News | April 6, 2018

Andrew McIntyre responds to a readers’ question on a complex probate issue for Choice Magazine

Q: My wife is a beneficiary of the Will of someone who died in February 2009. One of the other beneficiaries predeceased this person and no clause was inserted in the Will to divide his share among the remaining beneficiaries. As a result, a specialist organisation was brought in to trace any relatives of his. More than 50 people have now been identified as being entitled to his share in varying amounts. My wife signed the estate accounts this year under the impression that the balance of her share would be paid out once all the original beneficiaries to the Will had signed. She has now been told by the solicitors dealing with it that nothing can be paid out until all beneficiaries have signed including those benefitting from the predeceased’s share. This seems unfair but is it correct?

A: Where a beneficiary dies before the testator (the person making the Will), the general rule (unless there is express provision in the Will) is that the gift fails. That is to say, the beneficiaries’ own heirs receive nothing and cannot replace the predeceased beneficiary. Instead, the gifted property simply passes to the next beneficiary entitled under the Will, which is usually the person who stands to inherit the remainder of the estate. Therefore the property would ordinarily be divided between your wife and the other entitled beneficiaries.

The exception is where the predeceased beneficiary is the testator’s child or descendant and leaves children of his own. In that scenario, the predeceased beneficiary’s own children can step into their parents’shoes and inherit the gift. It may be the case that this is what has happened here. However, the Will should be examined carefully, as it can disapply this rule or expand it to other relatives of the predeceased.

It is good practice to require all beneficiaries (whether original or substitutes) to sign off the final estate accounts. This provides an opportunity for queries to be made, as it is difficult in practice to remedy incorrect assumptions once the assets have been transferred. The executors are obliged to form a clear picture of the estate, and the review by beneficiaries may reveal unknown assets, liabilities or further beneficiaries. That said, the executors may choose to make partial distributions in the interim, although whether this will be cost-effective will depend on the estate.

We would recommend asking a legal advisor to check the Will’s terms and estate accounts.

This article was first published by Choice Magazine.