Will and deed survivorship clauses

[Aussie_Pete]

Looking for guidance to know if a challenge is warranted

I am in a situation where I am a beneficiary of a will. The will says all assets to be split 50/50 with another person

The assets are basically 2 properties. One is a main house (valued at £300k), the other is an investment property (valued at £100k)

The investment property was jointly owned with the other beneficiary and it's deeds have a survivorship clause that states it should go to them. The deceased did leave a hand written note saying the value of their portion of the investment property (£50k) should be split, however the executor has advised this handwritten note does not meet legal requirements, so this express of wish by them is not being considered.

As a result I am informed by the executors that the legal position is that the survivorship clause trumps the will, so the investment property portion of the estate goes to the other beneficiary and is not part of the estate, only the main house is part of the estate and as such subject to 50/50 split

The result is an inheritance of £150k for me and £200k for the other beneficiary, when it was the intent of the deceased to make it 50/50, so the expectation was £175k each.

Is there any benefit in challenging the inclusion of the value of the investment property in the disbursement of the estate, specifically

As the survivorship clause trumps the will, the investment property goes to the other beneficiary, however it's value is still part of the estate and as such subject to 50/50 split, so we each should receive £175k - with the other beneficiaries inheritance being made up of £50k of value of the investment property and £125k of value from the main house, and my portion of the main house is £175k

Simply trying to understand if it is worth challenging the executors (who are supported by a legal firm) or just accept the current position

[Aussie_Pete]

Should add that this is all under Scottish law as the properties and the deceased are in Scotland

[Pezza54]

In Scotland property is not owned as joint tenants or tenants in common, as it is in England and Wales
The survivorship clause in the deeds does mean that the property passes to the surviving joint owner automatically when the other joint owner dies

IMO the executor is right. The rented property is not part of the deceased's estate. You should both receive half the remaining estate after expenses, fees, taxes, bills etc. About £150k each

What I fail to understand is why the testator allowed the rented property to be owned this way with the survivorship clause, if it was always their intention that you should inherit half of this property

[Aussie_Pete]

Thank you for your prompt and comprehensive reply.

In terms of allowing the property to be owned this way, I think they either didn't fully understanding or they were misled by the other beneficiary. As mentioned it was a joint venture between them, with the deed documents prepared by the other beneficiaries solicitor.

[sederunt]

Where a house is co-owned and there is a survival clause in the title (a special destination) then the house automatically passes to the surviving co-owner. So yes the special destination trumps the will. The exceptions to this are where the co-owners were spouses and then divorce or if the special destination is evacuated (removed). The power to evacuate by testament is normally only available if one owner has provided the finance for the house and is also dependent on very specific wording of the testament.

[Pezza54]

Such a shame they weren't provided about the ramifications and outcome of such a clause in the will

[Aussie_Pete]

Pezza54 totally agree, especially given that in numerous other correspondence (including hand written notes left for both of us) it was made clear that they wanted it's value to be shared

[Pezza54]

If the other beneficiary is in agreement, a deed of variation to the will (assume it's called the same in Scotland) could be drafted with the other beneficiary gifting you approx £50k from their share
The executor would have to follow a signed deed of variation

[Aussie_Pete]

If the other beneficiary is in agreement, a deed of variation to the will (assume it's called the same in Scotland) could be drafted with the other beneficiary gifting you approx £50k from their share
The executor would have to follow a signed deed of variation

Yes, that would be a good outcome - although it is very unlikely in this situation

[Aussie_Pete]

Pezza54 if I may a side question. In this situation is the investment property outside of the estate for IHT purposes?

[Pezza54]

No, the property should be included in the deceased's estate for IHT unless the joint owner is the surviving spouse or civil partner

[Pezza54]

Sorry should have said 50% of the property value

[sederunt]

No, the property should be included in the deceased's estate for IHT unless the joint owner is the surviving spouse or civil partner

I suspect that you are referencing IHT spouse exemption.

However, even though there might be spouse exemption, this does not prevent the share of the investment property being part of the estate of IHT purposes.

[sederunt]

Pezza54 if I may a side question. In this situation is the investment property outside of the estate for IHT purposes?

The share of property subject to a special destination is not part of the estate for Confirmation and does not appear in the Confirmation inventory. However the value needs to be taken into account in determining the Gross value, net value and Net qualifying value for IHT purposes.