LEVEL 6 - UNIT 14 LAW OF WILLS AND SUCCESSION SUGGESTED ANSWERS JANUARY 2013

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1 LEVEL 6 - UNIT 14 LAW OF WILLS AND SUCCESSION SUGGESTED ANSWERS JANUARY 2013 Note to Candidates and Tutors: The purpose of the suggested answers is to provide students and tutors with guidance as to the key points students should have included in their answers to the January 2013 examinations. The suggested answers set out a response that a good (merit/distinction) candidate would have provided. The suggested answers do not for all questions set out all the points which students may have included in their responses to the questions. Students will have received credit, where applicable, for other points not addressed by the suggested answers. Students and tutors should review the suggested answers in conjunction with the question papers and the Chief Examiners reports which provide feedback on student performance in the examination. Question 1 SECTION A This question requires a critical analysis of the rules of construction and admission of extrinsic evidence by the Court. A cautious approach is adopted by the Court because it does not want to write or re-write the will for the testator. However, it does want the will to reflect the testator s wishes. The Court has adopted two approaches when construing a will. Firstly, a strict literal approach to the words used by the testator can be applied or, secondly, a more liberal approach by asking what the words mean to that testator. In Perrin v Morgan (1943) a testator in a will left all monies of which I die possessed shall be shared by my nephews and nieces now living. At the time, the word monies meant cash or money in the bank, but not the residuary personalty. The testator s estate consisted mostly of stocks and shares and it appeared that she meant the word monies to include those shares. The Court gave the word monies a wide meaning. In Re Rowland (1962), however, the Court adopted the dictionary meaning of the word coincide rather than applying what the word meant to the testator. Although there are many rules of construction available to the Court to help it interpret the words used by the testator, generally, the testator s intention is determined solely from the will itself. If the words used have a clear meaning, then effect is given to those words even though this may not have been the intention of the testator. Examples include Scale v Rawlins (1892) and Re Jones (1998). The Court will look at the will as a whole in order to see if other parts help in interpreting what the testator meant in a particular part of the will, as in Re Whitrick (1957). The Court applies rules of construction to a will, but where a will is silent as to what is to happen in certain circumstances, the Court cannot speculate what the testator intended. In applying the literal approach, the Court Page 1 of 14

2 will give words their ordinary meaning, this being their dictionary definition, as in Perrin v Morgan. A secondary meaning of a word may be applied by the Court where the testator has used a word in the secondary sense. This may be indicated by the testator in the will itself or, when the will is applied to surrounding circumstances, it becomes clear that the testator had intended a particular word to be used in a secondary sense. Examples include Re Davidson (1949), where the words my grandchildren were held to include the children of the stepson of the testator. Another example Re Smalley (1929), where the testator referred in his will to his wife Eliza Ann Smalley when his lawful wife was called Mary Smalley and he lived with a woman called Eliza Ann. The Court decided that the word wife in a secondary sense meant his common law wife. The Court may apply subsidiary principles of construction such as the golden rule, ejusdem generis, falsa demonstratio, and particular rules where there are inconsistent clauses. The Court will use s22 Administration of Justice Act 1982, and apply the rule in Lassence v Tierney (1849) to resolve issues where a will contains conflicting gifts in specified circumstances. Section 24 Wills Act 1837 contains rules for construing how gifts in a will should be applied. In the absence of contrary intention in the will, it speaks from death and it must be construed as if the testator had made it just before he died and taking into account his property at that time. Where a technical word is used in a will there is a presumption that the technical meaning was intended. In Re Cook (1948), all my personal estate whatsoever was held by the Court not to include the realty (i.e. land).the court will also have regard to the punctuation in the will when interpreting the meaning of the words used. The Court attempts to ascertain a testator s intention from the will itself. Other evidence, known as extrinsic evidence, is used to help ascertain the meaning of words used. The armchair rule may be used where there is ambiguity, and in Boyes v Cook (1880) it was stated you place yourself so to speak in the testator s armchair and consider the circumstances by which he was surrounded when he made his will. This rule was applied in Charter v Charter (1874) where the testator left property to my son Forster Charter. Forster had died several years before the will was made and the testator was survived by his sons William Forster Charter and Charles Charter. By applying the rule it was discovered that William Forster Charter rarely saw his father whereas Charles Charter lived with his father who frequently referred to Charles as Forster. Section 21 Administration of Justice Act 1982 (AJA 1982), codifies the rules on the admission of extrinsic evidence by laying down three alternative conditions before it will admit extrinsic evidence. Section 21(1)(a) covers a word or phrase which appears to be meaningless. An example is Kell v Charmer (1856) where private marks were used by a jeweller and which would otherwise have appeared to be meaningless. Section 21(1)(b) AJA 1982 covers a word or phrase which is ambiguous because it appears to have several meanings. Examples include Re Williams (1985), Solem v Guyster (2001), Westland v Lilis (2003), and Ross v Perrin-Hughes (2005). Section 21(1)(c) AJA 1982 covers a word or phrase which has an ordinary meaning in circumstances which indicate that the testator may have intended it Page 2 of 14

3 to have some other meaning. In other words, there is a latent ambiguity. Examples include Charter v Charter (1874), Re Jackson (1933), and Pinnell v Anison (2005). The Court attempts to ensure that a testator s real intentions are carried out when they might not otherwise be under a strict literal interpretation of the wording used in the will. Question 2(a) Under s20 Wills Act 1837 two elements must be present at the same time for there to be a valid revocation of a will by destruction, namely the act of destruction and the intention to revoke. The act of destruction must be by burning, tearing, or otherwise destroying the will. A symbolic destruction by crossing through the will with a pen and crossing out the name of the testator as in Stephens v Taprell (1840), is not an act of destruction. In Cheese v Lovejoy (1877), a testator struck out some lines of his will by pen and wrote on the reverse side all these are revoked. These acts were held not to be acts of destruction. Although the whole will need not be destroyed, there must be sufficient destruction to impair the entirety of the will. In Hobbs v Knight (1838), it was decided that as the testator had cut out his signature, that was a sufficient act of destruction. Other examples include In the Goods of Morton (1887), and Re Adams (1990). The testator must have completed all he intends to do by way of destruction. In Perkes v Perkes (1820), the testator began to tear up his will with the intention of revoking it because he was angry with one of the beneficiaries. He tore it into four pieces before he stopped and became calm. He then put the pieces together and said it was a good job it is no worse. As the testator had not completed all that he had originally intended by way of destruction, the Court decided that the testator had not revoked his will. The act of destruction must have been carried out by the testator himself or by some other person in his presence and by his direction. The testator must be in a position to see the act of destruction. Examples include In the Goods of Dadds (1857), and In the Estate of De Kremer (1965). The testator must have the intention to revoke the will when the act of destruction is carried out. The testator must also have mental capacity, as in Brunt v Brunt (1873). In Re Booth (1926) the Court decided that there was no revocation where a will was accidentally destroyed by fire. If the testator destroys his will while being in a drunken state, there will be no destruction, as In the Goods of Brassington (1902).A will accidently destroyed is not revoked, and neither is it revoked if it is destroyed under a mistaken belief that it was invalid, as in Giles v Warren (1872). There are two rebuttable presumptions. Firstly, that a will in the possession of a testator which cannot be found at the time of his death is presumed to have been destroyed by the testator with the intention of it being revoked. In Sugden v Lord St Leonards (1876) the testator kept his will and codicils in a box to which he held the key. After his death the will, but not codicils, was found to be missing from the box. It appeared that a number of people had access to the key and there was also evidence to show that the testator made numerous references to his will and to his daughter. She had acted as his secretary and was able to confirm the contents of the will, this being fully consistent with the codicils. In the circumstances the Court decided that the presumption of revocation had been rebutted. What had happened to the will remained a mystery. Page 3 of 14

4 Secondly, where a will in the possession of a testator at the time of death is found to be in a mutilated condition, it is presumed to have been so mutilated by the testator with the intention of it being revoked. Question 2(b) The revocation of a will by destruction (or a later will) requires an intention to revoke. If the testator s intention to revoke was conditional, then the revocation is only effective when the condition is met. This is known as the doctrine of dependant relative revocation, or conditional revocation. Here the Court applies a presumption that the testator intended an existing will to be revoked only if the new will was valid. A relevant case is In the Estate of Southerden (1925) where a testator made a will leaving his estate to his wife. He later destroyed his will in the belief that his wife would inherit all of his estate on his intestacy, but this was not correct. The Court decided that there was no revocation because the act of burning the will was carried out under a mistaken belief. In Re Jones (1976) the Court gave guidance where a testator destroys his will by posing various questions. Did he do so with the intention of revoking it? If not, there is no revocation. If there is an intention to revoke, is the intention absolute or qualified? If qualified, then what is the nature of the qualification? If the qualification is in the form of a condition or contingency, has that condition or contingency been fulfilled? If not, the revocation is ineffective. A will revoked by a later will cannot be revived by a later revocation of that later will. There can be an implied revocation by a later will or codicil, it being a question of construction whether a testator has shown an intention to revoke. Examples include Re Robinson (1930) and Re Finnemore (1992). Question 3(a) This part of the question requires an analysis of the situations when a person not named in a will can act as an executor. Normally an executor is expressly appointed by a testator by will, but it is possible for a person(s) to be appointed in other ways, and that appointment may be absolute or qualified. A person may also be impliedly appointed as an executor by a testator - an executor according to the tenor (of the will). In In the Goods of Bayliss (1865), a testator directed named individuals to pay the debts of the estate and to hold it on trust for the deceased s children. This is an example of an appointment of an executor according to the tenor. However, in In the Estate of McKenzie (1909), the appointment of a trustee without an instruction to pay debts was decided not to be an appointment as an executor. A testator in his will may authorise another person to appoint his executors after his death. In In the Goods of Cringan (1828), a testator authorised his legatees to appoint two executors. Firms of solicitors can be appointed as executors of wills rather than the individual partners by name and the appointment can be made to the partners in the firm at the date of the testator s death. Consequently, individuals who were not partners at the time the will was made and who only became partners at a later date, would be able to act as executors. The appointment of an executor is generally not limited in time. If a sole or last surviving executor dies in office having taken out the grant of probate, s7 Administration of Estates Act 1925 provides for the automatic transfer of the Page 4 of 14

5 office of executor without that individual having to obtain a further grant of probate. This is subject to the executor of the original executor also having taken out a grant of probate. This is known as the chain of representation. It is only broken where a sole or last surviving executor dies intestate, leaves a will without appointing executors, or leaves a will appointing executors but they are unable or unwilling to act, or before obtaining a grant of probate of the original will. There is no transfer of office on the death of a sole or last surviving administrator. Where there is a valid will but no executor able to prove the will, the order of entitlement to apply for the grant is contained in r20 NCPR 1987, eg trustees of the residuary estate. The Court has wide power to appoint a substituted personal representative in place of an existing personal representative. The Court also has power to appoint an additional personal representative where, for example, there is a minority interest and the administration of the estate has not been completed. Similarly, where a person who is entitled to a grant of probate or letters of administration so wishes, letters of administration for his use and benefit may be granted to his attorney under r31 NCPR The power is limited until further representation is granted, or as the Court directs. If a person intermeddles with any of the assets belonging to the deceased s estate as if he were an executor, this makes him liable as executor de son tort. Examples of intermeddling would include selling assets of the deceased, and carrying on the business of the deceased. A person must intermeddle as if he were an executor, but if he intermeddles out of humanity or necessity this does not make him an executor de son tort. An example of an act of humanity would be arranging the deceased s funeral. Question 3(b) An executor may be passed over or substituted by the Court when it considers it expedient to do so by reason of any special circumstances. This wide power is given by s116 Senior Courts Act This power should only be exercised by the Court in extreme cases, as in AB V Dobbs (2010), and the Court will then appoint a replacement administrator. Where an executor becomes insolvent it would be prudent for a replacement administrator to be appointed. Although the insolvent executor might be able and willing to continue fulfilling the office of executor, the fact that that person is insolvent could be deemed to place the assets of the estate at some risk. This would be particularly so if the insolvent executor was the only executor administering the estate. Where an executor has lost mental capacity, a replacement administrator would have to be appointed. An executor may also be otherwise incapable of acting because, for example, he is serving a prison sentence as in Re S (1968). In In the Estate of Biggs (1966), the Court passed over two executors who were both elderly and in poor health and who also refused to take out a grant. If an executor is of bad character, or cannot be found because he has disappeared, there may be no alternative but for the Court to appoint a replacement. Examples include in In the Goods of Wright (1898), In the Estate of Paine (1916), and Re Crippen (1911) where the executor was in prison for murder and the Court deemed it inappropriate for such a person to be executor. Page 5 of 14

6 Beneficiaries may seek an order replacing an existing executor. Under s50(1) Administration of Justice Act 1985, the Court must be satisfied on the basis of evidence that there is good reason to replace an existing executor. In Re Steele (2010), an executor was replaced because of the extent of the breakdown in trust between the beneficiaries and executor, even though the executor had done nothing wrong. In Khan v Crossland (2011) the Court stated that it was not necessary for an administrator to be discredited before being removed. The Court considered that as the relationship between the executor and beneficiaries had completely broken down, it was expedient to appoint one of the beneficiaries as administrator. Question 4 This question requires an analysis of why the classification of legacies is important. Legacies of money or of physical objects given in a will may be classified as being specific, general, or demonstrative. The classification determines which rules apply in relation to ademption, abatement, and the payment of income or interest. Specific Legacies A specific legacy is a gift of a personal item from the assets of the testator. It is a gift of a specific thing not its cash value. eg my wedding ring. The item being gifted must have belonged to the testator and be a specified part of the estate, or be distinguishable from the remainder of the estate. Examples of cases include Bothamley v Sherson(1875) where there was a gift of all my shares or stock in the Midland Railway Company. Other examples include Re Willcocks (1921), Re Gage (1934), and Re Rose (1949). The construction of the will determines the type of legacy. Generally, the Court leans against construing legacies as specific and, if there is a doubt, prefers to construe them as general. The purpose is to try to allow the gift to take effect rather than for it to fail. A specific gift fails by ademption if the subject matter of the gift no longer forms part of the testator s property at death. eg Ashburner v MacGuire (1786). Relevant case law includes Re Clifford (1912), where a will included a legacy of twenty three of the shares belonging to me in L Co Ltd. The testator held one hundred and four 80 shares. The company had changed its name prior to the testator s death and had subdivided each share into four 20 shares. The Court decided it was a change in form and not a change in substance. Consequently, the beneficiary took the shares which represented those originally given by the testator, namely ninety two 20 shares. Other examples include Re Leeming (1912), Re Dorman (1994), and Soukun v Hardoyal and Others (1999). As a specific legacy takes effect from the time of the testator s death, all of the income and profits thereon accrue from the date of death. Consequently, a gift of company shares includes dividends paid after the testator s death. eg Re West (1909). If the residuary estate is insufficient to meet all the liabilities of the estate, the legacies will reduce on a pro rata basis in accordance with s34 and Part ll Schedule 1 Administration of Estates Act 1925 (AEA 1925).The process whereby the legacies are reduced is called abatement. Specific legacies abate after general legacies. Page 6 of 14

7 General Legacies A general legacy is not a legacy of any particular thing, but something to be provided from the testator s general estate. The subject matter may or may not form part of the testator s property at the time of death. If the subject matter of the gift does not form part of the assets of the estate, then the general gift operates as a direction to the Personal Representatives to purchase the equivalent asset, or to offer the beneficiary the equivalent in money. An example would be I give 500 ordinary shares in ABC plc to my son. A general legacy cannot fail by ademption. Using the examples of the gifts referred to previously, it is immaterial whether the testator has at the time of death, shares in ABC plc or 10,000 in cash. It is the subject matter of the general legacy that must be provided by the Personal Representatives out of the testator s general estate. General legacies are used to pay the liabilities of an estate before specific or demonstrative legacies. Consequently, general legacies abate before specific legacies. Interest on a general legacy runs from the time that it is payable, normally one year after the death of the testator unless the will states otherwise. Interest on a general legacy will run from the date of death of the testator in four cases: Firstly, where a testator gives a legacy to a creditor in satisfaction of a debt. Secondly, a legacy, charged only on real property if the legacy is vested. Thirdly, where the legacy is given to a child of the testator, the purpose being to provide maintenance for the child, although this rule will not apply where the testator has in his will made specific provision for the maintenance of the child. Fourthly, where the legacy shows an intention to provide for the maintenance of an infant beneficiary. (It is clearly better for specific provision to be made by a testator in his will for the payment of interest on a legacy, rather than to rely upon technical rules). Demonstrative Legacies This particular type of legacy is a hybrid because it lies somewhere between a specific legacy and a general legacy. The gift is of a general nature, but is directed to be paid out of a specified fund or a specified part of the testator s property - for example, 50 out of my 500 shares in ABC plc. If the specified fund is sufficient, then the legacy is treated as specific. However, if the fund is insufficient, then the legacy is treated as a general legacy. Consequently, it cannot fail by ademption and a demonstrative legacy abates rateably with general legacies. Consequently the legatee of a demonstrative legacy is in the best of positions. Interest runs from the time which it is payable, normally from the end of the executor s year. Pecuniary legacies are gifts of money and, although they are usually general, they can be specific or demonstrative and is defined by s55(1)(ix)aea Residuary Legacies A residuary legacy is what remains after all debts, liabilities, expenses and other legacies have been paid. Income accrues from the date of death, although it may be used for the maintenance of a minor under s31 Trustee Act 1925, with any Page 7 of 14

8 surplus income being accumulated. This statutory rule may be extended by the testator in his will. SECTION B Question 1(a) This part of the question requires advice to be given upon the validity of a will. In order to provide advice, the requirements of s9 Wills Act 1837 (as amended by s17 Administration of Justice Act 1982), must be explained and then applied to Adam s will. A will must be in writing and must be signed by the testator. In Wood v Smith (1992) the testator made a will which started my Will by Percy Winterbone..., but he did not sign his will anywhere else. The Court decided that as he had written his name at the head of the document it could be regarded as his signature. This applies to the will made by Adam and it also seems he intended to give effect to his will by handwriting his name as in Weatherhill v Pearce (1995). Affidavit evidence of Adam s intention may be required from his attesting witnesses. Although Adam has not dated his will, this does not affect its validity. Affidavit evidence upon the date it was signed will be required from the attesting witnesses. The fact that the will does not contain a revocation clause does not affect its validity, although it is desirable to include one. Section 9 Wills Act 1837 requires the testator either to sign the will in the presence of the witnesses or to acknowledge his signature in the presence of the witnesses. It is not necessary for the testator to actually sign his will in the presence of the witnesses. Consequently, Adam can sign his will before producing it to his witnesses for signature, or he could sign it in the presence of only one of the witnesses, provided that he acknowledges his signature in the presence of both witnesses at the same time. There are three requirements for a valid acknowledgment. Firstly, the will must have already been signed by the testator before his acknowledgment. Secondly, at the time of making the acknowledgment both witnesses must either see the signature or have the opportunity of seeing it. Thirdly, the testator must acknowledge his signature by his own words or conduct. It would appear that Adam has acknowledged his signature in their presence and, on the basis of the limited facts provided, it would seem that the three requirements have been met. Section 9 Wills Act 1837 requires the testator to sign or acknowledge his will in the presence of two or more witnesses and both witnesses must sign in the presence of the testator. Consequently, John and Mary must both sign in the presence of Adam, but not necessarily in the presence of each other. Although it is clear that John signed the will as directed by Adam and initialled the amendment Adam had already made to clause 2.2, Mary was not in the room at that time. It seems that Mary signed the will where indicated by her husband, when Adam was using his telephone. Adam was in the conservatory, and it is unclear whether he could have seen her signing the will. If she was within Adam s sight and he saw her sign or could have seen her sign the will, then it signed in his presence and will be valid, as in Casson v Dade (1781).If he could not see her sign, then it would not be validly witnessed. Affidavit evidence would be required from both attesting witnesses. Another example is Brown v Skirrow (1902). Page 8 of 14

9 Adam s will does not contain an attestation clause, but s9 Wills Act 1837 does not require an attestation clause to be included. However, there is no presumption of due execution if one is not included. Consequently, an affidavit of due execution will be required from one or both witnesses. Question 1(b) This part of the question concerns the advice to be given to the executors regarding the bequests. Clause 2.1. Section 15 Wills Act 1837 prevents a beneficiary from benefitting if they were a witness to the will. Consequently, as John and Mary witnessed Adam s will, they will receive nothing and they cannot rely upon s28 (4) Trustee Act 2000 (a payment to an executor is regarded as remuneration rather than a legacy for the purposes of s15), because this only applies to payments to trustees/prs acting in a professional capacity. As Trevor has not witnessed Adam s will he receives the legacy of 1,000. The rules on the alteration of wills are contained in s21 Wills Act There is a rebuttable presumption that unattested alterations were made after the execution of the will. Alterations made after execution have no effect if not signed or initialled by the testator and both witnesses. These rules can be applied to the remaining clauses of the will: Clause 2.2. As John has initialled the alteration, this suggests that it was made before execution. The presumption could be rebutted by evidence from John, in which case Mark receives 10,000. If the presumption is not rebutted, then he receives 5,000. r14 Non-Contentious Probate Rules 1987 governs the evidence required to overturn the presumption. Clause 2.3. An alteration which makes any part of a will not apparent revokes that part if the testator has an intention to revoke it. The word apparent in s21 Wills Act 1837 means optically apparent on the face of the will itself. A word in a will is not apparent if it cannot be deciphered by any natural means. This would include the use of a magnifying glass. Extrinsic evidence cannot be used and neither can physically interfering with the will by using chemicals to remove the marks or by the use of another document such as an infra-red photograph. eg In the Goods of Itter (1950). Consequently, Rosie receives nothing. Clause 2.4. The evidence suggests that the deletion was made after the execution because Adam did not ask John to initial that amendment and neither witness can recall the amendments made to clauses 2.3 and 2.4 before they signed the will. The original wording in clause 2.4 of the will is not apparent, but candidates should advise whether the doctrine of conditional revocation applies. Did Adam only intend to obliterate the original wording if the replacement wording was valid? If he did, then non-natural means (including extrinsic evidence) could be used to try to identify the original wording. If the original wording could be deciphered then that gift would pass to Frank, but if it could not be identified, the Page 9 of 14

10 gift of the Honda motorbike to Frank would fail and it would form part of Adam s residuary estate. Question 2(a) As the liabilities and debts exceed the value of the assets, Duncan s estate is insolvent. As the estate is not being administered in bankruptcy, the procedure is governed by s421 Insolvency Act 1986 and the Administration of Insolvent Estates of Deceased Persons Order 1986, as amended by the Administration of Insolvent Estates of Deceased Persons (Amendment) Order The statutory provisions cannot be varied and priority is given to the payment of reasonable funeral, testamentary and administration expenses before preferred debts and, thereafter, the order of payment of the liabilities and debts is the same as in bankruptcy. The jointly owned home passes to Flora by way of survivorship as she is the surviving beneficial joint tenant and does not form part of Duncan s estate. This might not have been the case if an Insolvency Administration Order had been made. Priority should be given to the payment of the funeral expenses of 3,500 and the reasonable administration expenses. The only secured creditor is the Lomond Bank plc which is owed 325,000. Consequently, the bank has priority over other creditors so far as the value of the yard is concerned. Under the Bankruptcy Rules a secured creditor has various options. Firstly, the creditor can rely on its security and not prove for the debt. This would only be appropriate where the security is adequate for the purpose of securing repayment of the whole debt. Secondly, the creditor may realise its security and prove for the balance of the debt. This is the preferred option for a creditor if the security it has is inadequate, and would apply in the case of the debt due to Lomond Bank plc. Thirdly, the creditor may set a value on its security and prove for the balance of its debt as an unsecured creditor. This course might be taken if the security is inadequate, but the creditor values its security at its own risk and there would appear no point in Lomond Bank plc taking that course of action. Lastly, a creditor may simply surrender the security it has and prove for the whole debt, but this course would not be taken if the security has any value. Flora should be advised to only make payment of the liabilities and debts in the same order as they would be paid in bankruptcy. After the funeral, testamentary, and administration expenses have been paid, any specially preferred debts would be paid. There are none in the case of Duncan s estate. Preferred debts should then be paid and these can take two forms, namely contributions to occupation pension schemes, and remuneration of employees with wages outstanding for up to four months before the death of Duncan and limited to a maximum of 800 and accrued holiday pay. Although the outstanding salary of Marie should be paid in full, the salary of Hamish is only preferred up to 800, and that the balance of 700 would rank with other ordinary debts. The bank overdraft, business creditors, and outstanding income tax are all ordinary debts and are paid next. The debt due to Flora is a deferred debt and comes last in the order of priority. A deferred debt is a debt owed in respect of credit provided by a spouse or civil partner of the deceased at the time of the latter's death. Interest that has accrued up to the date of death also ranks after ordinary debts so far as repayment is concerned. As the ordinary debts rank equally between themselves, they also abate proportionately. Not only will Flora Page 10 of 14

11 not receive repayment of her loan, it would appear that she will receive nothing whatsoever from her husband s estate. Question 2(b) Flora must be advised of the risk she runs of incurring personal liability if she fails to deal correctly with the payment of the liabilities and debts of the estate of her husband. It should be explained to Flora that she is under a duty to administer her husband s estate in accordance with s25 Administration of Estates Act If she does not pay the liabilities and debts in the strict order of priority then she is in breach of this duty, called a devastavit. Further, if she knowingly pays an inferior debt before a superior debt of which she had notice, she would incur personal liability. If she had no notice of the preferred creditor, she would not be liable Re Fluyder (1898), unless she would have had notice if she had advertised under s27 Trustee Act A personal representative has a duty to pay all debts in the same class proportionately (pari passu). However, under s10(2) Administration of Estates Act 1971, if she pays a debt in good faith and with no reason to believe the estate is insolvent, she would not be liable to other creditors in the same class if they could not be paid once the estate was found to be insolvent. It should be noted that this would not offer any protection to Flora because it was clear to her before she sought advice that the estate of her husband was insolvent. If executor s are concerned that there may be other debts payable by the estate of which they are not aware, then they should advertise and make searches in accordance with s27 Trustee Act Flora should be advised to place an advertisement in the London Gazette and in a local newspaper circulating in the area in which her husband s boatyard business was situated. It would also be appropriate for her to advertise in a newspaper circulating in the area where her husband resided. The notice must allow at least two months for claims against the estate to be made. After that time has expired, she can distribute the estate without being personally liable to creditors who have not come forward. Question 3 As Percy has died intestate his estate will be dealt with under the Administration of Estates Act 1925 (AEA 1925), as amended, and the Intestate s Estate Act 1952 (IEA 1952). Candidates should refer to the statutory trust that arises under s33 AEA 1925, and explain that the funeral costs and expenses and debts must be paid before the residue of the estate is determined and distributed in accordance with the order of entitlement set out in s46 AEA As Percy is survived by his wife Vanessa and three of his children, candidates should firstly advise upon the entitlement of Vanessa. Vanessa will receive Percy s personal chattels, a statutory legacy of 250,000 plus interest from the date of death, and a life interest in one half of the residue. The definition of personal chattels contained in s55(1)(x) AEA 1925 will include Percy s personal possessions worth 50,000, the photographic equipment worth 15,000, and the collection of paintings worth 100,000. Relevant cases include Re Reynolds (1966) and Re Crispin s Will Trust (1974). The Rolls Royce car is not included as it is used by Percy solely for business purposes, and the Porsche sports car will only be included if it s dominant purpose is for pleasure Re McCulloch (1981). The collection of paintings and the photographic equipment will not pass to Vanessa, even though they are personal chattels, if Percy made a valid Donatio Page 11 of 14

12 Mortis Causa (DMC). There are three requirements for making a valid DMC. Firstly, the gift was intended to be conditional on death. Secondly, that it was made in contemplation of death. Thirdly, that there must be a delivery of the subject matter of the gift or a parting with dominion. The requirements seem to be met in the case of the collection of paintings, which will thus pass to Kirsty, but have probably not been met in the case of the photographic equipment because there has been no effective delivery. Relevant examples of cases include Gardener v Parker (1818), Re Lillingstone (1952), Wilkes v Allington (1931), and Re Craven s Estate (1937). Vanessa has additional rights under s47a AEA 1925 to elect to receive a lump sum instead of a life interest. A complex formula is applied to calculate the lump sum, details being set out in the Intestate Succession (Interest and Capitalisation) (Amendment) Order Vanessa may prefer to retain the family home and, if she does, she may require the personal representatives to appropriate it to her under schedule 2 IEA This right must be exercised within twelve months of the date of the grant of representation, and written notice must be given to the personal representatives. If, as seems likely, she is the sole personal representative, she must give written notice to the Court and appoint a second personal representative, or obtain the consent of all the beneficiaries if they are adults - a relevant case being Kane v Radley-Kane and Others (1998). The home must be valued at the date of the appropriation and not at the date of her husband s death Re Collins (1975). Unless Vanessa s life interest is redeemed, one half is held on trust for her during her lifetime and the other half is held on the statutory trusts for Percy s children. William is entitled to a one quarter share, Kirsty is entitled to a one quarter share as she has married under 18, Amy and Glen take Jennifer s one quarter share per stirpes upon attaining 18 or marrying earlier, and Damien takes a one quarter share when he attains 18 or marries earlier. As Lucy is a step-child she is not entitled to a share of residue. So far as the entitlement of William to share in the estate of his father is concerned, regard must be had to the fact that he killed his father. The words used by Percy on his death bed can have no effect, although it would be reasonable to suppose Percy would have preferred his grandson, Simon, to take William s share. In accordance with Re DWS (2003), and the Estates of Deceased Persons (Forfeiture Rule and Law of Succession) Act 2011, William is precluded from benefitting from his father s estate due to having killed his father. Under this Act, William is treated as having died immediately before his father, the effect being that upon intestacy his son Simon will inherit his father s one quarter share when he attains 18 years of age. Question 4 This question concerns the advice to be given to Javed and Sunita upon the validity of Omar s latest will. Omar must have capacity within the meaning of the Mental Capacity Act 2005 (MCA 2005) when he executed his will. s1 MCA 2005 states that it is assumed that a person has capacity unless the contrary is established; a person is not to be treated as unable to make a decision because he has made an unwise decision; anything done on behalf of a person who lacks capacity must be in his best interests; and before the decision taken, regard must be had as to whether the purpose for which it is needed can be achieved in a less restrictive way. The onus is upon Javed and Sunita to rebut the presumption of capacity. Page 12 of 14

13 Section 2(1) MCA 2005 states a person lacks capacity in relation to a matter if at the material time he is unable to make a decision for himself in relation to the matter because of an impairment of, or a disturbance in the functioning of, the mind or brain. Under s3 (1) MCA 2005 a person is unable to make a decision for himself if he is unable to either understand the information relevant to the decision, retain that information, use or weigh that information when making the decision, or communicate his decision. s3(3) MCA 2005 provides that the fact that a person is able to retain the information relevant to a decision for a short time only does not prevent him from being regarded as able to make the decision. Before the MCA 2005, the test for mental capacity was referred to in Banks v Goodfellow (1870); a testator must understand the nature of his act and its effects, be aware of the extent of the property he has to dispose of in general terms, and be able to appreciate moral claims upon him. In Fuller v Strum (2002), it was stated that there was no requirement that a testator should have a perfectly balanced mind. Where a will has been drafted by a solicitor, the rule in Parker v Felgate (1883) may apply. The Court must be satisfied that Omar knew he was making a will disposing of his property on his death, that he knew the extent of his property, and understood the moral claims upon him. It is not known whether Omar knew he was making a will and whether he appreciated the extent of his assets for disposal upon his death. It is clear that he was giving around half of his estate to Molly and her husband, thereby significantly reducing the value of his residuary estate passing to Javed and Sunita. The Court will have to rely upon the available evidence from Omar s family and acquaintances, and consider all the surrounding circumstances, just as it did in cases such as In the Estate of Park (deceased) 1954, Ewing v Bennett (2001), and Sharpe v Adam (2006). It will have regard to Omar s age, health, the fact that he did not consult his longstanding solicitor, or mention changing his will to Javed or Sunita. The Court would also consider whether Omar s later will was rational and would seek evidence upon the reasons why Omar changed his executor and the disposition of his estate in favour of Molly s family. Although very confused towards the end of his life, Omar may have experienced a lucid interval when executing his will. Examples of cases include Cartwright v Cartwright (1793) and Richard v Allan (2000). The Court would require evidence as to Omar s state of mind on the day he executed his will and his doctor may be able to assist. The Court must be satisfied that Omar had the intention of making a will and knew and approved the contents of his will and intended it to operate as a will. The Court would refer to the guidance given in the case of Guardhouse v Blackburn (1866). Prima Facie, execution by the testator indicates knowledge and approval in the absence of suspicious circumstances. Before admitting the will to probate, the Court will require affidavit evidence from Molly and both witnesses regarding the preparation and execution of the will. This is important as Molly handwrote the will and Javed and Sunita have significant doubts about Omar s signature. Relevant cases include Fuller v Strum (2002), Re Rowlinska (2005) and Vaccianna v Herod (2006). If Molly seeks to prove Omar s will, the burden of proof is upon her to show that Omar knew and approved the contents of his will. If the Court is satisfied that Omar had testamentary capacity and his will was properly executed, a rebuttable Page 13 of 14

14 presumption of knowledge and approval arises. The burden of proof then shifts onto Javed and Sunita to rebut the presumption. The presumption does not apply if there are suspicious circumstances. Due to Omar s poor eye sight the will should have been read over to him and the attestation clause amended accordingly. The Court will consider whether Omar was subjected to undue influence, ie something which overpowers the free will of the testator without changing the testator s wishes. Although Omar is a vulnerable person, there is no presumption of undue influence because of the relationship he had with his carer. The position would be otherwise if Omar had been making the gifts to his doctor or solicitor. In Parfitt v Lawless (1872) it was stated that actual evidence of undue influence was required before refusing probate. In Carpeto v Good (2002) an elderly testator left property to her carer and her carer s husband. The testator was vulnerable, but the Court decided that as she knew she was making a substantial gift to her carer she understood what she was doing. The Court would expect the testator to have had the opportunity of receiving independent advice, as stated in Royal Bank of Scotland v Etridge (2001). Whether or not the Court would admit the will to probate depends upon the nature of the evidence dealing with the areas of concern. Consequently, Javed and Sunita cannot yet be finally advised upon the likelihood of the will being admitted to probate. Page 14 of 14