Funeral expenses v Life tenancy

I have an estate where deceased left a life interest in his home to his girlfriend for her life and thereafter to a charity (which he and his deceased wife had set up for local underprivileged children). There is also a specific gift of his bank account to the girlfriend. The only other asset is a policy which the deceased believed would cover his funeral but which in fact we have been advised is outside his estate and goes to the girlfriend also. Suffice to say there are insufficient funds to cover his funeral and other debts and expenses even after the specific gift of the bank account is abated. As these debts must be paid the only option the executors have is to ask the girlfriend to satisfy them from the life policy and in the event she refuses (which is likely) what powers to the executors have to sell the property in which she has a life interest?

sharon edelstyn
Phoenix Legal Group

perhaps if it is explained to her carefully and sympathetically that

  • the deceased had expected the policy proceeds to cover his funeral and that

  • as the debts have to be settled and she does not contribute then she is likely to have the house sold to do this, then she may be less likely to refuse.

Presumably she does not have much in the way of income and is looking to the policy proceeds to fund her day-to-day expenses, especially if she is not going to get the bank account that she was also expecting?
The executors may wish to consider suggesting to her that she downsizes, if that is possible, both practically and under the terms of the Will, then some cash would be freed up to deal with this?

Maxine Higgins
Citroen Wells

My understanding is that specific gift abate rateably, with no differentiation between legacies and devises. Accordingly, the gift of the bank account cannot be extinguished and the gift of the life interest remain.

In general, where a property is in trust and there is an IHT liability outstanding, the life tenant, or remaindermen, can be encouraged to make a loan to the trustees to enable settlement of the tax. The IHT relating to the property will be payable by instalments, which might soften the impact on the girlfriend in this instance. If the life tenant makes an addition to the trust, this will use her NRB and cause her to be a joint settlor, which may serve to complicate the administration of the trust fund.

If no loan is forthcoming, the executors/trustees may have no option than to take the draconian step of selling the property. This may also include the need to expel the girlfriend, which may be both traumatic and expensive. Having said that, if she unreasonably refuses to cooperate, costs might be awarded against her. In any event, such action will significantly increase the costs of administration.

If the girlfriend is unwilling to cooperate, either by making suitable loan(s) to the executors/trustees, or agreeing to vacate the property, the first step may be to make a Beddoes application to the court. This will put the trustees is a far stronger position, even if the court refuses the application, as it will provide protection against complaints from the other beneficiaries.

If a sale of the property would terminate the life interest, and the gift to the charity is vested, it may be the girlfriend and charity trustees could come to some form of compromise (to be recorded in a deed of variation?) which could satisfy all parties without resorting to potentially expensive litigation.

Paul Saunders