The Law Commission

 


APPENDIX 1
DRAFT LAW REFORM (SUCCESSION) BILL

DRAFT

OF A

B I L L

TO

Amend the law relating to the distribution of the estates of deceased persons.

BE IT ENACTED by the Queen's most Excellent Majesty, by and with the advice and consent of the Lords Spiritual and Temporal, and Commons, in this present Parliament assembled, and by the authority of the same, as follows:

1 Disclaimer or forfeiture on intestacy

(1) Part 4 of the Administration of Estates Act 1925 (c. 23) (distribution of residuary estate) is amended as follows.

(2) After section 46 insert

"46A Disclaimer or forfeiture on intestacy

(1) This section applies where a person

(a) is, in accordance with section 46, entitled to an interest in the residuary estate of an intestate but disclaims it, or

(b) would have been so entitled had he not been precluded by the forfeiture rule from acquiring it.

(2) He is to be treated for the purposes of this Part as having died immediately before the intestate.

(3) But subsection (2) does not affect the power of a court, in a case within subsection (1)(b), to make an order under section 2 of the Forfeiture Act 1982 (power to modify effect of forfeiture rule).

(4) In this section and section 46B, "forfeiture rule" has the same meaning as in that Act.".

(3) After section 46A insert

"46B Safeguarding minor's share following forfeiture

(1) This section applies where

(a) a person ("the offender") would have been entitled to an interest in the residuary estate of an intestate had he not been precluded by the forfeiture rule from acquiring it, and

(b) as a result of section 46A(2), an infant who is a child or remoter descendant of the offender becomes entitled to an interest in the estate.

(2) The Court may (whether or not on its own initiative)

(a) appoint the Public Trustee to hold, during the infant's minority, any property to which his interest relates on such trusts as the Court may specify, and

(b) make such further orders or give such directions as it thinks necessary or expedient for giving effect to an appointment under paragraph (a).

(3) In deciding whether to exercise its powers under this section, the Court must have regard to the need to ensure that the offender does not benefit as a result of the infant's entitlement to an interest in the estate.

(4) When acting as trustee of a trust under this section, the Public Trustee must, so far as reasonably practicable, ensure that the offender does not benefit from the trust.

(5) Section 2(3) of the Public Trustee Act 1906 (which enables the Public Trustee to decline to accept a trust) does not apply.

(6) "Benefit" means benefit whether directly or indirectly.".

(4) Section 47 (statutory trusts on intestacy) is amended as follows.

(5) In subsection (1)(i) (provision that no issue with a parent alive at the intestate's death may inherit), after "and so that", insert "(subject to section 46A)".

(6) After subsection (4) insert

"(4A) Subsections (2) and (4) are subject to section 46A.".

2 Disclaimer or forfeiture of a legacy under a will

(1) The Wills Act 1837 (c. 26) is amended as follows.

(2) After section 33 insert

"33A Disclaimer or forfeiture of legacy

(1) This section applies where a will contains a devise or bequest of an interest in real or personal estate to a person who

(a) disclaims it, or

(b) has been precluded by the forfeiture rule from acquiring it.

(2) He is to be treated for the purposes of this Act as having died immediately before the testator.

(3) But subsection (2) does not affect the power of a court, in a case within subsection (1)(b), to make an order under section 2 of the Forfeiture Act 1982 (power to modify effect of forfeiture rule).

(4) Subsection (2) is subject to any provision in the will about how the devise or bequest is to take effect in circumstances which would include those where the intended beneficiary comes within subsection (1)(a) or (b).

(5) In this section and section 33B, "forfeiture rule" has the same meaning as in the Forfeiture Act 1982.".

(3) After section 33A insert

"33B Safeguarding minor's share following forfeiture

(1) This section applies where

(a) a person ("the offender") has been precluded by the forfeiture rule from acquiring an interest in real or personal estate under a will, and

(b) as a result of section 33A(2), an infant who is a child or remoter descendant of the offender becomes entitled to an interest in real or personal estate under the will.

(2) The Court may (whether or not on its own initiative)

(a) appoint the Public Trustee to hold, during the infant's minority, any property to which his interest relates on such trusts as the Court may specify, and

(b) make such further orders or give such directions as it thinks necessary or expedient for giving effect to an appointment under paragraph (a).

(3) In deciding whether to exercise its powers under this section, the Court must have regard to the need to ensure that the offender does not benefit as a result of the infant's entitlement to an interest in real or personal estate under the will.

(4) When acting as trustee of a trust under this section, the Public Trustee must, so far as reasonably practicable, ensure that the offender does not benefit from the trust.

(5) Section 2(3) of the Public Trustee Act 1906 (which enables the Public Trustee to decline to accept a trust) does not apply.

(6) In this section

"benefit" means benefit whether directly or indirectly, and

"the Court" has the same meaning as in the Administration of Estates Act 1925.".

(4) In section 33(3) (provision that no issue with a parent alive at the testator's death may inherit), after "and so that", insert "(subject to section 33A)".

3 Death of a single parent under 18

At the end of section 47 of the Administration of Estates Act 1925 (c. 23)

(statutory trusts on intestacy), add

"(4B) Subsections (4C) and (4D) apply if a beneficiary under the statutory

trusts

(a) fails to attain an absolutely vested interest because he dies without having reached 18 and without having married or formed a civil partnership, and

(b) dies leaving issue.

(4C) The beneficiary is to be treated for the purposes of this Part as having died immediately before the intestate.

(4D) The residuary estate (together with the income from it and any statutory accumulations of income from it) or so much of it as has not been paid or applied under any power affecting it is to devolve accordingly.".

4 Commencement, extent and short title

(1) This Act comes into force on such day as the Secretary of State may by order made by statutory instrument appoint.

(2) But the order may not provide for this Act to come into force before the end of three months beginning on the date on which it is passed.

(3) This Act extends to England and Wales only.

(4) This Act may be cited as the Law Reform (Succession) Act 2005.

EXPLANATORY NOTES

Clause 1

This clause inserts two new sections after section 46 of the Administration of Estates Act 1925, and makes two consequential amendments to section 47 of that Act.

New section 46A

This section modifies the order of intestate succession in two cases where the person first in line to inherit an estate or part of it is unable or unwilling to do so. The first case is where the person disclaims the inheritance. The second case is where the person loses the inheritance through the common law "forfeiture rule": that is to say, where he or she has killed the intestate, and is not allowed to inherit for this reason.

The question is who inherits instead of the person disclaiming or forfeiting. The current position is that not only that person but also all that person's descendants are excluded from inheriting. In some cases, such as where the disqualified person is the child of the intestate, the inheritance goes to other relatives such as siblings. In other cases, such as where the disqualified person is a parent or spouse, the inheritance goes to the Crown as bona vacantia. The problem came to light in the case of Re DWS (deceased),^[1] where R murdered both his parents and his son T claimed the inheritance. The Court of Appeal decided that T could not inherit and that the property went to the estate of W, the dead man's sister.

This result is widely perceived as unfair. The new section provides that, in all such situations, the property should be treated in the same way as if the person disclaiming or forfeiting had died immediately before the intestate. The effect is that the inheritance will go to the next person listed in order of priority in section 46: on facts such as Re DWS (deceased), to the grandchildren.

Subsection (3) ensures that the new rule will not limit the court's power under section 2 of the Forfeiture Act 1982. Under that section, where a person has killed the deceased but the killer has not been convicted of murder, the court has the power to modify the effect of the forfeiture rule, for example by allowing the killer to inherit all or part of the estate. Accordingly, the rule introduced by the new section gives way to any order made using the power under the Forfeiture Act.

New section 46B

This section exists to prevent a killer from benefiting indirectly from a child's inheritance.

The rule introduced by new section 46A allows a person's children and other descendants to inherit in place of that person, when he or she is disqualified by the forfeiture rule. This inheritance takes the form of "statutory trusts", which are defined in the existing section 47. Briefly, any child or descendant acquires a vested interest on attaining 18 or marrying (or, once the Civil Partnership Act 2004 is in force, forming a civil partnership). Until then, the property is held on trust, with the usual powers of maintenance, advancement and accumulation.

New section 46B provides that, in this situation, the court may appoint the Public Trustee to hold the property for the minor beneficiaries: the Public Trustee may not decline the trust. The purpose is to avoid benefit to the disqualified person. Accordingly the Public Trustee must so far as reasonably practicable administer the trust so as to avoid such benefit.

The Public Trustee continues to hold the property until the beneficiary attains the age of 18. There is no specific provision for the trust to terminate if the beneficiary marries or becomes party to a civil partnership before that age.

Subsection (5)

This is a consequential provision. At present, section 47(1) of the Administration of Estates Act 1925, which defines the statutory trusts for descendants, provides that no grandchild or remoter descendant may inherit if their parent was still alive when the intestate died. The effect of section 46A is to treat the offender as having died, so as to allow the offender's descendants to inherit. Subsection (5) inserts the words "subject to section 46A" into section 47(1), to ensure consistency with the new rule.

Subsection (6)

This is another consequential provision, and inserts a new subsection after section 47(4) of the Administration of Estates Act 1925, stating that subsections (2) and (4) are subject to the new section 46A.

Section 47(2) provides that, where no descendant of the intestate attains a vested interest, the estate is to be distributed as if the intestate had died without issue. Section 47(4) applies a similar rule to the statutory trusts for siblings or uncles and aunts, which are defined by section 47(3). These two rules cover some of the same ground as the new section 46A, and the new subsection exists to avoid duplication.

Clause 2

This clause inserts two new sections after section 33 of the Wills Act 1837, and makes one consequential amendment to that section.

New section 33A

This corresponds to new section 46A of the Administration of Estates Act 1925.

It applies when a person either disclaims an interest under a will or is precluded from taking it by the forfeiture rule because he or she has killed the testator. In both these situations, the will is to be interpreted as if the person disclaiming or forfeiting had died immediately before the testator.

This makes a practical difference where the will contains wording such as "to A, but if A dies before me, to B". Under the current rule, if A disclaims, or kills the testator, the gift to B will fail because B did not in fact die before the testator. Under the new rule, B will inherit.

A similar situation can arise under section 33 of the Wills Act 1837. Where a will contains a gift to a child, and that child dies before the testator, the gift is (unless the will states otherwise) to go to that child's descendants, but that no grandchild or remoter descendant may inherit if their parent was still alive when the testator died. The same problem can arise here as in the intestacy case, and the rule introduced by new section 33A solves it in the same way. Where the child disclaims or forfeits the gift, he or she is treated as having died before the testator, and the grandchildren can inherit.

Subsection (3) of the new section provides that, as in the intestacy situation, this new rule gives way to any order the court may make under the Forfeiture Act 1982. Subsection (4) confirms that the new rule gives way to any specific provision in the will about what happens to the gift in circumstances such as forfeiture and disclaimer.

New section 33B

This corresponds to new section 46B of the Administration of Estates Act 1925. Where an interest under a will is forfeited, and the new rule in section 33A results in an interest being taken by a person under 18, the court may appoint the Public Trustee to be the trustee of the relevant property for that person. The court, and the Public Trustee, are charged with ensuring that the offender does not benefit from the trust.

Subsection (4)

This makes a consequential amendment to section 33(3) of the Wills Act 1837, and corresponds to subsection (5) of clause 1 in the intestacy situation.

As explained above, section 33(3) excludes a grandchild or remoter descendant of the testator whose parent was still alive at the testator's death. Subsection (4) inserts the words "subject to section 33A", to avoid inconsistency with the rule introduced by that section.

Clause 3

This inserts new subsections (4B), (4C) and (4D) after the new section 47(4A) of the Administration of Estates Act 1925.

The inserted subsections concern a special situation, in which a child of an intestate dies unmarried, but leaving children. The problem arises if the child dies after the intestate, but before attaining the age of 18. In this situation, the grandchildren are effectively disinherited. They cannot inherit directly from the intestate grandparent, because their parent was still alive at the grandparent's death (section 47(1)). Nor can they inherit via the parent, because the parent never attained a vested interest in the grandparent's estate. The same problem can arise where the person who dies under the age of 18 is a grandchild, sibling, uncle or aunt of the intestate, or a descendant of any of these.

The inserted subsections address this problem by providing that, in any of these situations, the estate is to be distributed as if the child or relative had died immediately before the intestate. Income remaining from the period between the death of the testator and the death of the child or relative is dealt with in the same way.

Clause 4

This provides for the Act to come into force on an appointed day, which must be at least three months after Royal Assent. It also provides for citation and extent.

Note 1    [2001] Ch 568 (CA).    [Back]