Learning Outcomes
After reading this article, you will be able to explain and apply the rules on the failure of testamentary gifts by lapse, disclaimer, and forfeiture. You will understand when a gift lapses, how beneficiaries can disclaim gifts, and the effect of the forfeiture rule. You will also be able to identify anti-lapse provisions and the interaction between these concepts, enabling you to answer SQE1-style questions on this topic.
SQE1 Syllabus
For SQE1, you are required to understand the rules governing the failure of gifts in wills, including the legal consequences of lapse, disclaimer, and forfeiture. In your revision, focus on:
- the meaning and effect of lapse of gifts in wills, including anti-lapse rules (e.g., s.33 Wills Act 1837)
- how and when a beneficiary can disclaim a gift, and the legal effect of disclaimer
- the operation of the forfeiture rule and the Forfeiture Act 1982
- the consequences of these failures for the distribution of the estate (e.g., residue, intestacy)
- the interaction between lapse, disclaimer, and forfeiture, and how to apply these rules to practical scenarios
Test Your Knowledge
Attempt these questions before reading this article. If you find some difficult or cannot remember the answers, remember to look more closely at that area during your revision.
- What is the general rule if a beneficiary under a will dies before the testator?
- How does s.33 of the Wills Act 1837 modify the rule on lapse for gifts to children or remoter issue?
- What is the legal effect of a beneficiary disclaiming a gift under a will?
- In what circumstances does the forfeiture rule prevent a beneficiary from taking a gift, and what is the effect on the estate?
Introduction
When a person makes a will, they intend their property to pass to chosen beneficiaries. However, gifts in a will can fail for several reasons. The main ways a gift may fail are by lapse (the beneficiary dies before the testator), disclaimer (the beneficiary refuses the gift), or forfeiture (the beneficiary is disqualified, usually due to unlawful killing). Understanding these rules is essential for advising clients and for the SQE1 exam.
Lapse of Gifts
A gift in a will generally fails, or "lapses," if the beneficiary dies before the testator. The property then passes according to the will's other provisions or, if none, under the intestacy rules.
Key Term: lapse Lapse is the failure of a testamentary gift because the beneficiary dies before the testator or is otherwise unable to take.
The General Rule
If a beneficiary does not survive the testator, the gift to them lapses. The property will fall into the residue of the estate, or if it is a residuary gift, it will pass under intestacy unless the will provides otherwise.
Anti-Lapse Rule (s.33 Wills Act 1837)
Section 33 of the Wills Act 1837 creates an important exception. If a gift is made to a child or remoter descendant of the testator, and that person dies before the testator but leaves issue who survive the testator, the gift does not lapse. Instead, the issue take the gift in place of their deceased parent, unless the will shows a contrary intention.
Key Term: anti-lapse rule A statutory rule (s.33 Wills Act 1837) that saves gifts to children or remoter issue from lapsing if they die before the testator but leave issue who survive the testator.
Lapse of Residuary Gifts
If a gift of residue lapses (e.g., the residuary beneficiary dies before the testator), the lapsed share passes under the intestacy rules unless the will contains a substitutional provision.
Substitutional Provisions
A testator can include a clause such as "to my brother, but if he predeceases me, to his children in equal shares." This prevents lapse by specifying who should take if the primary beneficiary cannot.
Lapse and Joint Tenancies
If a gift is made to two or more people as joint tenants, the gift does not lapse unless all die before the testator. If one joint tenant dies before the testator, the surviving joint tenant(s) take the whole.
Worked Example 1.1
Scenario:
A will leaves £10,000 to "my daughter, Anna." Anna dies before the testator, leaving two children. The will is silent on substitution.
Answer:
The gift does not lapse. Under s.33 Wills Act 1837, Anna's children take the £10,000 in equal shares.
Exam Warning
If a will uses words like "to such of my children as survive me," this may show a contrary intention and prevent s.33 from applying. Always check the wording of the will.
Disclaimer of Gifts
A beneficiary may refuse a gift under a will. This is called disclaimer. The effect is that the beneficiary is treated as if they had died before the testator, and the gift passes as directed by the will or, if not, to the next entitled under the residue or intestacy.
Key Term: disclaimer The refusal or renunciation by a beneficiary of a gift under a will, resulting in the beneficiary being treated as if they had predeceased the testator.
Requirements for Disclaimer
- The disclaimer must be clear and unequivocal.
- It is usually made in writing, but there is no prescribed form.
- The beneficiary must not have accepted any benefit from the gift.
- The disclaimer must be of the whole gift; partial disclaimer is not generally permitted.
Effect of Disclaimer
Once a gift is disclaimed, the beneficiary cannot later change their mind. The property passes as if the beneficiary had died before the testator. If s.33 applies, the issue of the disclaiming beneficiary may take the gift.
Worked Example 1.2
Scenario:
Ben is left a legacy of £50,000 in his mother's will. He wishes to disclaim the gift. He has two children.
Answer:
If Ben disclaims the legacy, he is treated as having predeceased his mother. The £50,000 passes to his children under s.33 Wills Act 1837.
Tax and Disclaimer
For inheritance tax, a disclaimer is not treated as a transfer of value by the beneficiary. The gift is treated as if it never vested in them.
Revision Tip
If a beneficiary wants to redirect a gift to someone else, a disclaimer is only suitable if the will or intestacy rules will pass the property as desired. Otherwise, a post-death variation may be needed.
Forfeiture of Gifts
The forfeiture rule is a principle of public policy: a person who unlawfully kills another cannot benefit from their victim's estate, whether under a will, intestacy, or by survivorship.
Key Term: forfeiture rule A rule of public policy that prevents a person who has unlawfully killed another from benefiting from their victim's estate.
Scope of the Rule
The rule applies to murder, manslaughter, and certain other unlawful killings. The killer is treated as having died before the victim, so any gift to them lapses or is distributed as if they had predeceased the testator.
The Forfeiture Act 1982
The Forfeiture Act 1982 allows the court to modify the effect of the forfeiture rule in some cases (e.g., manslaughter), but not for murder. The court may grant relief if justice requires, considering all circumstances.
Effect on the Estate
If the forfeiture rule applies, the property passes as if the killer had died before the victim. If s.33 applies, the killer's issue may take the gift.
Worked Example 1.3
Scenario:
A will leaves the residue of the estate to "my son, David." David is convicted of manslaughter in relation to the testator's death. David has a daughter, Lucy.
Answer:
David is disqualified from inheriting. The court may grant relief under the Forfeiture Act 1982, but if not, David is treated as having predeceased the testator. Lucy may take the residue under s.33 Wills Act 1837.
Forfeiture and Joint Tenancies
If a killer and victim own property as joint tenants, the killer cannot take by survivorship. The killer's share passes as if they had died before the victim.
Exam Warning (Forfeiture)
The court cannot grant relief from forfeiture for murder. Relief is only possible for lesser offences such as manslaughter, and only if justice requires.
Interaction of Lapse, Disclaimer, and Forfeiture
All three mechanisms result in the beneficiary being treated as having predeceased the testator. The gift then passes according to the will's substitutional provisions, s.33, or the intestacy rules.
Worked Example 1.4
Scenario:
A will leaves £20,000 to "my nephew, Mark." Mark dies before the testator, leaving no children. The will is silent on substitution.
Answer:
The gift lapses and falls into residue. If there is no residuary clause, it passes under intestacy.
Key Point Checklist
This article has covered the following key knowledge points:
- Lapse occurs when a beneficiary dies before the testator; the gift fails unless saved by s.33 or a substitutional clause.
- Section 33 Wills Act 1837 saves gifts to children or remoter issue if they leave issue who survive the testator.
- Disclaimer allows a beneficiary to refuse a gift; they are treated as having predeceased the testator.
- Forfeiture prevents a person who unlawfully kills the testator from benefiting; the court may grant relief for manslaughter but not murder.
- In all three cases, the gift passes as if the original beneficiary had died before the testator, subject to substitutional provisions, s.33, or intestacy.
Key Terms and Concepts
- lapse
- anti-lapse rule
- disclaimer
- forfeiture rule
