Personal chattels – time for change

20 / 10 / 2014

Most people will have a clear idea of what their personal possessions or “personal chattels” are but, if asked to list these, few would include items such as “carriages”, “stable furniture”, “linen”, “plated articles” or “scientific apparatus”. It might come as a surprise therefore that until 1 October this year, these items were among a list of other somewhat outmoded objects that comprised the legal definition of “personal chattels”; a definition that had been in existence since 1925.

In an attempt to modernise this definition, new legislation has been introduced with effect from 1 October which defines “personal chattels” as “tangible moveable property other than any such property which consists of money or securities for money, or was used at the death of the intestate solely or mainly for business purposes, or was held at the death of the intestate solely as an investment.”

The definition of personal chattels, and in particular the exceptions to what is included in the definition, is important, because it will determine which assets pass to which beneficiaries after an individual’s death.

The first exception, money and securities for money, was found in the old definition.  As before, such items will not be treated as personal chattels.  The words “solely or mainly” have now been introduced to the second exception to make it clear that it is only where an item is used primarily for business purposes that it should be excluded from the definition of personal chattels.

The third exception is perhaps the most controversial. Property held “solely” for investment purposes, which has no personal use at the date of the deceased’s death will not be treated as a personal chattel. This is intended to be a narrow exemption such that property which has some personal use but which the deceased also hopes might increase in value, for example precious jewellery worn only occasionally, will not be excluded from the definition of personal chattels, even if it is held in a bank for security purposes.  However, as various critics have pointed out, the point at which a piece of art or a collection of stamps would no longer be perceived as being held for personal enjoyment but solely for investment purposes is bound to be litigious.

If you do not have a Will, all of your “personal chattels” will pass to your surviving spouse or civil partner and so you should consider whether this new definition is broad enough to include items that you regard as your personal possessions or alternatively whether it now includes items that you would expect to be excluded. Can you get any personal enjoyment from items that might be considered investment property, but you would in fact like to pass to your spouse? Making a Will could avoid a dispute between your surviving spouse and children about whether or not items fall into the definition of personal chattels or fall into the residue and who should therefore inherit them.

If you have executed a Will before the 1 October 2014 which defines “personal chattels” by reference to the old statute (the Administration of Estates Act 1925), then, subject to contrary intention, the new definition will not apply.  If you consider that the new definition is more appropriate in your circumstances, then you will need to execute a Codicil which expressly incorporates this into your existing Will.

If you need any advice about making a Will or amending your current Will then please contact one of our team.