GENERAL PRINCIPLES

The law as to whether or not you can leave moveable property (i.e. anything other than land, which includes non-portable buildings on land) by your will is decided by the law of the state in which you are domiciled, i.e. the state which is considered to be your permanent home at the date of your death. The law as to whether or not you can leave immoveable property by your will is the law of the state in which the land is situated.

At birth you have the same domicile as your mother if you are illegitimate or your father is dead, otherwise the domicile of your father. This is known as your domicile of origin. You can exchange your domicile of origin for what is known as a domicile of choice by abandoning your ties with the state in which you have your domicile of origin and moving to live in another state with the intention of making it your permanent home. A new domicile of choice can be acquired as frequently as you wish, but you can only have one domicile at any given time. Those who are mentally incapable or under the age of 16 have the domicile of the person upon whom they are dependent and their domicile will follow any change in that person’s domicile. This is known as a domicile of dependency. A woman who married before 1 January 1974 acquired her husband’s domicile by virtue of the marriage, but after that date she can change it and her domicile is no longer dependent upon her husband. There are exceptions to the above rules for inheritance tax purposes, in that for those purposes,

• you are deemed to retain your domicile in the relevant part of the United Kingdom for three years after leaving it and
• you are deemed to be domiciled here if you have been resident here for any part of 17 or more of the 20 preceding tax years.

I use the word ‘state’ in connection with domicile rather than ‘country’ because domicile is defined not by national boundaries but by places which have their own independent system of law.

If your domicile is England and Wales you can dispose by will of anything in England and Wales and any moveable property which you have abroad and you can dispose of it to whom you wish and to the exclusion of your family unless

• you have restricted yourself by contract, e.g. by entering into an agreement to create and not revoke mutual wills; or
• it is something which does not pass to your personal representative on your death, e.g. jointly owned property held as joint tenants; or
• it is a contract in which your personality is an essential element, e.g. a contract to paint a portrait or to write a book; or
• it is property you do not own (e.g. assurance policies taken out by you on trust for another) and over which you have not been given a power of appointment; or
• the property has been ‘nominated’ and the nomination has not been revoked; or

• it is property the disposal of which is restricted by its nature, e.g. some rights in immoveable property such as a personal licence or permission to use or cross the land of another, or shares in some small companies; or
• it is your body; or
• statute law restricts your right to dispose of it in the way you wish.

Some of these matters are easy to understand but I will deal with the others in more detail.

MUTUAL WILLS

Mutual wills must not be confused with so called ‘mirror wills’.

Mirror wills are merely wills each of which precisely reflects or mirrors the terms of the other and are frequently entered into by husband and wife. They are nothing more than wills with reciprocal terms. Mutual wills are wills made by one testator under a legally binding contract with another testator to make the wills and not revoke them without the other’s consent. The contract need not be a written one unless the will disposes of an interest in land.

To be a legally binding contract the agreement must

• be intended to create a legally binding relationship;
• have an element of bargain, i.e. of a mutual exchange of promises.

The fact that two people make their wills together at the same time and in identical terms does not by itself make them mutual wills. To be mutual wills there must also be further evidence of a legal contract to make the bequest and not revoke it without the beneficiary’s consent. Extrinsic evidence, i.e. evidence which is not apparent from the wills themselves (e.g. letters exchanged between the parties concerned), can be used to show that what on the face of it appear to be mirror wills were in fact mutual wills. In appropriate circumstances, to avoid problems, you should consider including in the wills the following clause ‘(insert name of other party concerned) and I agree that our respective wills are/are not mutual wills and that each of us is/is not free to dispose of his/her property in any way he or she thinks fit in the future.’ Only one of the alternatives should, of course, be included.

Makers of mutual wills need not necessarily confer benefits upon each other by their wills, provided that the agreement and the above elements of a contract are present. For example, A and B might agree that A will give up A’s house and go to live with and act as a carer for B for the remainder of their joint lives, if B will leave B’s house to A by will and not revoke the gift and further that A will leave the house to B’s children in A’s will. Another example of mutual wills would be if two partners in a business mutually agree to leave their share in the business each to the other by their wills and not to revoke the bequests.

In English law a will cannot be made irrevocable, but if one party to an agreement for mutual wills breaks the agreement, the other party is released from it and free to make alternative provisions in that other party’s will.

If one party to a mutual wills agreement dies having carried out his part of the bargain and the other party makes a new will in breach of the agreement, then upon the death of the party who has broken the agreement a court would ensure that the agreement is carried out either by imposing a trust upon his estate to achieve justice for the aggrieved party’s estate or granting damages in favour of the aggrieved party’s estate against the other estate.

Although the law will not usually enforce a promise made in your lifetime to make a gift by your will and your executor cannot legally carry it out unless it is contained in a valid will or codicil or a binding contract to make mutual wills, the law will very exceptionally enforce such a promise if the potential beneficiary relies upon it to his detriment in such circumstances that the promise would bind you in all conscience to do no other than to carry out your promise. The essential factors which must be present are the promise, reliance upon it, detriment and extremely seriously unconscionable conduct.

JOINTLY OWNED PROPERTY, i.e. PROPERTY NOT IN YOUR SOLE NAME

There are two ways of owning property jointly in English law, namely as joint tenants or as tenants in common. The use of the word ‘tenants’ has nothing to do with tenants in the sense of landlord and tenant; it is merely the same word used as a technical term to signify a different concept.

If people own property as joint tenants, the law provides that on the death of one owner, that person’s share is inherited by the surviving joint owner or owners by the very act of surviving, regardless of the terms of the deceased’s will or the next of kin, but a share of property which is owned as tenants in common is inherited on death as provided in the deceased’s will, if there is one, or if none, then by the next of kin in accordance with the intestacy laws.

How do you know whether jointly owned property was held as joint tenants or tenants in common? Usually bank accounts, building society accounts and stocks and shares in joint names are held as joint tenants, but if there is any evidence to show that the joint owners owned separate shares of the property as opposed to each joint owner owning the entirety, the joint ownership is a case of tenancies in common. The regular sharing by the joint owners of the dividends from jointly owned shares in a company in the same unequal proportions might be an example of such evidence. Joint tenants always own the asset equally and words or actions indicating that the joint owners own unequally always means that the assets are held as tenants in common. Partnerships almost invariably own property as tenants in common. When husbands and wives own property jointly they usually, but not necessarily, do so as joint tenants and not tenants in common.

Because you cannot leave your entitlement in property which you co-own as a joint tenant by will, if you wish to do so you must first sever the joint tenancy to create a tenancy in common and then leave your share by your will. A form of document to sever a joint tenancy and create a tenancy in common is included in the appendix of forms to this book and when completed must be given to the other joint tenant(s) to be effective. It is a wise precaution to arrange for the other co-owner(s) to sign a receipt to confirm that they have received the document and to place the receipted copy of the document with the title documents. If the property has a title which is registered at HM Land Registry, the receipted copy should be sent to the Land Registry at the District Land Registry (which you will find noted on your official copy of the Land Registry title information document) for noting in the Registry’s records. When communicating with the Land Registry you should quote the Land Registry Title Number which appears in the copy of the Land Registry title information document.

It is possible for a joint tenant to sever the joint tenancy and create a tenancy in common by other conduct showing an intention to do so, but such a severance is much more difficult to prove.

Whether the jointly owned property is held as joint tenants or as tenants in common your entitlement in the property is included in the value of your estate for the purpose of calculating inheritance tax.

BUSINESS PARTNERSHIPS

If you are a partner in a business you should refer to the written partnership agreement if one exists. Partnership agreements frequently provide that on the death of a partner, the surviving partners shall have a right to buy his share, or less frequently, that the deceased partner’s share shall accrue to the surviving partners without payment. Such provisions will obviously restrict your right to leave your share in the partnership to whom you wish.

If there is no written partnership agreement, then on your death the partnership will cease and the business should be wound up.

Your estate will be entitled to your share of the partnership assets or the proceeds that their sale produces and they can be left by your will.

PROPERTY YOU DO NOT OWN

Insurance policies taken out or held on trust for another

It is possible when taking out an insurance policy to stipulate that the policy is taken out on trust for, i.e. for the benefit of, another person or people. It is similarly possible to make a written declaration in respect of an existing policy that the policy shall be held on trust for others. The main advantages of following these procedures are that on death or maturity the proceeds of the policy do not form part of your estate and consequently they are:

• immediately payable to the trustees upon production of proof of death without waiting for a grant of probate of your will or letters of administration of your estate being issued by the Probate Registry;
• not subject to inheritance tax.

Because the policy is held on trust and is not beneficially owned by you, it is not yours to leave and cannot be included in your will.

Other property you do not own over which you have a power of appointment

Sometimes a deed or another person’s will or a trust, while it does not give you property, will give you a right (i.e. power) to decide who shall have the property. This is called a power of appointment. The document which gives you the power usually states whether you can use the power by deed in your lifetime or by will or by deed or will.

Other property you do not own over which you have no power of appointment

Although it might seem to be stating the obvious, you should always check that you do in fact own property you purport to give away in your will. It is easy to believe that you own articles which you have on hire purchase which in fact you only hire and are actually owned by the finance company, or consider that you own an assurance policy which you took out on trust for your wife or children. Similarly you may look upon the holiday cottage you inherited from your grandmother as your own and after many years forget that she only left it to you for the duration of your life and that her will provided that thereafter it was to go to a favourite grandson. If you try to leave it by your will to your daughter and you leave a legacy to the grandson, the result will be something that you almost certainly do not expect. There is a rule in English law known as the doctrine of election to the effect that a person who accepts a benefit conferred by a document must also accept every other provision of that document and give up any other right he possesses which is inconsistent with the document. Thus if a testator who does not own something purports to give it away by his will and also gives a bequest to the true owner of the asset, the true owner must either refuse his bequest or give up his own property or its value in compensation to the other beneficiary. Therefore, in the above example, the grandson will have to decide whether he will refuse the legacy or alternatively accept it and give up the cottage (or the value of the cottage) to your daughter.

NOMINATED PROPERTY

There have been various Acts of Parliament which authorised those who deposited money with certain organisations, e.g. National Savings and Friendly Societies, to ‘nominate’ people to receive the deposits on the depositor’s death. Such nominations are not overridden by the provisions of a will, and although it is no longer possible to make new nominations, any deposits which you have made and nominated cannot be left in your will unless the nomination is revoked by signing the organisation’s specified form or by your subsequent marriage, or are frustrated by the death of the nominee before your death.

PROPERTY WHICH BY ITS NATURE HAS RESTRICTED ALIENABILITY

Some existing rights in relation to land

Some existing rights for the benefit of land can only be left by will to a beneficiary to whom the land is left; for example, a right of way which you own cannot be left separately from the land or building to which it relates (unless you are giving the right by will or codicil to the owner of the land over which it exists so that it thereby ceases to exist). However, you can give a new right of way by your will to a neighbour for use with his neighbouring land.

Shares in some limited companies

Some family companies and some private companies state in their Articles of Association (the regulations which govern the running of the company) that you cannot transfer the shares in the company (sometimes except to specified members of your family), even as the result of a gift in a will, without first offering them to the other shareholders in the company. If you own shares in a small or family company you should check the position first with the company secretary before deciding to whom you will leave them in your will.

Your body

The general rule is that it is not possible to ‘own’ a dead body. It follows therefore that you cannot leave your body by your will although the courts have decided in a criminal case that if body parts have changed their nature as the result of skill, such as being dissected or preserved for the purpose of exhibition or teaching, they can be property and the subject of theft.

Although you cannot leave your body by will, if you express a wish at any time in writing or during your last illness orally in the presence of two witnesses to the effect that your body, or any part of it, shall be used for therapeutic purposes or for the purpose of medical education, research or anatomical examination, then the person having lawful possession of it (unless he has such possession only for the purpose of its interment or cremation) may authorise such use. Similarly any such person may authorise such use of any part of your body if, after making all reasonable practical enquiries, he has no reason to believe that you or your surviving spouse or relatives would object.

The coroner’s prior approval is required for such use if an inquest or coroner’s post-mortem may be required.

Your executors have a right and a duty to claim your body and arrange for its disposal.

More detailed information as to the disposal of your body is given in the next chapter.

STATUTORY RESTRICTIONS ON YOUR RIGHT TO LEAVE YOUR ASSETS TO WHOM YOU CHOOSE

Statutory tenancies

Certain old tenancies of private houses and housing association properties and certain tenancies of local authority houses can pass to particular members of your family on your death, but the position is very complicated and professional advice should be sought.

However, it is interesting to note that in 2002, in the case of Ghaidan v Mendoza, the court decided that a provision of the Rent Act 1997 which permitted a bequest of a statutory tenancy to a person living with a tenant ‘as his or her husband or wife’ must be construed to mean ‘as if they were his or her husband or wife’ and include same-sex couples to avoid contravening the provisions of the European Convention for the Protection of Human Rights and Fundamental Freedoms 1950 as set out in the Human Rights Act 1998, which provides for respect for the home and non-discrimination on the grounds of sex, race, religion or ‘other status’.

The Inheritance (Provision for Family and Dependants) Act 1975, as amended

In broad terms the Act permits

• your wife or husband or civil partner
• your former wife or former husband or former civil partner who has not remarried or registered new civil partnership
• your children

• any person who was treated as a child of any marriage or civil partnership to which you have been a party
• anyone who considers that he or she was maintained by you to a material extent immediately before your death

to claim a reasonable share of your estate after your death, even if your will leaves the claimant nothing.

The fact that the claimant is living in England illegally is irrelevant and the Forfeiture Act 1982 will not necessarily prevent a person who causes your demise by a criminal act from successfully making a claim under the Inheritance (Provision for Family and Dependants) Act 1975! A different-sex partner and possibly a same sex partner (whether the partnership is registered or not) who has been cohabiting with you as if you were man and wife or civil partner for two years immediately prior to your death can claim without having to prove he or she was maintained by you.

What is meant by the word ‘immediately’ has to be construed in the light of all the surrounding circumstances and can have a wider meaning than might at first be thought. The case of Gully v Dix in re Dix deceased, which was decided by the Court of Appeal in January 2004, is a good example. The facts were that the claimant and the deceased lived together from 1974 until August 2001 when the claimant moved out because the deceased’s alcoholism caused her to fear for her safety. She never returned and in October 2001 the deceased died. The court decided that in the light of their long-standing relationship and the reason for her leaving, in spite of the fact that she had been away for the three months or so before the death, she could be considered to be living in the same household and maintained by him immediately before his death and was therefore entitled to make a claim.

The High Court or a County Court exercising matrimonial jurisdiction can bar a spouse or civil partner from making a claim under the Act on or after successful proceedings for annulment of marriage, divorce, dissolution of partnership or judicial separation.

Proceedings under the Act can be brought in the County Court or in the High Court, but they must be started within six months of the issue of a grant of representation to the estate unless the claimant can satisfy the court that there were exceptional reasons for the delay.

What is a reasonable share depends upon all the circumstances of the individual case. Factors which will be considered include the size of the estate, the conduct of deceased and the parties, the needs and resources of the parties and the length of time the relationship existed. You might decide that you wish to leave a statement either in your will or in a separate note stating why you have made no, or only limited, provision for a potential claimant. A specimen statement containing some reasons which might be applicable in a particular case can be found in the specimen note contained in the appendix to this book, but other reasons might be relevant and could be included. If you leave the statement in your will, remember that when probate of your will has been granted after your death the will will be a public document and anyone can obtain a copy for a nominal charge. It is usually better to leave any such statement in a separate note and keep it with your will. Such a statement no longer has any statutory effect but in the event of any claim your executors would find it useful.

You must therefore either make reasonable provision in your will for those described above as entitled to claim against your estate or risk an expensive challenge being made to the provisions of your will.

INTANGIBLE ASSETS

Most other intangible items such as debts, patents, copyright rights, rights to sue for damages (except to sue for defamation) and contracts to which the personality of the parties is not an essential element can be left by will.

PRIVATE PENSION SCHEME BENEFITS

Private pension schemes frequently include benefits relating to death in service and benefits to take effect after the pensioner’s death. Usually these matters are decided by the rules of the scheme administered by the trustees of the scheme outside the will and the beneficiaries are chosen by the trustees at their discretion, but the trustees will usually give effect to the member’s intentions expressed in a statement of the member’s wishes. The advantage of these provisions is that the benefits do not form part of the member’s estate for the purpose of calculating inheritance tax.