Will Drafting - Construction

Question 1

Date from which the will speaks - Property?

Answer 1

General rule: unless a contrary intention, will speaks from the testator’s death in respect to identifying subject matter of a gift (s 24)

Contrary intention is demonstrated by use of words such as ‘my’, ‘now’ or ‘at present’ when describing a gift, which makes date of execution of will the relevant date.
* as the word, ‘my’ can be construed as demonstrating a contrary intention to general rule, specific gifts have significant risk of failure as testator no longer owns the asset when they die so gift will adeem unless express substitutional gift.

Question 2

Collections?

Answer 2

• Gifts of collection capable of growing the will speaks from date of death regardless of the use of ‘my’
• e.g.,”my chattels” or “my stamp collection”
• holding shares would be treated the same way and will be taken to mean owned at date of death.

Question 3

People?

Answer 3

• to identify persons who should inherit under a clause, the will is deemed to speak from date of execution, unless wording in will shows a contarty intention.
• where a gift is given to class of beneficaries, a testator should state expressly when the beneficiaries will be determined (e.g., does testator mean beneficiaries alive when will was executed or when testator dies)
  
  • without express wording, ‘class closing’ rule applies and class closes when first beneficiary in class obtains vested interest.

Question 4

What is a relieving provision?

Answer 4

• Deals with matters as who should bear burden of taxes, charges (e.g., mortgages), expenses and costs. Such provisions should be expressly stated but in abscence, there are general rules.

Question 5

Inheritance Tax

Answer 5

In abscene of an express provision an individual gift in a will is made free of IHT and it would be payable out of residue as general testamentary expense.
* standard practice for legacies to be drafted expressly as free from tax and for resdiuary estate to bear burden of such tax, though it is not strictly legally necessary
* if general rule does not reflect testator’swished, they can oust general rule and state a gift should bear its own IHT.

Question 6

Expenses/cost of transfer?

Answer 6

Absence of any express provision, specific beneficiaaries bear the burden of the:
* cost of delivery of the item of property to them
* expenses incurred since date of death in preserving item or ensuring its upkeep

Testator may prefer costs be paid out of residuary estate and if so, gift should be stated as ‘free of’ expenses and/or costs of transfer

Question 7

Charges?

Answer 7

General rule: unless the will shows a contrary intention, the asset charged bears liability for payment - beneficiary will inherit property subject to charge

• testator can expressly relieve property of charges and so becomes a general debt of estate to be paid out of residue
• as well as checking testator’s intention, terms of any policy should be checked carefully as lump sum may not even fall within succession estate

Question 8

Where meaning of a will or clause is unclear or ambiguous, can the courts rule on how it should be considered?

Answer 8

• courts has power to determine the effect of the will and overriding principle regarding construction is that testator’s intention should be given effect to.
• court’s role is to determine the meaning of the words within the will and what testator intended - extrinsic evidnece may be permitted

Section 21 Administration of Justice Act

Question 9

When may extrinsic evidence be submitted under s.21?

Answer 9

• if will or any part of it is meaningless
• language used in any part is ambiguous on the face of it
• if will is ambigious in light of surrounding circumstances

extrinsic evidence is used to help construction of will not to vary or contradict

Question 10

Survivorship Provision?

Answer 10

Generally in order to take a gift under a will beneficiary must merely survive the testator, even if for a short period of time.
* if beneficiary predeceases testator, gift will lapse (fail)
* in sitution where it is uncertain to know exact order of death between testator and beneficiary, the commorientes rule applies whereby there is a presumption that the eldest person died first
* if order of death is unknown, testator and beneficiary’s estate are taxed (IHT) separately but if property passes from one to another (order is known), relief on double taxation as second estate is not taxed

Question 11

Express survivorship clauses?

Answer 11

To avoid problems and confusion regarding two deaths, an express survivorship clause, similar to intestacy rule, should be applied - normally within 28/30 days - if survived, less than week of specified period, gift passes to next one entitled under terms of will.