Abatement, how does it work

[linbren03]

Hi

I would like some advice concerning the contents of a will left by an in-law.

There are insufficient funds in the estate to pay all the legacies in the will.

 

 The house stated in the will has been sold and as a consequence there is not enough money in his estate to meet the bequest.

I have been led to believe those legacies must abate.

 

Does that mean that the legacies must be reduced proportionately?

As there are different sums involved (please see enclosed copy of the will) how does this work in practice?

 

The will states sums that sums of money will bequeathed to his:

Wife

Brother

Sister

Common law wife

By way of abatement, who takes precedence?

 

Many thanks

 

will.pdf

[dx100uk]

what is abatement?

If there are insufficient funds in an estate to pay all of the legacies in full, those legacies must abate.

That means that they must be reduced proportionately.

They abate in the reverse order of distribution.

 

 

What Is Abatement?

WWW.SLEEBLACKWELL.CO.UK

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What is abatement? We look at 'abatement' and how this legal principle can be misunderstood with disastrous consequences for a beneficiary.

we do not recommend using any firm

 

but going by what the above site is saying, and others

 

you are correct.

 

you can do this yourself .

 

 

 

[linbren03]

Excuse my ignorance but but what do you mean by  abate in the reverse order of distribution?

[honeybee13]

If you want to speak to someone about this, I've used these people. They're attached to a law firm but I was under no pressure to become a client. My OH had the same experience when he was executor.

 

/assets/static/images/logo/bac-logo-1280x720.jpg

Bereavement Advice Centre | Free Helpline

WWW.BEREAVEMENTADVICE.ORG

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We give practical information, advice and signposting on the many issues and procedures that face us after the death of someone close.

 

HB

[dx100uk]

3 hours ago, linbren03 said:

Excuse my ignorance but but what do you mean by  abate in the reverse order of distribution?

its not 'my advice' it's extracted from the site i posted..but seems akin too others too.

 

however to me it looks like you take /read the will .

write down what it says should goto whom and in what order, ie who gets things before others.

 

you then reverse that list, and apply your abatement to each person.

 

you then might get to a stage whereby because of the above abatements you can met what the will states to them, and the others not under abatement.

 

its the principle of last mentioned ,1st reduced, if you get the idea.

 

dx 

[Ethel Street]

@linbren03 It would be helpful if you could give us some approximate figures. 

 

Do you mean that the house had been sold before your in law died? So that at the time he died the Estate just held the cash proceeds of the sale and any other cash the deceased had? I am assuming it was sold before his death. If that is not the case it becomes more complicated.

 

If the Estate does not have enough money to pay all the bequests then the expenses of the Estate have to met first - debts the deceased owed when they died, Inheritance Tax, Executors expenses, funeral expenses, and the like. 

 

The next priority is what the law calls "General Legacies" in the article linked, that is,  cash amounts to named beneficiaries (the Will confusingly refers to them as "specific legacies"). That's the legacies listed in paragraph 2 - £30k to "my partner" [is that who you mean by the deceased's common law wife?], £10k to his brother, £10k to his sister,  £500 to a charity.  Total "general legacies" £50,500.  So after all the the expenses have been met will there be at least £50,500 left to pay the legacies in paragraph 2?

 

If so no problem, you pay them in full. Anything left is the Residuary Estate and is paid in accordance with paragraph 4 of the Will.

 

But if, as an example, there is only £25,250 left to pay the "general legacies" - ie only half the amount needed - then everyone listed in paragraph 2 of the Will would get half of what was stated in the Will. 'My partner' would get £15k, brother and sister £5k each, the charity £250. They all get reduced by the same proportion. That would use up all the money so there would be no Residuary Estate and the person named in paragraph 4 of the Will would get nothing.

 

Note, this is not "Advice" from me. I am not a lawyer or an expert in this. I am just goving you my understanding of what the site linked is saying.

 

 

 

 

 

 

[linbren03]

Hi everyone

 

Firstly I would start off by thanking everybody who took the time to give me advice on my problems concerning paying beneficiaries their legacies.

 

On a more somber note it has come to pass that one of the executers has taken it upon himself to pay the full residue of the funds left in the estate to the deceased's Common law wife.

 

As this was given by mistake - can we get the money back or do we write it off as it was given in good faith to the recipient?

[Ethel Street]

@linbren03

 

The Executors are in a potentially serious position and need to take action quickly.

 

It's irrelevant that the money was paid in good faith. It was negligence by the Executors that it was paid to the wrong person and the beneficiary it should have gone to can sue the Executors. The Executors would then have to pay it personally if they cannot get it back from the person they gave it to.

 

Can you give us some more information please.

 

 

How many Executors are there? 

Are you one of the Executors?

Did all the specific cash bequests get paid to the named beneficiaries in full? Is it only the residual estate that is the problem?

How much money has wrongly been paid to the Deceased's Common law wife?

 

 

From the Will £30,000 was to go to "my partner". The residue was left 100% to "my wife". Which of those is the Deceased's Common law wife? Has the Common law wife received both the £30,000 and all of the residue?

 

 

 

[linbren03]

Thank you for replying. 

 

There was not enough money in his estate to meet the bequest,  there was only £10,500 left in the deceased estate.

 

This amount was given to his common law wife. (his partner)

 

None of the beneficiaries including his wife received anything.

 

The £10,500 legacy was paid in full to the deceased's partner. 

 

There are two Executors one of which is my wife the other is her brother, Who took the decision to give the £10,500 legacy to the deceased's partner after consulting with his financial advisor. 

[Ethel Street]

I don't know why the financial adviser thought that was the correct thing to do, or whether they have any legal qualifications, but my understanding of the abatement rules is that each of the named beneficiaries for specific sums of money should have had their legacy reduced by the same proportion. I'm not a lawyer myself but the abatement rules are explained that way on many online legal sites that you can look at to check this.

 

Is it possible that the deceased's brother and sister have agreed to waive their legacies to enable the deceased's common law wife to receive more? 

 

However in reality we aren't talking about a lot of money and I hope the Executors can resolve this informally without getting involved in legal arguments.

 

The specific cash bequests totalled £50,500. The money available to pay those, £10,500, is just over 20% of the amount bequeathed (20.79% to be exact).  So each beneficiary should have been paid 20.79% of what was left to them in the Will. The two family beneficiaries, the deceased's brother and sister, should have been paid £2,079 each. Unlikely they will sue the Executors for an amount that small - it would be eaten up in legal costs before they even got to the court door.

 

Do the brother and sister know what's happened? Are they happy to leave things as they are and let the the deceased's common law wife keep their shares? I wouldn't try and hide from them what has happened. If they are happy to waive their legacies they should confirm this to the executors in writing. Properly this should be done by the Executors drafting a Deed of Variation for the brother and sister to sign. You'll find specimen wordings online.

 

Sooner or later you'll probably get the charity chasing you for its £500. But after abatement that's now only £104.  As it's the chosen charity of the deceased I'd ask his common law wife to make the donation from her legacy.