The house that never reached the estate
Malcolm died intestate in April 2024. He was survived by his second wife, Dilys, whom he married in 2016, and by three children: Anna (42, from his first marriage) and Ben and Cass (twins, 19 and 17, of Malcolm and Dilys). Malcolm's estate comprises quoted shares worth £500,000 and personal chattels worth £12,000. The matrimonial home, worth £600,000, was registered in the joint names of Malcolm and Dilys as beneficial joint tenants. There was no severance and the house is unencumbered. Dilys has been told by a friend that, as Malcolm died without a will, 'everything goes to the wife'. Anna asks whether she inherits anything and says Malcolm always promised her 'the house one day'. Cass is 17 and unmarried.
1. How is Malcolm's estate distributed, and does the house form part of it?
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The house does not form part of the estate. It was held on a beneficial joint tenancy with no severance, so it passes to Dilys by survivorship outside the intestacy and outside the grant.
Intestacy (AEA 1925, s.46): Malcolm leaves a spouse and issue. Dilys therefore takes:
- the personal chattels absolutely (£12,000);
- a statutory legacy of £322,000 (the figure for deaths on or after 26 July 2023), with statutory interest from the date of death;
- one half of the residue on trust for life, with the remainder to the issue.
The other half of the residue goes to the issue on the statutory trusts.
Arithmetic: residue after the legacy (ignoring interest) is £500,000 − £322,000 = £178,000. Half (£89,000) is held on a life interest for Dilys; the other £89,000 is divided equally between Anna, Ben and Cass.
Cass's share: he is 17, so his share is contingent on attaining 18 or marrying earlier. Until then it is held on the statutory trusts; if he died under 18 and unmarried, his share would pass to the other issue.
Answer to Dilys's friend: not 'everything'. Dilys takes the house, the chattels, £322,000-plus-interest and a life interest in £89,000. Anna takes roughly £29,667.
2. What is the inheritance tax position, and is Anna's 'promise about the house' of any legal effect?
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IHT: the chattels, the £322,000 legacy and the £89,000 life-interest fund all qualify for the spouse exemption (IHTA 1984, s.18) – property to which the surviving spouse becomes beneficially entitled, a life interest in possession included. Only the £89,000 passing to the children is a chargeable transfer.
Residence nil rate band: this is not available. The RNRB requires a qualifying residential interest forming part of the estate and closely inherited. The house passed by survivorship and never entered the estate, so there is nothing to set against the RNRB. Fortunately the chargeable estate (£89,000) is well within the £325,000 nil rate band, so no tax is actually payable – but the RNRB is lost, and Dilys's ability to transfer Malcolm's unused NRB is unaffected by that.
Anna's promise: a promise that she would have the house 'one day' is not a testamentary disposition – there is no will, and s.9 Wills Act 1837 is not engaged. Her only routes are:
- a proprietary estoppel claim, which requires a clear assurance, reliance and detriment; a loose family remark with no evidence of detrimental reliance will not support it, and the promise was never capable of binding the jointly owned house;
- a claim under the Inheritance (Provision for Family and Dependants) Act 1975 as a child of the deceased (s.1(1)(c)). She is eligible, but as an independent adult she must show a need for maintenance, not merely disappointed expectation.
Advise that both claims are weak, and that a claim would be funded at personal risk.