I have a very badly drafted Will clause gifting the rental income of a property to the deceased’s spouse.
There is no provision for what should happen afterwards after all. My initial thought was it would just pass to the residuary beneficiaries but a colleague seems to think it would pass under the intestacy rules. The deceased was married to the life tenant and wishes the property to pass to her own two children.
Please help!
Kirsty Claridge
The Deans Legal Services
This is the entirety of the clause:
I GIVE DEVISE AND BEQUEATH my interest in the property XXXXXX UPON Trust to my Trustees for the following purpose:
a) The property will be rented out by my Trustees to suitable tenants of their choosing during the lifetime of my said husband xxxxx or until such time as such rental shall by his sole election cease
b) So that my husband xxxxxx may receive all of the rental income from the property subject to him paying all tax associated with receipt of such income and all the usual outgoings relating to the said property during the time of its rental PROVIDED ALWAYS that whenever such rental or receipt of rental income may cease either on the death of my said husband or on his election or otherwise
Kirsty Claridge
The Deans Legal Services
It will depend on what the rest of the will says, but I think your colleague is right. This is a trust that fails to exhaust the entire beneficial interest. Unless there is something in the rest of the will that disposes of the remainder interest, there is a partial intestacy. If the husband has survived, then he may have rights arising on intestacy as well as under the will.
Josh Lewison
Radcliffe Chambers
As Josh says, the terms of this clause need to be construed after taking into account what the Will as a whole says. If there is doubt, rectification may be a possibility
Simon Northcott
The rest of the Will is just the residue clause,
‘I give devise and bequeath all of my real and personal property whevever situate except for that disposed of by this my Will to my children…’
Then the second edition of the STEP provisions are included, then attestation.
Is the point that the property was carved out of the Will and therefore is not part of the residue? Makes sense I guess. On intestacy this would revert to her husband I guess and then pas with his Will on his death? This is not what was intended.
Kirsty Claridge
The Deans Legal Services
I am not convinced the reversion after the life interest passes on intestacy. H has been given a limited interest in the asset and then the asset after the termination of his interest has not been disposed of specifically, although the wording is clearly incomplete.
As the wording is incomplete you need to explore rectification.
Absent that, I believe the reversionary interest passes as part of the residue-ie it has not been " disposed
of by this my Will", apart from H’s interest, so should go to the children as residue.
Simon Northcott
My understanding is that for the subject matter of a trust devise not to fall into residue on the termination of the trust, the gift into trust must be exhaustive. Usually this will specifically include the identity of the beneficiary entitled on the termination. If that gift then fails, for whatever reason, the trust fund passes as on an intestacy.
Where the gift into trust is not exhaustive, I believe that upon termination of the trust the trust fund falls into residue.
As the wording of the gift into trust appears only to deal with the widower’s income entitlement, I am not convinced that it is an exhaustive gift and, like Simon, am inclined to the view that it falls into residue when the widower’s interest ceases.
I suggest it might be appropriate to obtain the opinion of Chancery counsel, which can then be shared with the potential beneficiaries. If they cannot agree on the interpretation, this will likely bring forward the discussion and allow matters to be resolved sooner, rather than be allowed to fester.
Paul Saunders
Thank you for all your replies. Very grateful for the knowledge and assistance the forum provides.
Kirsty Claridge
The Deans Legal Services