial home to better reflect the wishes of the deceased.24 While the consideration of children and co-habitants of the deceased deserves credit, the application of 'per stripes" has been a subject of controversy. More recently, the Law Commission addressed the application of "per stripes" rule in a case involving forfeiture doctrine,25 in its consultation paper.26 As per the current legal position, in cases where a person is killed by an only child, the inheritance goes to the other relatives, if not to Crown as "bona vacantia", and all descendants of the killer are excluded/forfeited from inheritance.27 While the courts are granted discretionary power in exercising forfeiture rule, the Commission found that the forfeiture rule was often applied contrary to the will of the deceased. The Law Commission, contending that the intestate would prefer his grandchildren to inherit his estate rather than other relatives and/or Crown, suggested that the "deemed predeceased" principle28 may be applied in such cases so that the property passes on to grand children, as presumably wished by the deceased. Conclusion The current intestacy rules as governed by the Administration of Estates Act 1925 as amended and subject to L aw Reform (Succession) Act, 1995 can be said to be a will by the parliament for intestate distribution. The Parliament's approval of the Law Commission recommendations, which were based on public opinion, and the subsequent reforms suggest that the present rules largely reflect presumed wishes of the deceased. While the supremacy of spouse in intestate succession is a reflection of the public sentiment, the Parliament, as the deciding authority, has limited the inheritance of the spouse, taking into consideration other wider social aspects including the case of children, particularly those in step families, as well as cohabitants and other needs or deserts of the survivors. While the rules continue to present problems, such as the application of forfeiture principle to the contrary intention of the deceased, the Law Commission has recommended changes to the rules via their Draft Bill29 to better reflect the wishes of the deceased, which awaits Parliamentary approval. Fractional division of property and the resolution of ownership of matrimonial homes are aspects that are considered to improve the intestacy rules, better reflecting the wishes of the deceased. Bibliography 1. Administration Of Estates Act (1925) Available at http://www.paclii.org/vu/legis/vu-uk_act/aoea1925274/ Accessed 25/10/06 2. ALRI (June 1999) "Reform of the Intestate Succession Act" Report No: 78 Alberta Law Reform Institute, Alberta Available at http://www.law.ualberta.ca/alri/docs/fr078.pdf Accessed 30/10/06 3. Borkowski, A (2002) Textbook on Succession Oxford: Oxford University Press 4. Cretney, S. (1995) 'Reform of intestacy: the best we can do' 111 Law Quarterly Review p.77 5. England (1951) "Report of the Committee on the Law of Intestate Succession" Cmd 8310. 6. Fellows, ML, Simon, RJ And Rau, W. (1978) "Public Attitudes about Property Distribution at Death and Intestate Succession Laws in the United States" Chicago: American Bar Foundation Research Journal p.319-391 7. Glucksman, JR (1976) "Intestate succession in New Jersey: does it conform to popular expectations" 12 Journal of Law and Social Problems 253 8. Johnson, M. K & Robbennolt, J K. (1998) "Using Social Science to Inform the Law of Intestacy: The Case of Unmarried Committed Partners" Law and Human Behavior, (Oct.), Vol. 22, No. 5, p. 479-499 9. Kerridge, R (Ed) (2002) Parry and Clark: The Law of Succession London: Sweet & Maxwell 10. Kerridge, R. (1990) 'Distribution on intestacy: the Law Commission Report (1989)' 54 The Conveyancer p.358. 11. Law Reform (Succession) Act 1995 c. 41 Available at http://www.opsi.gov.uk/acts/acts1995/Ukpga_19950041_en_1.htm#end Accessed 2/11/06 12. Miller, J.G. (1996) The Machinery of Succession Second edition Aldershot: Dartmouth 13. Scottish Executive Social Research (2005) "Attitudes Toward Succession Law: Finding of a Scottish Omnibus Survey" Available at http://www.scotland.gov.uk/Publications/2005/07/18151328/13297 Accessed 25/10/06 14. The Law Commission (England) (July, 2005) The Forfeiture Rule and the Law Of Succession (Law Com No 295) Cm 6625 Available at: http://www.lawcom.gov.uk/docs/lc295_Final.pdf Accessed 30/10/2006 15. The Law Commission (England) (2003) .The Forfeiture Rule and the Law of Succession. Consultation Paper No 172 London:TSO Available at http://www.lawcom.gov.uk/docs/cp172.pdf Accessed 30/10/2006 16. The Law Commission (England) (1989) Distribution on Intestacy Report No. 187 17. Wright, C.E. (1986) Succession: Cases and Materials London: Butterwoths Law List of Cases 1. Re Skeats [1936] Ch 683 2. Re Chaplin [1950] Ch 507 3. Re Hutchinson [1955] Ch 255 4. Re MacCulloch's Estate [1981]44 NSR (2d) 666 5. Re Phelps [1980] Ch 275, 6. Robinson v Collins [1975] 1 All ER 321 7. Re Thornber [1937] Ch 29 8. Re Sullivan [1930] 1 Ch 84. 9. Re Young [1951] Ch 185. 10. Taylor v Taylor [1875] 20 LR Ch 155 11. Re Morton [1956] Ch 644 12. Re Grover's WT [1971] Ch 168 13. Hardy v Shaw [1975] 2 All ER 1052 14. Re DWS (decd) [2001] Ch 568 (CA) 15. Re Sigsworth [1935] Ch 89 16. Re Giles (decd) [1972] Ch 544 17. Re Royse (decd) [1985] Ch 22. Read More