Current Issues in Succession Law

Birke Häcker, Charles Mitchell, Birke Häcker, Charles Mitchell

• Publisher: Hart Publishing
• Year: 2016
• ISBN:
  9781782256281
• Edition: 1
• Topic: Diritto
• Subtopic: Diritto sulla proprietà

While continental and comparative lawyers have recently rediscovered succession law as an area of immense practical importance deserving greater academic attention, it is still a neglected field in England. This book aims to reinvigorate the English debate. It brings together contributions by leading academics and practitioners engaging with topical issues as well as questions of fundamental importance in succession law and estate planning. The book will be of interest to both academics and practitioners working in the field, and to non-English comparative lawyers.

1

Intestacy Reform in 2014—Unfinished Business

ROGER KERRIDGE^*

1.Introduction

On 1 October 2014, the provisions of the Inheritance and Trustees’ Powers Act 2014 came into force, but the theme of this chapter is that that Act represents unfinished business—unfinished in two senses. On the one hand, the 2014 Act, which enacted proposals contained in the Law Commission’s 2011 Report on Intestacy and Family Provision Claims on Death,¹ succeeded for the most part in completing a programme begun by an earlier, 1989, Law Commission Report on Family Law: Distribution on Intestacy,² but it did this, in large part, by ignoring views with which the draftsmen of the two Reports were out of sympathy. It may be that this was inevitable, it may be that this difference of approach represents two opposed views of what, at the end of the day, is to be regarded as ‘the family’. But, if this is so, the underlying problem remains. Those who drafted the two Reports almost certainly see themselves as representing not only the present, but the future, the direction of things to come. It may be that, in believing this, they could be wrong.

2.The Background

The rules which have applied to intestacies in England and Wales since 1926 are contained in Part IV of the Administration of Estates Act 1925, ‘the 1925 Act’. They are based on the rules of distribution, the rules which had, before 1926, applied only to personalty and which had been codified in the Statutes of Distribution of 1670 and 1685. The principal effect of the 1925 Act was to get rid of the rules of inheritance which had until then applied to realty, to do away with the privileges given to the heir, to end the precedence of males over females and male primogeniture, and to create equality as between persons of the same degree. Eldest sons were the losers, widows the winners.

The code which took effect in 1926 has since been amended several times, but the majority of the changes have either been relatively unimportant³ or have been linked with, or have resulted from, changes effected in other branches of the law.⁴ Since 1926, there have been at most three occasions on which there have been significant changes to the intestacy code—these were in 1953, 1996 and 2014. There have been at most three occasions because the 1996 and 2014 changes are, to a considerable extent, linked. They result from two separate Law Commission Reports, but the 2014 changes follow on from those made in 1996 and could be viewed as an attempt to complete the task begun 20 years earlier—unfinished business left over from the earlier round. In order to put the 2014 changes in context, it may be helpful to consider, albeit briefly, the position in 1926, what happened in 1953 and then what did, and what did not, happen in 1996.

2.1.The Position in 1926

The 1926 rules were relatively straightforward. If the deceased left a surviving spouse, she⁵ took (i) the personal chattels; (ii) the statutory legacy of £1,000; and (iii) a life interest in half the residue if there were issue, or a life interest in the entire residue if there were no issue but the deceased left a grandparent or the descendant of a grandparent.⁶ If the deceased left a surviving spouse, but no issue and no grandparent or descendant of a grandparent, she took the entire estate. If the deceased left no surviving spouse, but did leave issue, the issue took the entire estate. If the deceased left no spouse and no issue, but did leave grandparents or their descendants, they would take his estate in a specified order.⁷ If the deceased left no spouse, no issue and no grandparents or their descendants, the estate would pass to the Crown⁸ as bona vacantia.

The personal chattels will be discussed further below.⁹ The statutory legacy had had its origin in the Intestates’ Estates Act 1890 which had provided that, where a man died totally intestate leaving no issue, his widow would take his entire estate if its value did not exceed £500, and that she would have a charge on his real and personal property for £500 if the value of the estate exceeded this sum. In 1926, the £500 had become £1,000, it was awarded both to widows and to widowers, it was to be paid whether or not there were issue, and it was to be paid also in cases of partial intestacy.

2.2.The 1953 Changes

The Intestates’ Estates Act 1952, which came into force on 1 January 1953, was based for the most part on the recommendations of the Report of the Committee on the Law of Intestate Succession, usually referred to as ‘the Morton Committee’.¹⁰ The principal change effected by the 1952 Act was a huge increase in the spouse’s statutory legacy. In 1953, the sum, which had been £1,000 irrespective of whether the deceased was survived by issue or by a grandparent or any descendant of a grandparent, was increased to £5,000 where there were issue, and to £20,000 where there were no issue. To compensate for these increases, an additional hotchpot rule¹¹ was introduced whereby a spouse had to account against her¹² entitlement to the statutory legacy for any benefits received in a partial intestacy.¹³ There were no other changes in 1953 in cases where the deceased left a spouse and issue. The spouse continued, as she had since 1926, to take the personal chattels, the now increased statutory legacy, and a life interest in half the residue, the issue took the remainder and the other half on the statutory trusts.¹⁴

If, after 1952, the deceased left a spouse and no issue, there were further changes. The spouse continued, as before, to take the personal chattels, but if the deceased left no parents or brothers or sisters of the whole blood or their descendants, the spouse now took the entire estate. Before 1953, the spouse took the entire estate only if the deceased left no grandparents or their descendants.¹⁵ And, if he did leave grandparents or their descendants,¹⁶ the surviving spouse had, before 1953, had only a life interest in the residue after taking the personal chattels and the £1,000 statutory legacy. If the deceased now left no issue, but left parents, or brothers or sisters of the whole blood or their descendants, the surviving spouse would now take, in addition to the personal chattels and the £20,000 statutory legacy, half the residue absolutely, rather than, as had been the case since 1926, the whole of the residue for life.

3.The 1989 Law Commission Report and the 1996 Changes

Apart from increases to the statutory legacy,¹⁷ there were no significant changes to the intestacy rules between 1953 and 1988, but in that year the Law Commission produced a Working Paper and a survey of public opinion, and these were followed in 1989 by a Report Family Law Distribution on Intestacy¹⁸ which made the following three recommendations for reform: (i) that—subject to (iii) below—a surviving spouse should in all cases take the intestate’s whole estate; (ii) that the statutory hotchpot rules¹⁹ should be repealed; and (iii) that a spouse should inherit under the intestacy rules only if he or she survived the intestate for 14 days.²⁰ The first of these was, of course, by far the most important and it has been at the heart of an on-going debate ever since. All other changes proposed in or since 1989 have either been linked with this, or have been relatively unimportant.

In the 100 years starting in 1890, ‘progress’ and ‘reform’ had always meant that the share of an intestate’s estate given to his spouse was increased. The Intestates’ Estates Act 1890, although described by JHC Morris as ‘a timid half measure of reform’,²¹ established the notion of the statutory legacy and, in doing so, gave the widow a measure of precedence over the heir.²² The 1925 Act applied to realty the rules formerly applicable to personalty. The 1952 Act hugely increased the size of the statutory legacy. The 1989 recommendation was the culmination of a century-long process, and it had the merit of being, in its application, a simplification. But did it go too far? There had always been fundamental differences of opinion as to how to divide up an intestate’s estate between his spouse and his next of kin. These differences could be seen in 1951 when the Council of the Law Society suggested in their evidence to the Morton Committee that, where there were no issue, the surviving spouse should take the whole of an intestate’s estate. By contrast, the General Council of the Bar, when giving their evidence to the same committee, suggested no increase to the statutory legacy; they would have retained it at £1,000, but they would have given the surviving spouse a life interest in the whole of the residue, above and beyond the personal chattels and the statutory legacy, in all cases, whether or not there were surviving issue. This was almost the opposite of the Law Society’s suggestion—the Bar were drawing no distinction between the position where there were and where there were no issue, and the only way in which a spouse was better off after 1952 than before was in the case where the spouse was survived by issue. The recommendations of the Morton Committee, which were enacted in 1952 and came into force in 1953, steered a course between these extremes.

There are two interlinked questions here. The first is: with whom (if anyone) should the spouse share the intestate’s estate? The second is: how much (or what percentage) should the spouse be awarded? From 1926 onwards, the spouse took the entire estate if the deceased left no surviving issue and no next of kin who were grandparents or their descendants.²³ From 1926 to 1952, the spouse’s share of the estate was slightly smaller if there were issue than if there were no issue, but there were grandparents or their descendants, yet it made relatively little difference.²⁴ From 1953 onwards, the position where there were, and when there were not, issue, was radically different. In the latter case, unless the deceased left parents or brothers or sisters of the whole blood, or their descendants, the spouse now took the whole estate; and even in cases where there were parents or such brothers or sisters or their descendants, the spouse now took a much larger statutory legacy (£20,000 as opposed to £5,000) than she would have been awarded had there been issue. So, where the deceased left a spouse, the effect of the 1953 changes was, in the vast majority of cases, to disinherit all next of kin except for issue.

But that brings us back to the question of the issue. From 1953 onwards, where a deceased left a surviving spouse, the issue were the only members of his family who were likely to share his estate with her. The proposal in the 1989 Law Commission Report to give the entire estate to the surviving spouse was one which would be of relatively little significance except where there were issue. So the question which needed to be asked was: how generously should issue be treated vis-à-vis a surviving spouse? Does it make sense simply to say that the surviving spouse should, in all cases, take the entire estate, or should the rights of the issue be to some extent preserved? In theory, one could of course draw all sorts of different lines according to the duration of the marriage on the one hand and the ages and closeness of the issue to the deceased on the other. What may seem to some to be a reasonably obvious dividing line may not appear so to others. One effect of the 1953 changes was to create a cut-off point for those of the next of kin who might share the deceased’s estate with his spouse, between brothers and sisters of the whole blood and those of the half blood. This seems slightly arbitrary. The line between issue and non issue is easy to draw, but in terms of succession it may be suggested that the correct place to draw the line, when considering who should share with the spouse and how the shares should be measured, does not relate so much to the link between the deceased and the issue but, more importantly, to the link between the surviving spouse and the issue: ie is the surviving spouse the parent of the deceased’s children? If rules are enacted which pass a large part of, or the whole of, the deceased’s estate to his spouse in the case where he also left children or other issue, there will be a distinction between what are likely to be the longer term effects of this if the surviving spouse is the parent of the deceased’s children, as opposed to what is likely to h...