Most people understand the importance of making a will, to determine what will happen to their money and property when they die, and to ensure that their loved ones are provided for in accordance with their wishes. What is less well known however is that not all ‘assets’ (i.e. money and property) automatically form part of a person’s ‘estate’ when they die, by operation of law.
There are certain situations in which assets fall outside of a person’s estate, and as such do not fall to be distributed in accordance with the terms of the will, to their chosen beneficiaries.
One good example of this is what is known as ‘Joint Property’; certain jointly owned property passes by the legal doctrine of ‘Survivorship’, to the other joint owner/s (for example, a house owned as ‘joint tenants’, rather than as ‘tenants in common’, will pass by survivorship to the co-owner). That co-owner may not in fact be the person who the testator intends to benefit when they die, and whom they have named in their will (even if the will specifically states that their share of the house should be left to a named individual).
Another good example is where certain funds may be paid out to a third party on the death of an individual, but form part of a discretionary trust. That trust is not part of the estate, and so again the benefit of those funds will fall to any individuals named in the trust. Many pension funds are paid outside of an estate, and are paid out to individuals at the discretion of the pension trustees (and not necessarily to the will beneficiaries).
We deal with cases where exactly this happens, and where it is argued that the people who actually receive funds are not in fact the people who the person who has died actually intended to benefit. In such cases, we have successfully argued in favour of a “constructive trust”. This is essentially an implied trust, by which the trustees are said to hold the relevant funds on terms which mirror the deceased person’s will. In that way, it can be argued that the will beneficiaries actually do benefit as the deceased intended.
We always advise clients that they should make a will, rather than leave it to the rules of Intestacy to determine who benefits from their estate. But it is equally important when making your will, to consider what assets are likely to form part of your estate, and to be aware of any assets such as your home, joint bank accounts, pension funds or life policies, which may fall outside of the estate. If in doubt, ask your solicitor to check the positon. A quick Land Registry search will show for example whether your home is owned as ‘joint tenants’ or ‘tenants in common’. It is far better to be safe than sorry!
At Moore Barlow we have a specialist team who advise on private wealth matters and the resolution of estate disputes. If you have a legacy concern you would like to discuss then please feel free to contact our solicitors on 01483 543 210.