Interpretation of Wills — SQE1 FLK2 Wills and Administration of Estates

A woman's will gives her estate car to her sister, £10,000 to her brother, and the residue to her husband. She owned an estate car when she made the will. Two years later she sold it and bought a hatchback, which she still owned when she died. She made no codicil and no new will. Her sister claims the hatchback, saying the testatrix meant her to have whatever car she owned. Does she get it? No.

This is Interpretation of Wills, and it is the topic where sympathy loses. The court's job is to give effect to the words the testator used, read in context. Not to the will she would have made if she had thought about it. Keep our sister and the hatchback in mind. We are coming back to them.

Here is the route. How a court reads a will, and when it may look outside the document. Then the kinds of gift, because almost every question turns on which one you are looking at. Then the ways a gift fails: ademption, lapse, uncertainty, abatement. And last, class gifts and the doctrine of satisfaction.

Start with the rule that decides more questions than any other. The court gives effect to the intention the testator expressed in the words he used. Take a daughter who gave up her job to care for her father for six years. She finds the whole estate left to a medical charity. She cannot ask the court to read in a share for her. The words are clear. Clear words are applied.

Three principles sit under that. Words take their ordinary meaning, unless the context shows a technical one was meant. The will is read as a whole, not clause by clause. And the armchair principle lets the court sit where the testator sat: his family, his assets, what he knew when he signed. Context, not speculation.

Context can do a lot of work. A woman writes her own will, one sentence: I leave all my money to my sister. No residuary clause, nothing else. She dies with £5,000 in a current account and £150,000 in stocks and shares. Strictly, money means cash. Read in context, and to avoid an intestacy, it can carry the whole of her personal estate. That is Perrin v Morgan, and the sister takes the investments.

Where the literal reading is absurd, the court can depart from it. A home-made residuary clause gives one half to the son, one half to the daughter, and one half to the brother. Three halves. The court does not let the gift fail. It divides the residue into three equal shares.

And where the words have been overtaken by events, the court looks at purpose. A baker leaves £50,000 to the people employed in my bakery at the date of my death. He then transfers the business to his own company, so at his death nobody is employed by him personally. Same staff, same bakery. His purpose was to benefit the people working there, and they take.

Now ambiguity, and the distinction matters because it controls the evidence. A patent ambiguity is visible on the face of the will. A latent ambiguity appears only when you apply the words to the facts. My house is perfectly clear until you discover he owned two.

The general rule is that extrinsic evidence cannot contradict, vary or add to the terms of a will. But it comes in to resolve a latent ambiguity, to identify a beneficiary or a property, to establish facts about the will's operation, and as context under the armchair principle.

So take the man with two properties. He lived in one for twenty years, always called the other one the cottage, and his papers show he used my house to mean the place he lived. That evidence is admissible, and the daughter takes the home, not both. Same with my farm, where he bought sixty adjoining acres and then worked the whole hundred as a single unit.

Then section 21 of the Administration of Justice Act 1982 widens the door. Where a will is meaningless, or its language is ambiguous on the face of it, or evidence shows it is ambiguous in the circumstances, extrinsic evidence is admissible. That includes evidence of the testator's own intention. A home-made will giving the sum of two thousand pounds in words, and £20,000 in figures, is ambiguous on its face. The court can look at what he meant.

And where a description fits two people exactly, that is an equivocation, and the court may hear direct evidence of what the testator actually said. Two nephews, both called John Smith, one her brother's son and one her late sister's. The solicitor's attendance note records that she meant my brother's boy. Admissible? Yes. Declarations of intention come in on an equivocation.

One more construction rule worth the name. Falsa demonstratio non nocet: a false description does not harm. My leasehold flat at 10 Queen Street, where the flat exists at that address but is held freehold, and he owned no leasehold anywhere. The wrong word is rejected, the property is otherwise clearly identified, and the niece takes the flat.

Now the gifts, and this is where the marks are. A specific gift is identified property: my estate car, the painting in my hallway. A general legacy describes a kind of property without identifying any particular one. A pecuniary legacy is a sum of money. A demonstrative gift is a sum payable primarily out of a named fund. And residue is whatever is left.

Ademption is why the distinction matters. If the subject matter of a specific gift is not in the estate at death, the gift adeems. It fails, and the beneficiary takes nothing. Not the replacement, not the value, not a substitute out of residue. Our sister's estate car was sold. A hatchback is not that car, and she takes neither.

Nor do the proceeds help. He sells the hallway painting, puts the whole price into shares, and never touches them again. The shares are worth £50,000 at his death and the hallway is bare. The daughter gets none of it. The painting was gone, the gift adeemed, and the shares are residue.

But not every change is ademption. The question is whether the thing changed in name and form only, or in substance. That is the test in Re Slater. Delta Ltd re-registers as Delta plc and consolidates every two shares into one, so 2,000 shares become 1,000 and the holding is unchanged in substance. No ademption. The friend takes the 1,000 shares.

Ademption can also be partial. My 1,000 ordinary shares in the water company, 400 sold to meet a tax bill, 600 still held at death. The gift adeems only as to the 400. The friend takes the 600.

Now the mirror image, and it is the most missed point on this topic. A general legacy does not adeem. If the will says 500 ordinary shares in Barclays plc, with no my and no reference to any particular holding, that is general. Sell the lot, die owning none, and the executors must still provide 500 shares, or their value, out of the estate.

The demonstrative gift is the hybrid, and it behaves generously. £20,000 from my savings account with the building society. The account holds £15,000 at death, and the rest of the estate is substantial. What does the niece get? £20,000. £15,000 from the account, and the balance from the general estate. That is exactly what distinguishes it from a specific gift.

One clash worth knowing. My jewellery to my niece, and, some clauses later, the contents of my house to my nephew. The jewellery is in the house, so it answers both descriptions. The specific gift prevails. The niece takes the jewellery and the nephew takes everything else inside.

Then lapse. A beneficiary who dies before the testator takes nothing, and the gift falls into residue. If there is no residuary gift, it passes on a partial intestacy. That is the default, and it applies to friends, siblings and charities alike.

Unless section 33 of the Wills Act 1837 saves it. Where the beneficiary was a descendant of the testator and died leaving issue, the gift passes to that issue as if the beneficiary had survived. So a son who predeceases his father, leaving two children, does not lose his £50,000. His children take it between them. But section 33 is for descendants only. A brother who predeceases loses the gift, and it lapses into residue.

And watch for words of severance. £100,000 to my friends Anna and Ben in equal shares. Anna dies first. Does Ben take the lot? No. In equal shares makes them tenants in common, so Anna's half lapses and falls into residue. Ben takes his £50,000 and no more.

Gifts also fail for uncertainty, in two directions. Uncertainty of objects: £10,000 to be divided among my relatives who have been kind to me, with no list and no way of deciding who qualifies. Uncertainty of subject matter: some of my shares. Either way the gift fails completely, and the property falls into residue.

Abatement is a different thing. It is not failure, it is shortage. When the estate cannot meet everything, gifts are reduced in order: undisposed-of property first, then residue, then pecuniary legacies, which abate proportionately among themselves, and specific and demonstrative gifts last. So a car worth £15,000, a legacy of £50,000, debts of £25,000 and £60,000 in the bank. The brother keeps the car, the friend takes £35,000, and the residuary sister takes nothing.

Class gifts, and the rule in Andrews v Partington. A class closes when the first member becomes entitled in possession. If a member has already satisfied the contingency at the testator's death, the class closes then. If none has, it stays open until one does. So: residue to such of my grandchildren as attain 25, and at the death the grandchildren are 8 and 5. The class stays open, and a grandchild born two years later is in.

Last, satisfaction. A parent makes a lifetime gift to a child who is also a beneficiary, and equity presumes he did not mean the child to be paid twice. That is the presumption against double portions. Give a daughter £70,000 towards a first home after leaving her £100,000, and the legacy is presumed satisfied to that extent. She takes £30,000, unless the presumption is rebutted.

Two limits on that. The payment has to be a portion, something meant to establish the child in life. University fees and a termly allowance, paid for every child in the family, are not, so no presumption arises and the legacy stands in full. And the idea runs the other way too. A legacy to a creditor is presumed to satisfy the debt, so the friend who is owed £8,000 and left £10,000 takes the £10,000, not both.

A word on how SQE1 tests this. You get a scenario, five answers, and one instruction: pick the best. There are three case names in this whole topic, and you will not be asked to recall any of them. What you will be asked is which kind of gift you are looking at.

If you keep only three. Specific gifts adeem, general legacies do not, and the word my is usually what tells you which one you have. Andrews v Partington: a class closes when the first member becomes entitled in possession. And Perrin v Morgan: a word like money takes its meaning from the context, especially where the alternative is an intestacy.

Four traps. One: an adeemed gift gives the beneficiary nothing. Not the replacement asset, not the sale proceeds, not the value out of residue. Nothing. The only question is whether the thing described was still in the estate at death, in substance.

Two: section 33 rescues a lapsed gift only where the dead beneficiary was a descendant of the testator and left issue. Not a sibling, not a friend, not a charity. For everybody else, lapse means the gift falls into residue.

Three: a demonstrative gift is not capped by its fund. If the named account is short, the balance comes out of the general estate. Treat it as a specific gift and you will underpay the beneficiary every time.

Four: extrinsic evidence is not all one thing. Surrounding circumstances come in freely under the armchair principle. Direct declarations of what the testator meant come in only on an equivocation, or under section 21 where the will is meaningless or ambiguous.

Quick check. A woman's will says: I give 500 ordinary shares in Barclays plc to my nephew. She does not use the word my, and she refers to no particular holding. When she made the will she did own some Barclays shares, but she sold the whole holding a few years later and never bought any more. At her death she owned none at all, though her residuary estate is substantial.

Is the nephew entitled to anything? Three candidate answers. One: nothing, because she owned no Barclays shares at her death, so the specific gift adeemed. Two: only whatever Barclays shares remain in the estate, which here is none. Three: the gift is a general legacy that does not adeem, so the executors must provide 500 shares, or their value. Pause here if you want a moment.

The answer is three. There is no my, and no identified holding, so this is not a gift of a particular thing. It is a gift of a quantity of a kind of property, and that is a general legacy. General legacies do not adeem. If the executors cannot find the shares in the estate, they buy them, or they pay the value.

Why the others fail. Option one calls the gift specific, and that is the whole question. Had she written my 500 ordinary shares in Barclays plc, option one would be right and the gift would have gone. One word decides it. Option two reaches the specific-gift outcome under a different name.

Five things to take away. One: the court gives effect to the words used, read in context, and clear words are applied however hard the result. Two: identify the kind of gift first. Specific, general, pecuniary, demonstrative, residue. Almost every question turns on it.

Three: specific gifts adeem if the thing is not there at death, though a change of name and form only is not ademption. General legacies do not adeem at all. Four: lapse sends the gift into residue, unless section 33 saves it for the issue of a deceased descendant. Five: a class closes when the first member becomes entitled in possession.

And our sister and the hatchback? The will gave her my estate car. The estate car was sold. A hatchback is not an estate car, so the gift adeemed, she takes nothing, and the hatchback falls into residue for the husband. One sold car, one lost gift. Next time, Grants of Representation.

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