Q. My cousin died a few years ago. He lived overseas. Specific bequests in his will were paid out. The rest was left in trust to his sister, with the interest from it to be paid to her during her life. She is now deceased.
The remainder of his estate was to be redistributed among residuary beneficiaries, including myself, in proportions outlined in the will.
My cousin inadvertently named a residuary beneficiary who does not exist.
The solicitor says this gift has lapsed and must be dealt with under the rules of intestacy, becoming part of the deceased sister’s estate. Shouldn’t it instead be distributed to the residuary beneficiaries?
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. A. The reader in this situation is a residuary beneficiary – that is, a person who inherits the remaining part of an estate, or the residue, after all debts, taxes, funeral expenses and specific gifts have been transferred or paid out.
Once specific bequests were paid out in this case, the rest of the deceased cousin’s estate was left in trust, with the interest accruing from it to be paid to his sister during her life.
The sister was a “life tenant” in a trust. The interest of a life tenant ceases on their death and does not pass to their estate. However, the right of a life tenant to the income of the trust for the period of the trust survives the life tenant’s death.
So, any income that was accrued or earned up to the exact date of the sister’s death – even if it has not yet been paid out – belongs to her estate.
“Any unpaid income from the trust is a debt due to the sister’s estate and should be paid to the legal personal representative of the late sister’s estate,” says Deirdre Farrell, partner at Amorys Solicitors LLP.
That one of the residuary beneficiaries named does not exist seems to have been established. Personal legal representatives must take great care in doing this, ensuring there is compelling evidence before they proceed to distribute the fictional person’s share to others, says Farrell.
At a minimum, they should seek an opinion from experienced counsel to confirm the gift fails, she says.
“If there is any uncertainty, a court application seeking an order declaring that the gift fails for uncertainty is usually required,” says Farrell.
In this case, the names of the deceased’s second and third cousins might be relevant to confirm that there is no cousin with the name stated in the will, she says.
Where a bequest does fail, because of the non-existence of a person named in a will, for example, it is said to lapse.
Where a lapsed share goes depends on the wording of the will.
If the residuary estate is left to residuary beneficiaries as “joint tenants”, a form of co-ownership, the asset passes to the remaining co-owners.
Joint tenancy would be indicated by words like “jointly”, or the phrase “to my cousins jointly” in the residuary clause of the will.
In the case of a non-existent joint tenant however, that fictional person’s interest is ignored, as it is not possible for an interest to vest in a fictional person.
If the residuary estate was held jointly, then the reader’s interpretation of the residuary clause would be correct – the lapsed gift would be distributed to the residuary beneficiaries.
Conversely, a tenancy in common provides that two or more people own distinct shares in the residuary estate.
“In the reader’s case, it is very likely that the residuary beneficiaries hold the residuary estate as tenants in common, as the reader references proportionate shares in the residuary estate,” says Farrell.
“This would indicate the testator’s intention to gift exact shares in the residuary estate.”
If this is the case, there is no doubt that the reader’s fictional cousin’s share falls to be distributed according to the rules of intestacy, as they relate to the deceased person’s estate – that is, to the deceased person’s next of kin, says Farrell.
If reader and the other residuary beneficiaries are the deceased’s next of kin, whether they are tenants in common or joint tenants may be of little practical difference, she says. The lapsed gift would go to them.
If, however, the partial intestacy means that a different group stands to inherit the fictional person’s share in the residuary estate, the reader might be interested to know that the cost of the administration of the estate is first deducted from the assets to be distributed on partial intestacy.
The name of the reader who submitted the question is not being published to protect the identities of those involved.
Please send your legal queries to Joanne Hunt, Ask the Lawyer, The Irish Times, 24-28 Tara Street, Dublin 2, or by email to joanne.hunt@irishtimes.com with a contact phone number. This column is a reader service and is not intended to replace professional advice.
