Jersey Wills & Probate – Change in inheritance in Jersey after death

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When a person dies, the executors or administrators are responsible for distributing the estate in accordance with the deceased’s will or, if the deceased died without leaving a will, following the rules relating to an intestate succession.

However, a person’s will may not reflect changes in their circumstances or in tax legislation over time, and arrangements left to beneficiaries at the time of their death could have unforeseen consequences. For example, an inheritance might push a beneficiary into a higher tax bracket or the will might not provide for a child or grandchild born after the will is written. Executors and administrators may also be faced with beneficiaries who do not wish to receive their entire inheritance.

It is often forgotten that in Jersey, the heirs of a succession have the possibility of modifying the distribution of property provided for by the will or the law on succession, in the event of intestate succession, by modifying the provisions of the succession which entail a problem.

Is a request to the Royal Court necessary?

Unlike some other jurisdictions, a will cannot be simply amended under Jersey law by means of a written agreement signed by the interested parties. An application must be filed with the Royal Court. Section 25 of the Succession (Jersey) Act 1998 (the “Act”) gives the Royal Court discretion to vary any disposition of the movable property of a deceased person, whether made “by will. , under intestate inheritance law or otherwise. ”The request is made by way of representation, which is a type of original court proceeding in Jersey and parties whose consent is required for the amendment must be represented at the hearing.

It is important to note that the representation must fully state the exact wording of the new provision to be inserted and read as part of the will. Anyone who subsequently reads the will coupled with the Act of Court should know exactly what they are planning as a result of the variation. In practice, if the modification of the will is set out in an act of modification, it must be annexed to the declaration.

Who must consent to the request?

All parties affected by the proposed amendment must consent to the court order being made. Applicants should be aware that providing the court with an amendment deed signed by the parties involved is not sufficient proof of consent. The court must be satisfied that consent is given by all parties who are sufficiently interested and affected by the request and will require that they be present in person or represented at the hearing.

Testators sometimes ask the executor to hold property in trust. If an amendment to the provision of the trust is requested, the executor or trustee may make the request for amendment. The executor and the trustee must attend the hearing of the application. The beneficiaries of the trust that is to receive the amended or created disposition to receive the disposition will generally not be required to attend the hearing and give their consent. The Royal Court confirmed this position in Re (A) Probate [2013] JRC 148. It is the trustee who is required to give his consent to a modification which affects the trust.

In practice, trustees will generally want to consult with the beneficiaries of the trust before consenting to any modification and when consulting them to inform the Court of the views of the beneficiaries on the proposed modification. However, the decision to apply to change the disposition of the trust provided for in the will rests, in these circumstances, with the executor or trustee.

When to apply

Section 25 of the Act provides that a Representation requesting an amendment must be presented within two years of the death. No changes can be made after this period has elapsed. If an amendment is requested for tax efficiency purposes, applicants will need to provide the professional advice on which they rely on the Court to assist it in determining whether it should exercise its discretion under section 25 of the Court. the law.

Tax advice should be obtained prior to a proposed amendment to allow for in-depth review and discussion between executors and affected beneficiaries well in advance of the two-year deadline.

What happens if the variation is ordered?

The order will have effect retrospectively, as if it were a disposition effected by the will of the deceased person or under the law of intestate succession. The court may also indicate to whom and in what manner the movable property of the deceased person is to be distributed. He therefore has a very broad jurisdiction.

Practical application

There are a number of occasions where the Court has exercised its power under section 25 of the act. The variations that may be sought from the court are far-reaching and may include, for example, orders that personal property should not be transferred to a trust due to tax consequences, providing instead that the chattels be distributed directly. to heirs.

As a practical example, in a recent unreported case, Walkers obtained an order amending a will to help beneficiaries of a life interest in a trust created by will. Under the will, the deceased appointed an executor to hold the remainder of her movable property in trust and pay the income from the trust fund to a parent during her lifetime and, on her death, to her spouse while the spouse was alive. time. However, the beneficiaries were residents of the UK and the income payable from the trust would require them to pay a higher tax. The will also did not provide for the child of beneficiaries with whom the beneficiaries wanted to be able to share income and did not allow them to defer income in years when they did not need it.

A variant was sought in the will based on advice obtained from an expert tax advisor on the tax situation to help beneficiaries achieve their goals. It was proposed that the Will be amended to implement a more flexible structure, which involved the creation of a discretionary non-UK resident trust to receive the income instead of the people who receive it directly, but only during their lifetime. of these people. The beneficiary’s child was also included as the beneficiary of the newly created discretionary trust.

The court ordered the requested modification. The requested variation was considered to be in the best interests of the beneficiaries of the lifetime interest, as it allowed for greater flexibility by allowing any income that was not needed in a given year to accumulate and dump. ‘be invested until needed. The structure also allowed lifelong beneficiaries to share the benefit with their daughter. All parties required to consent to the amendment and the beneficiaries of the life interest supported the request.

In another interesting case, Representation of RM Talbot Estate [2010] JRC 204, a trustee received a tax advice that distributions from a trust would result in potentially adverse tax consequences for UK resident beneficiaries. The trustee sought to amend the will, which regulated moneys in trust so that moneys were paid directly to beneficiaries rather than in trust. Submissions to the Court pointed out that, unlike distributions from a trust, there was no UK tax burden on a person receiving under a will. The tax would only be payable on the estate of the deceased where the deceased was domiciled in the UK, but in this case the deceased was domiciled in Australia at the time of death. The Royal Court therefore consented to the modification of the will, with the distribution to beneficiaries to be made from the deceased’s estate directly rather than through the trust, thus avoiding the significant additional tax obligations that would otherwise have been payable by the heirs.

The Royal Court allowed a similar variation in the O’Sullivan portrayal case [2011] JRC 208. In this case, the deceased’s will was amended to allow the inheritance to be paid directly to her heirs rather than being held in trust for them, as they would incur a significant tax liability upon the creation of the estate. trust and the sums were too small. to make a trust economically viable.

The deceased owned property in common. Can the right of survivorship attached to the co-ownership be changed after death?

The Court responded positively in the recent case of Representation of Anthony Yianni [2021] JRC 133 and adopted a purposive interpretation of the words “or otherwise” in section 25 of the Act. The deceased had created a Jersey company, in which he owned shares with his wife and son. Upon his death, representation was presented to the Royal Court to seek an amendment under section 25 of the Act and one of the questions put to the Royal Court was whether these shares were held jointly for the holders. and their survivors, or equally. as common owners. The Court found on the facts that the deceased and his family owned the shares as co-owners. Consequently, they would automatically devolve to the surviving owner and therefore to the widow and son of the deceased.

This caused difficulties for the beneficiaries. The deceased’s UK-resident widow expressed concern that she would not be able to claim the ‘spousal exemption’ to which she was entitled under the inheritance tax regime because the shares were not transferred to her outright, but to her and her son jointly. The family therefore supported a request to amend the right of survivorship provision so that upon his death, the deceased’s son held his shares in the company as the common owner.

The court ordered the amendment, noting that all historical and current shareholders had consented to it and the company had no objections. HMRC had also been informed.

Conclusion

Wills are often drawn up several years before death. While frequent reviews and updates limit the risk of unwanted consequences, they do not completely eliminate them. The beneficiaries of Jersey estates do not have to be linked to unwanted or unequal bequests. The power of the Royal Court to exercise its jurisdiction to modify a provision of an estate may be a useful option to consider if these situations arise.

The points to remember for executors who are considering making an amendment request are as follows:

  • Representations must be made within two years of death at the Royal Court;
  • The declarations must indicate the exact wording of the variation sought;
  • If the variation is sought for tax efficiency purposes, tax advice should be obtained quickly and well in advance of the two-year deadline; and
  • Consent to the wording of the order must be expressly given by all parties affected by the modification. When changing a bequest to a trust, only the consent of the trustee is required, but it is prudent for the trustee to seek the agreement of the beneficiaries before making the request.


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