Distribution of estate subject to a right of occupation and cash gift

Trusts Discussion
1

Hello

I am dealing with an estate where the Will provides the deceased’s partner with a right of occupation.

The deceased’s assets comprised of a 45% share in a property and around £7,000 in cash.

The Residuary Estate gives £40,000 to daughter A and the remainder equally between daughter A and daughter B. There is currently not enough cash in the Residuary Estate to pay this legacy, and this will need to be paid when the property is sold (once the partner no longer wishes to reside there).

My queries are:

  1. should the Residuary Estate that is available (£7,000) be paid to daughter A in part-payment of her legacy?
  2. is daughter A entitled to interest on the legacy if it is not paid within one year of their mother’s death

The wording of the Will is as follows:

3a.
I give free of tax to my Trustees all my beneficial interest (“my Share”) being 45% in (or in the future proceeds of sale of) the property known as [address of property] aforesaid (the Property”)

3b.
While [name of partner] has a beneficial share in the Property (or its future proceeds of sale) and while he wishes to occupy it and subject to his reasonable compliance with the provisions of clause (c) below my Trustees shall take no steps to sell my Share or obtain a sale of the Property or to obtain any rent or profits therefrom and shall permit him to occupy the same

3c.
If he shall survive me and occupies the Property the said [name of partner] shall:-
(i) Pay the outgoings in respect of the Property.
(ii) Keep the property in good repair
(iii) Keep the property insured comprehensively and to its full replacement value at no cost to the Trustees

3d.
Subject to the above my Trustees shall hold my share as part of the residue of the estate.

I give devise and bequeath to my Trustees all my real and personal property of whatever nature and wherever situate of or to which I shall be possessed or entitled at my death (except any property otherwise disposed of by this my Will or by any Codicil hereto) upon the following trusts:-

4a
Upon trust to sell call in and convert the same into money with power to postpone such sale calling in and conversion for so long as my Trustees shall in their absolute discretion think fit without being liable for loss

4b
Upon trust to pay out of the net proceeds of such shall calling in and conversion and the property for the time being remaining unconverted and my ready monies all my debts funeral and testamentary expenses and all legacies given by this my Will or by any Codicil hereto

4c
Upon trust as to Forty thousand pounds thereof for my daughter [name of daughter A] absolutely (to achieve equality with her sister who has previously had such benefit)

4d
Upon trust as to both capital and income and in equal shares if more than one for such of my daughters [name of daughter A] and [name of daughter B] who shall be living at my death for their own use absolutely

Any thoughts would be appreciated

Kind regards

2

Hi Katherine,

My view is interest is payable from the end of the executor’s year. This is in line with CPR PD 40A. I am not aware of any exception if the legacy is delayed through no fault of the executor’s. Lexis suggests looking at Tolley in respect of exceptions to the rule:

‘In the absence of contrary directions in the testator’s Will, general and demonstrative legacies carry interest from the end of the executor’s year (ie 12 months after the testator’s death) if the legacy has not already been paid within that period. For exceptions to this rule, see commentary: Interest and income: Tolley’s Administration of Estates [E6.16].’

I think it is clear the residuary estate available should be paid to the daughter now. Her legacy comes out of the residue and some residue is available now.

Admittedly, these conclusions do seem odd as one would think the draftsman would have left the entire estate on a life interest trust and then given £40,000 of the remainder to daughter A and divided the rest between A and B.

Yours the Legal Beagle