Probate case shows how easy it is to leave a muddle behind....

David Ross created and executed a home-made will shortly before he died.  He had assets of a maisonette, the freehold reversion* of the building containing his maisonette and an endowment policy taken out at the time of purchasing his mortgage to cover the loan. 

This policy was originally assigned to Town & Country who were subsequently taken over by the Woolwich.  In the month in which he died, Mr Ross increased the monthly premium to cover a predicted shortfall in the amount the policy would produce.

His will stated that he was leaving his maisonette and 50% of his other assets to his fiancée Irene.  His two brothers would receive 25% each of the remaining. There was no mention of an endowment policy or to the freehold reversion.

The deceased’s brothers challenged that Irene took the maisonette subject to the mortgage under section 35 of the Administration of Estates Act.  They claimed that the policy was part of the remaining assets. They also contended that the freehold reversion passed as part of those remaining assets of the estate.

The Administration of Estates Act provides that a person taking property with a debt charged on it does so with responsibility for that debt unless the deceased specified his intentions otherwise.  As the will didn’t actually specify the endowment policy the deceased’s brothers claimed it was in his remaining assets, but the court decided that by ensuring the policy was up-to-date before he died, his intention was that the property should not remain charged with a mortgage after his death.  The court then decided that the freehold reversion as well as the lease was also intended to be passed over to Irene. 

While the court cannot rewrite a will, it can take surrounding circumstances into account to interpret vague expression.  This decision is clearly important when considering the administration of an estate involving property that is subject to a debt.

When drafting a will where there is a mortgage and a life policy, it is advisable to make provisions for that debt and to express clearly your destination of any policy.

Source: Law Society Gazette 10 Feb 2005

* In other words Mr Ross owned the ‘freehold’ to the entire property, occupied one maisonette within it, under a lease arrangement, and had also granted leases to others living in the remaining maisonettes in the building.