Do you have a survivorship clause in your Will? Chances are you do, if you leave assets to
someone outright in your Will. The
mischief that these clauses are designed to avoid is this. If A gives a gift to B in his Will and B dies
the day after A, B’s estate will get the gift and it will be B’s Will that
decides where A’s gift ends up. However,
in these circumstances, A may have wanted someone else to get the gift instead
(A may not like B’s choice of heirs!).
Survivorship clauses are meant to solve this problem. They also prevent the delay associated with
the same money being administered through two separate estates and can reduce
the total Inheritance Tax bill on both estates.
Survivorship clauses introduce a condition of survivorship
to an otherwise outright gift in a Will – for example: ‘I give £100,000 to my
nephew if he survives my death by 28 days’.
Sometimes a catch-all survivorship clause is included instead; for
example: ‘My estate is to be divided as if any person who dies within 28 days
of my death had predeceased me’.
However, this exact catch-all phrase unfortunately caught out the
estates of the late Mr and Mrs Winson, as recently decided in the case of Jump v Lister [2016] EWHC 2160 (Ch).
Mr and Mrs Winson made similar Wills leaving everything to
each other but if that gift failed, each Will contained a near identical list
of cash gifts to be made, totalling £214,500 in each Will, and the rest to two
nieces. Their Wills contained the above
survivorship catch-all clause.
Unfortunately, Mr and Mrs Winson died of natural causes at
home and, as it was impossible to say which survived the other, English law (specifically
the commorientes rule in section 184 Law of Property Act 1925, which is
designed to help determine ownership of assets where survivorship is uncertain)
stepped in to deem the younger (Mr Winson) to have died last. Therefore, in Mrs
Winson’s case, her husband was deemed to survive her because he was younger but
not by 28 days and so the gift to him failed.
In Mr Winson’s case, his wife as the elder was deemed to have already
predeceased him and so the gift to her automatically failed. The result was that the recipients of the
cash gifts received the same gift twice, from each Will. As there was no ambiguity in the wording of
the survivorship clause, the court felt unable to reach any other conclusion. Whilst Mr Winson had asked for confirmation
from the solicitor draftsman that the legacies would not be paid twice, Mrs
Winson had not. Therefore there was
insufficient evidence of her intentions on the matter to found a claim for
rectification of her Will, to prevent the cash gifts being made twice.
Not all survivorship clauses are ‘toxic’ but in this case, a
combination of unusual circumstances and a lack of appreciation about how the
commorientes rule would operate on the survivorship clause in the Will resulted
in unintended consequences. The
survivorship clause should have been disapplied in respect of the gift to the
spouse in the Winsons’ Wills. The case
shows that it’s wise to get the will-drafter to focus on the issue by
confirming in writing how the survivorship clause could
operate. The case is also a clear
reminder that Will drafting is a tricky business. Mr and Mrs Winson could not have spotted the
issue even by reading their Wills carefully.
No one who was unaware of the commorientes rule would have either.
