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Does your will contain a ‘Toxic’ survivorship clause?

Do you have a survivorship clause in your Will? Chances are you do, if you leave assets to someone outright. These clauses introduce a condition of survivorship to an otherwise outright gift in a Will. They 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. Yet if not carefully drafted, they can turn toxic and obstruct the gifts of your Will.

How do survivorship clauses work?

If A gives a gift to B in his Will and B dies the day after A, B’s estate will get the gift. It will be B’s Will that decides where A’s gift ends up. However, 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, by introducing a condition of survivorship:

“I give £100,000 to my nephew if he survives my death by 28 days.”

Sometimes a catch-all survivorship clause is included instead:

“My estate is to be divided as if any person who dies within 28 days of my death had predeceased me.”

However, catch-all phrases can turn toxic, as in the estates of the late Mr and Mrs Winson, recently decided in the case of Jump v Lister [2016] EWHC 2160 (Ch).

‘Toxic’ clauses

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, 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. While Mr Winson had asked for confirmation from the solicitor draftsman that the legacies would not be paid twice, Mrs Winson had not. There was therefore 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.

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.

This 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. It’s 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.

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