Survivorship and the importance of Wills
The winner does not have to take it all…
There has been a great deal of media coverage of the recent case of Scarle v Scarle. A dispute between Mr Scarle’s daughter Anna Winter and Mrs Scarle’s daughter, Deborah Ann Cutler reached the High Court and judgement has now been delivered.
The rule governing assets held jointly is that the asset passes to the survivor. Mr and Mrs Scarle’s main assets were a joint bank account containing approximately £18,000 and their jointly owned property. Both of which automatically passed to the survivor. However, in an unusual turn of events both Mr & Mrs Scarle were found dead the same day, 11th October 2016. So it was not apparent who had survived and inherited the jointly owned assets.
There is a long-standing legal presumption, set out in s184 Law of Property Act 1925, that the younger is deemed to survive the older in cases where it cannot be determined which party dies first. The case of Scarle v Scarle turned on whether the legal presumption that death occurs in order of seniority applied in respect of these valuable jointly owned assets.
Evidence was brought forward by Anna Winter that Mr Scarle outlived Mrs Scarle due to Mrs Scarle’s body being more decomposed. However, the counter-argument was that the greater level of decomposition was due to Mrs Scarle being found in a different part of the bungalow and that rates of decomposition are highly sensitive to environmental conditions.
Looking at the evidence…
Ultimately, the evidence presented on behalf of Anna Winter was not persuasive enough to demonstrate that Mr Scarle had survived Mrs Scarle. The order of death therefore remained uncertain and the presumption that Mr Scarle had died first due to being older was not rebutted. As such Mrs Scarle inherited the jointly owned property and joint bank account through being deemed the survivor. These formerly joint assets then passed under the Will of Mrs Scarle to her daughter, Deborah Ann Cutler.
If the presumption had been rebutted and Mr Scarle had been deemed to survive, then the assets would have passed under the rules of intestacy, to his daughter Anna Winter. Many commentators have noted that the couple, possibly inadvertently, adopted a winner takes all approach in that jointly owned assets would ultimately pass to one daughter and not the other.
Quite clearly Mr and Mrs Scarle were not working as a team, as Mr Scarle did not make a Will (for whatever reason) and Mrs Scarle made a Will that only provided for her daughter, Deborah, and made no provision at all for her step daughter Anna.
Could the dispute have been avoided?
The simplest solution would have been for Mr and Mrs Scarle to make mirror Wills whereby the entire estate of the survivor, including jointly owned assets, passed to both daughters in equal shares. Such mirror Wills are appropriate for many couples however it must be understood the survivor can revoke (change) their will at any point including after the first death. There was the risk that any mirror Wills made by Mr and Mrs Scarle benefiting both daughters could have been changed by the survivor to benefit the survivor’s daughter only.
It is tempting where possible to make as much provision as possible for children on the first death. Particularly when there are children from prior relationships involved. Where people have significant assets/savings in their sole name such an approach is viable as it does not necessarily impinge on the surviving spouse’s standard of living. However, many people do not have significant savings and most people own their property jointly, so it passes by survivorship.
Can you change how a property is owned?
It is possible to change how a property is owned so that it does not pass by survivorship. Through severing the joint tenancy each co-owner can own their own share in the property. That share can then pass under their Will into a trust that ultimately benefits the chosen beneficiaries of the first to die, such as a child or children. (Whether from a prior relationship or not.) A professionally drafted Will trust can effectively ring-fence the share in the property of the first to die for their chosen beneficiaries whilst clearly and fairly setting out the right of the surviving co-owner to continue occupying the property. The Wills can also be drafted so the terms of the trust allow the survivor to move properties and if the property is ultimately sold; allow the survivor to receive the income from the share in the property of the first to die.
If you would like more information on Wills that make provision for your descendants without compromising your partner then please contact me on 01283 214231 or via email at m.kelly@timms-law.com