21st-Century Wills – Part 2

In August, we considered the Law Commissions’ consultation on how Wills are made in England and Wales. That article reviewed four of eight key proposals, including: 

•    The courts being given greater flexibility
•    Online Wills being allowed
•    The age of testamentary capacity being reduced 
•    How the tests of capacity could be improved 

This month we are looking at four further proposals, namely: 

•    Amendments to the rules of ademption
•    Extending the protection of testators from undue influence
•    Clarifying the rules on revocation of Wills and marriage 
•    Reviewing the rules on deathbed gifts  

Ademption is a legal term for what happens when a gift of a particular piece of property in a Will does not take effect at the testator’s death. It may be that the item no longer exists or it has fundamentally changed. If, for example, an item has been given away or sold, the gift is said to “adeem” and the beneficiary will not receive anything. The logic of having a strict ademption rule is to ensure that the testator’s property is distributed according to his or her genuine wishes as much as that is possible. However, there can be cases in which the rule has exactly the opposite effect. For example, the testator gifts his sports car to a favourite relative but dies when he crashes the car. The ademption rule would suggest that the gift would fail, but under the circumstances, is that what the testator actually wanted? 

In addition to allowing some flexibility to the rules where the testator dies at the same time as the property is destroyed, changes might be made to allow wider exceptions to the rule where there are circumstances beyond the testator’s control. 

Protecting testators from financial abuse is another area where the Law Commission is reviewing the current rules to see whether they are sufficient. In particular, the rules on undue influence could be changed. It has been proposed that rather than rely on the existing rules, which were created by judges through case law, a new and improved set of statutory rules could be created by Parliament. Under the current rules, a gift made in a Will can be set aside only because of undue influence in limited circumstances. This is different from the rules about when a gift made during a person’s life can be set aside. When someone makes a lifetime gift, they are better protected because there is an automatic assumption that the gift is suspicious (referred to as a presumption of undue influence) when you can show two things: 

(1) The existence of a relationship of influence; and  
(2) The disposition calls for explanation. 

A relationship of influence would include gifts made to a medical adviser, a person who prepared the Will for money, a professional caregiver or a spiritual adviser. The second test of whether a gift calls for an explanation could look at how the beneficiary behaved in relation to the making of the Will and under what circumstances the Will was made. By making the rules relating to a gift made in a Will more like those used for lifetime gifts, there is less risk of financial abuse, as these tougher rules would force the beneficiary of a “dodgy” gift to explain why they received it. If they cannot explain it, then it will be assumed that they were exerting undue influence on the deceased and the gift will fail.

Revocation of a Will and the rule that marriage automatically revokes a Will have also been highlighted as a potential trap for the unwary. The effects of the rule can be harsh on cohabitants who are unaware of the rule and who might decide to get married, in which case the marriage would revoke any Will already made. 

The rule revoking a Will on marriage currently protects the position of second families. In other words, a situation where a person has remarried and has children from both marriages. Marriage revokes any earlier Will and, if a new Will has not been made, then the testator’s property will pass to his or her current spouse under the intestacy rules. If marriage did not revoke the Will, then any earlier Will would remain valid. Without the rule, the testator may not want his or her first family to inherit but would exclude a current spouse and any children of a second family.

Amending this rule is not an easy question, as arguably the current law provides the fairest balance. In truth, if the public was more aware of the rule, then testators who are in a situation of having a second family would be aware of the need to update their Will to reflect their true intentions.

One final area of the law which the Law Commission is reviewing relates to deathbed gifts. The correct legal terminology for this type of gift is Donationes mortis causa (“DMC”). A deathbed gift is when a donor contemplating death gives a beneficiary an item. This type of gift does not have to follow the formalities of a gift made by a Will (i.e., made in writing, witnessed), and as such it can be open to claims of fraud. The advantage of having a doctrine that allows a dying person’s wishes to be carried out has to be weighed against the potential for the law to be abused. As with the review of the law on automatic revocation of Wills on marriage, it may be the case that after consultation no change is suggested. 

The Law Commission consultation does not close until 10 November, and it will be several months before it prepares a detailed report for government. If any changes are accepted by government, they will not happen until at least 2018. In the meantime, the Institute will keep you informed of any major changes to the law via the Legal Secretary Journal.