Intestacy Rules and Capital

Client’s father died without leaving a will, client maintains his father’s house was left to him and his 2 children but untill this has been decided by courts he obviously cannot do anything with the property.

Council have decided, somewhat prematurely, the property belongs to the client and have withdrawn his HB resulting in him losing his tenancy. Client has appealed the decision on basis he is not yet the legal owner of the property and he believes when he does inherit it should only be 1/3 share.

My question is, is there any caselaw or can someone point me in direction of regs to say the property cannot be classed as a capital asset until client is able to realise his interest in it. I don’t undersand how the Council can treat him as being able to sell the property and live on the profits when legal ownership has still not been proven.

We have an appeal hearing next Wednesday.

Schedule 6, para 7 HB Regulations would appear to apply.

Capital is to be disregarded for: “Any future interest in property of any kind, other than land or premises in respect of which the claimant has granted a subsisting lease or tenancy, including sub-leases or sub-tenancies.” 

I would argue it is still a future interest as the current interest is still to be confirmed through the courts.

As client does not possess the property nor deprived himself of the property, I do not see how it can be included in a calculation for capital under Reg. 47 or Reg. 49.

Capital rules are definitely not my forte, so perhaps someone else can either confirm this or come up with other legal arguments.

Interesting case: on what basis is the father making this contention? It bears no relationship to anything that would happen on intestacy and I can only assume some sort of secret trust (one of the great joys of learning trusts law and tending only to happen when people try to save money on legal costs by not making a proper will and then the whole estate gets eaten up in court costs - but there I go again…)

Any wife or siblings?

Or, if none, other children? In fact, why is there a legal case at all - who is on the other side arguing that the client (and his children) shouldn’t have the house? If he is the sole next of kin he will inherit everything and can do whatever he wants with it, including share it with his children. I find the underlying fact pattern impossible to visualise.

Before case came to me was being dealt with by Solicitor because of the housing eviction for non payment of rent. Solicitor wrote to council confirming there is no will and a grant of letters of administration had not yet been made, therefore the value of the estate including any debts against it was still unknown.

The Council had however excepted my client’s verbal statement that his father intended that he and the 2 grandchildren were sole beneficiaries (no wife or other children). Client has learning difficulties and has had a stroke and Solicitor pointed out the Council couldn’t rely on his statement as he had no understanding of the workings of Intestacy law (to be fair nor do I).

When case came to me I asked for property to be revalued on the basis my cleint would only be able to put 1/3 of the property up for sale, Council have now responded to this saying under the rules of intestacy client will inheit all of the estate not 1/3.

By the Council saying will inherit my train of thought was Council are stating client will, but hasn’t yet inherited anything, so client still has nothing to sell to realise his interest in the capital?

Does this make anymore sense?

hi

i can’t find any case law. however, i think that may be because it should be really clear - if your client doesn’t own any part of the property then he doesn’t have any capital.

section 134 of the social security contributions and benefits act 1992 says that ‘no person shall be entitled to an income-related benefit if his capital or a prescribed part of it exceeds the capital limit’

if you could get a letter from the solicitor setting out the position as to ownership, and saying that the claimant isn’t the owner, then that should be the end of it i would have thought.

My initial reaction was cannot be treated as capital as client is not yet the owner but am thinking there must be more to the argument as the Council, having taken advice from their legal department and despite this argument going backwards and forwards over many months and knowing the client would be made homeless, have maintained their position.

fair enough - i see your point - however, i just can’t see how they can take into account capital he doesn’t own yet. would be madness if everyone’s benefit stopped as soon as a parent who owned a house died. it surely must be the case that you only own it once probate etc given.

do you have the appeal papers - what does the LA say about ownership in their sub? have they come up with any case law or anything?

can anyone else come up with a reason he could be treated as owning property even though doesn’t actually own it yet?

yes, i think this case clearly distinguishable as hbinfo says - in fact to the extent that it’s helpful to your client -

judge howell says that there was no error of law in tribunal’s decision that -

‘the claimant was “without doubt” beneficially entitled to the property from the date of her mother’s death subject only to the formalities needed to perfect her title, which she could have carried out at any time had she wished…’ (paragraph 11)

very different to situation where there is no will and ownership is disputed. from what you’ve said, your client has no power to get hold of any capital or to get deeds put into his name until legal situation is sorted out.

Who is disputing?
The order of entitlement in intestacy is:

spouse (if any) and issue in a very complicated manner;
if no spouse, issue, ie children but substituting grandchildren if any child has predeceased the intestate);
if no issue, then you go through parents, brothers and sisters of full blood, brothers and sisters of whole blood, aunts and uncles substituting cousins and nephews and nieces.

Under the intestacy rules a grandchild can only inherit if the parent who was the intestate’s child is already dead. On the facts as related the grandchildren have no rights whatever to inherit unless there was some sort of agreement in the intestate’s lifetime that that if he did not make a will the son would give a share of the house to his own children. That is a secret trust, but proving it is something else.

As a matter of the administration of estates, at present nobody owns this house (I think it may technically belong to the President of the Family Division of the High Court). Someone will have to apply for letters of administration to the Court. This will normally be the same person (or up to two of them) who are entitled under the intestacy rules: you only need one as long as no children are going to inherit.

That person in applying for letters of admin swears an oath to confirm his relationship with the deceased - that there is no surviving spouse, and that he is the sole child of the deceased (if so: you say he is the only one but were there any others who predeceased the intestate?) He will also swear to “collect, get in and administer the estate according to law”. That means paying the funeral bill, the other debts, any IHT due on the property, and the costs of getting LOA. When granted the Court formally transfers the legal title to the estate to the adminstrator, and he then carries out his duties and distributes the estate. In the case of a house he would have to transfer it into the name of the new owner at the Land Registry.

The equitable interests in items within an estate in succession law separate out at the point at which it becomes clear that they will not be needed to pay debts and expenses or to provide for cash legacies. If the house is worth over the IHT threshold and there are other debts and expenses it may be necessary to sell the house or mortgage it to pay these items, which would then of course reduce its value. Just sitting there doing nothing is not an option!

Presumably then my arguement at Tribunal is, untill the administration of the estate, nobody owns the house. The Tribunal may then argue client should have been doing more in applying for letters of admin to have the house transferred into his name as sole beneficiary, as in the decision above, but at least I can prepare a case against this now if it does come up.

Thanks for the help!

Kids these days all have issues.

You say this has been batted back & forth for many months.  What has the solicitor been doing?  Is there really a dispute which has prevented application for LOA?  Or is it the case that the solicitor has only been involved more recently & because of the eviction issue?  Has a solicitor actually been appointed to deal with getting LOA?

I suspect you might be asked questions on these lines at the hearing.  Answers might help you in distinguishing the other case quoted.

And I still don’t understand why there is a dispute and who between. If there is no spouse and the client is the only child (and there are no nephews or nieces from a brother or sister of his who died earlier) - then on an intestacy he is the sole heir and no-one else has a right to a look in.  So what IS it all about?

My reading of it is that the dispute is that the client maintains he is only going to be beneficial owner of one-third of the value, and HB say he will be/already is beneficial owner of the whole estate.