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1894, a wife surviving her husband is entitled not only to the income
of the settled property, but also to the caf)ital, then estate duty is
payable in respect of the property passing on the death of the husband,
the life interest being merged in the absolute ownership {d).

Where property is settled by a person on himself for life, and after
his death on any other person with an ultimate reversion to the settlor
absolutely, the property will not be deemed for the purposes of the Act
to pass to the settlor on the death of that other person after the 1st
July, 1896(e).

Example. — X. settles property on himself for life, with remainder to Y.
for life, with remainder to X. absolutely. Y. dies before X. in 1898.
No estate duty is payable.

Where by a disposition a life interest is conferred on any other
person than the disponer, and the only benefit retained by the disponer
is subject to such life interest, and no other interest is created by
the disposition, then on the death of the tenant for life after the 1st
July, 1896, the property will not be deemed to pass to the settlor for
the purpose of the Act (/).

Exam.ple. — X. by deed conveys property to Y. for life, with remainder
to himself. Y. dies in 1898. No estate duty is payable by X.

(c) Fin. Act, 1894, s. '21 (5).

\d) A.-G. V. Strange, 1898, 2 Q. B. ;39 ; 67 L. J. Q. B. 629; Austen-
Cartmell, 4th ed., 176.
(e) Fin. Act, 1896, s. 14.
(/) lb., s. 15.



WILLS (death duties), 767

Estate duty is not payable in respect of a single annuity not exceeding single annuity

£25 purchased or provided by the deceased, either alone or in concert no* exceeding
'■ c J ' £25 exemj)ted.

or arrangement with any other person, for the life of himself and some

other person or the survivor of them, or to arise on his own death in

favour of some other person, and if in any case there is more than one such

annuity, the annuity first granted is alone entitled to the exemption (g).

Pictures and other objects appearing to the Treasury to be of Pictures, &c.,

national, scientific, artistic, or historic interest are exempt from estate, ?f "'^^lo*^*!

' ' ' _ i- ' interest.

legacy, and succession duties while enjoyed in kind, and duty only
becomes chargeable when the property is sold (h), and if such objects
are given to the nation or to a public body, the Treasury may remit
the duty altogether (i).

Pensions payable by the Government of India to the widow or
child of a deceased officer are exempt (k).

In cases of estates not exceeding £300 in gross value, there was Estates of
formerly a fixed estate duty of 30s., and in the case of estates exceeding ^'"'^^' value.
£300 and not exceeding £500 in gross value, a fixed dut}' of 50s. (/),
but now duty at one per cent, is payable on estates exceeding £100
and not exceeding £500.

When the net value of the property in respect of which estate duty is
payable exclusive of property settled otherwise than by the Will of the
deceased does not exceed £1,000, such property is not to be aggregated
with other property, but to form an estate by itself, and where the fixed
duty or estate duty has been paid upon the principal value of that
estate, the settlement estate duty and the legac}^ and succession duties
are not to be payable under the Will or intestacy of the deceased in
respect of that estate {m). This provision is not altered by the Fin.
(1909-10) Act, 1910 (n).

The Act contains a special provision with respect to property situated Property in
in a British possession (o). The Act of 1900 contains a power to remit ^„^'i*|fj^;
death duties within certain limits in case of persons killed in war.



possession.
Persons killed



Leffaci/ Duty (p).

Legacy duty is payable (subject to special exemptions which will be
mentioned presently) for every legacy, specific or pecuniary, or of any

(g) Fin. Act, 1894, s. 15.

{h) Fin. Act, 1896, s. 20; Fin. (1909-10) Act, 1910, s. 63.

(i) Fin. Act, 189^, s. 1.5.

(/.') lb., s. 15 (3).

(l) lb., s. 16 ; Eevenue Act, 1903, s. 14.

(m) Fin. Act, 1894, s. 16 (3).

{n) Fin. (1909-10) Act, 1910, s. 58 (2).

(o) Fin. Act, 1894, s. 20.

(p) Hanson, 5th ed., 334,



768



WILLS (death duties).



Personal estate
appointed by
Will under
general power.



Rate of
legacy duty.

Where legatee
is lineal
descendant or
ancestor.



brother or
sister, or
descendant of,

uncle or aunt,
or descendant
of,

great-uncle or
aunt, or
descendant of,



in other cases.



The £1 per
cent, legacy
duty and
succession
duty no longer
covered by
estate duty.



other description, not being leasehold property, given by any Will or
testamentary instrument of any person out of his or her personal or
movable estate, and also for the clear residue (when devolving on one
person) and for every share of tlie clear residue (when devolving on two
or more persons) of the personal or movable estate of any person (after
deducting debts, funeral expenses, legacies, and other charges first pay-
able thereout), whether the title to such residue or any share thereof
accrues by virtue of any testamentary disposition or upon a partial or
total intestacy (q).

Personal estate appointed by a Will made in exercise of a general
power of appointment is liable to legacy duty as if the same were the
property of the testator (r). The right to charge profit costs is a
legacy, and legacy duty is payable (s).

Legacy duty is payable at tlie following rates according to the
relationship between the legatee (t) and the deceased, viz. : —

W^here the legatee is a child of the deceased or any descendant
of a child of the deceased, or the father or mother or any lineal
ancestor of the deceased, or the husband or wife of the deceased,
£1 per cent.

Where the legatee is a brother or sister of tlie deceased, or any
descendant of a brother or sister of the deceased, £5 per cent.

Where the legatee is a brother or sister of the father or mother of the
deceased, or any descendant of a brother or sister of the father or
mother of the deceased, £10 per cent.

Where the legatee is a brother or sister of a grandfather or grand-
mother of the deceased, or any descendant of a brother or sister of a
fj-randfather or grandmother of the deceased, £10 per cent.

And where the legatee is in any other degree of collateral con-
sanguinity to the deceased thaii is above described, or is a stranger in
blood to the deceased, £10 per cent.

Estate duty does not now cover the £1 per cent, legacy or succession
duty, but the £1 per cent, duty is not payable where the value of the
property on which estate duty is payable does not exceed £15,000 ; or
where the value of all legacies or successions derived by the legatee
does not exceed £1,000; or where the legatee is the widow or infant
child of the deceased and the value of all legacies or successions derived



{q) St. Act, 1815, Schedule, Part III. ; S. D. Act, 18o3, s. 19 ; Oust.
Act, 1888, s. 21, sub-s. 2, as amended by Fin. (1909-10) Act, 1910,
s. 58.

(r) Loi'd Advocate v. Boutledye's Trustees, 1907, S. C. 327.

(s) Re White, 1898, 2 Ch. 217; 67 L. J. Ch. 502; Hanson, 5th ed.,
365.

(t) The term " legatee " includes any person taking on an intestacy.



WILLS (death duties).



769



by such person does not exceed £2,000 (u).
and share of residue (x).



" Legacy " includes residue



Definition of
" succession."



Succession Duty (y).

Under the Succession Duty Act, 1853, succession duty is payable in Duty payable
respect of every succession to property on death, subject to a rule that ■ accessions.
no person charged with legacy duty will be charged also with succession
duty in respect of the same acquisition of the same property (z), and
subject also to certain special exemptions which will be mentioned
presently.

For the purposes of duty, a succession is thus defined by s. 2 : —

Every past or future disposition of property by reason whereof any person
has or shall become entitled to any property or the income thereof, upon the
death of any person dying after the time appointed for the commencement
of this Act either immediately or after any interval, either certainly or con-
tingently, and either originally or by way of substitutive limitation (a), and
every devolution by law of any beneficial interest in property or the income
thereof upon the death of any person dj'ing after the time appointed for the
commencement of this Act to any other person in possession or expectancy,
shall be deemed to have conferred or to confer on the person entitled by
reason of any such disposition or devolution a " succession,' and the term
" successor" shall denote the person so entitled, and the term " predecessor '
shall denote the settlor, dispouer, testator, obligor, ancestor, or other person
from whom the interest of the successor is or shall be derived.

The above definition of a succession is supplemented by provisions to
the following effect, namely (1) that where any persons have any Title by
property vested in them jointly by a title not conferring a new survivorship
succession, the beneficial interest accruing to them by survivorship is to succession.
be deemed a succession derived from the deceased joint tenant as
predecessor, and where any persons take a succession jointly, any
beneficial interest accruing to any of them by survivorship is to be
deemed a new succession derived from the predecessor from whom the
joint title was derived (b) ; (2) that if a donee of a general power taking
eff"ect on death exercises it, he will for the purpose of duty be deemed to
be entitled at the time of such exercise to the property appointed as a appointment
succession derived from the donor of the power, and where any person
having a limited power to take effect on death exercises it, the appointee
will be deemed to take the property as a succession derived from the

(m) Fin. (1909-10) Act, 1910, s. 58 (2).
(.t) Ih., sub-s. 3.
{y) Hanson, 5th ed., 476.
(z) S. 18.

(a) A.-G. V. Etjres, 1909, 1 K B. 723 ; 78 L. J. K. B. 384; Hanson,
th ed., 491.
(6) S. D. Act, 1853, s. 3.
P. — VOL. II. 49



Succession by
exercise of
power of



770



WILLS (death duties).



Succession by
extinction of
prior charges,



or by deter-
mination of
interest
reserved to
grantor.



Leaseliold
property, and
money to arise
on sale of real
property,
liable to suc-
cession duty.

Rate of suc-
cession duty.



What duties
payable when
sviccessor is
also pre-
decessor



Provision as
to joint
predecessors.



donor of the power (c) ; (3) that where any property is subject to any
charge, estate, or interest, determinable by the death of any person, or
at any period ascertainable only by reference to death, the increase of
benefit accruing to a person on the extinction or determination of such
charge, estate, or interest, is to be deeuaed a succession (d) ; (4) that
where any disposition of property, not being a sale, and not conferring
an interest expectant on death on the person in whose favour the same
is made, is accompanied by a reservation or assurance of, or a conti'act
for, any benefit to the grantor or any other person for life, or for any
period ascertainable only by reference to death, such disposition confers
at the time appointed for the determination of the benefit an increase
of beneficial interest, so as to make the person taking the same liable to
succession duty (e).

Leasehold property acquired by Will or devolving on an intestacy,
legacies payable out of real property, and money to arise from the sale,
mortgage, or disposition of real property directed by a Will to be
sold, mortgaged, or disposed of, are liable to succession (not legacy)
duty (/•).

Under the Act of 1853, succession duty is payable at the same rate as
legacy duty, according to the degree of relationship between the
successor and the predecessor {g).

Where a person takes a succession under a disposition made by him-
self, then, if at the date of such disposition he was entitled to the
property expectantly on the death of any person dying after the 19th
May, 1853, and such person died during the continuance of such
disposition, he is chargeable with duty on his succession at the same
rate as he would have been chargeable if no such disiDOsition had been
made ; but a successor is not liable to duty in any other case under a
disposition made by himself, and no person is chargeable with duty
upon the extinction or determination of a charge or interest created by
himself, unless at the date of the creation thereof he was entitled to the
property subject thereto on the death of some person dying after the
19th May, 1853 {h).

Where tlie successor derives his succession from more predecessors
than one, and the proportional interest derived from each of them is
not distinguishable, the Commissioners may agree with the successor as
to the duty payable ; but if no such agreement is made, the successor



(c) S. D. Act, 1853, s. 4.
{d) S. 5.
(e) S. 7.

(/) S. D. Act, 1853, s. 19; Oust. Act, 1888, s. 21 (2).

[cj) S. D. Act, 1853, s. 10; Fin. (1909-10) Act, 1910, s. 58; and see
p. 768, sup.

{h) S. D. Act, 1853, s. 12,



WILLS (death duties).



771



will be deemed to have derived his succession in equal proportions from
each predecessor, and will be chargeable with duty accordingly (i).

Where the interest of any successor in personal property shall, before
he shall have become entitled thereto in possession, have passed by
reason of death to any other successor, then one duty only is payable in
respect of such interest, and is due from the successor who first becomes
entitled thereto in possession ; but such duty will be at tlie highest
rate which, if every such successor had been subject to duty, would
have been payable by any of them (k).

Where on the 19th May, 1853, any reversionary property expectant
on death was vested by alienation or other derivative title in any person,
such person will be charged with duty at the same time and rate as the
original successor would have been chargeable if there had been no
alienation, &c. ; and where after the 19th May, 1853, any succession,
before falling into possession, has become vested by alienation or any
title not conferring a new succession in any other person, the duty is
payable at the same rate and time as if there had been no such aliena-
tion, ifec. ; and where the title to any succession is accelerated by the
surrender or extinction of any prior interest, the duty is payable as if
there had been no such acceleration (I).

Property given to any charitable or public purpose is liable to duty
at 10 })er cent. {m).

No policy of assurance on life creates the relation of predecessor and
successor between the insurers and the assured, and no bond or contract
made by any person honcf fide for valuable consideration in money or
money's worth for the payment of money or money's worth after the
death of any other person creates the relation of predecessor and suc-
cessor between the parties ; but a disposition or devolution of the money
payable under such policy, bond, or contract may create a succession (?t).



Where there
has been a
devoUition by
death of a
successor, only
one duty to be
j)aid at the
higher rate.



Duty to he
paid by alienee
of succession.



Acceleration.



Gifts to
charities, &c.

Provision for
j)olicies on life
and contracts
for valuable
consideration.



Exemptions from Legacy and Succession Duty.

No legacy or succession duty is payable on gifts to members of the Gifts to Eoyal
Royal Family, or for charitable purposes in Ireland (o), or on gifts of '^|'^™\^^ ^"*^

Ireland.



{i) S. D. Act, 1853, s. 13.

{k) S. 14.

\l) S. 15; Buclmn v. Lord Advvcate, 1909, A. C. 160; 78 L. J. P. C. 70;
D. of Northumberland v. A.-Ci., 1905, A. C. 406; 74 L.J. K. B. 734;
Hanson, 5th ed., 579.

(m) S. 16.

(n) S. 17. Marriage is not a valuable consideration under this section .
Floyer v. Banhes (1864), 3 D. J. & S. 306; 33 L. J. Oh. 1.

(o) 5 & 6 Vict. c. 82, s. 38.

49-2



772



WILLS (death duties).



Where whole
estate less
than £100 in
value.

Plate, &c.,
while not
disposable.



books and other specific articles to bodies corporate for preservation and
not for sale (jo).

No legacy or succession duty is payable when the whole estate of the
deceased, or the whole succession derived from the same predecessor,
does not amount to £100 {q).

Plate, furniture, or other things not yielding income are not liable to
legacy or succession duty while enjoyed by persons who have no right
to dispose of them (?•). And see p. 767, sup., " Pictures, etc., of National
Interest."



Effect of
Marriage.



The value of
annuities to be
calculated
according to
tables, and
to be payable
by four
instalments.



The value of
annuities pay-
able out of
legacies, how
to be calcu-
lated and paid.

Duty on
property given
to jDurchase
annuities.



Rules as to Assessment and Payment of Legacy and Succession Duties.

Where any pei'son chargeable with legacy or succession duty is
married to a wife or husband of nearer consanguinity to the deceased or
the predecessor, the duty is payable at the same rate as if the wife or
the husband had been the legatee or successor (s).

Where property liable to legacy or succession duty consists of an
annuity, the value of the annuity is to be calculated according to the tables
in the schedule to the S. D. Act, 1853 (t), and the duty thereon is made
payable in four equal annual instalments, and the value is to be calculated
without regard to any contingency on which it may be determinable.
But if the annuity determines by death before the end of the four years,
the duty is payable in proportion only to so many of the payments of the
annuity as actually became due and payable ; and in case the annuity
determines by any other contingency than death, not only all future
instalments of duty ceaseto be payable, but a return is to be made of
so much of the duty actually paid as will reduce the same to the amount
which would have been payable for such annuity calculated according
to the term for which it shall have endured {u).

The value of an annuity charged on a legacy is to be ascertained in the
same manner, and the duty on the legacy is to be paid on its value, after
deducting the value of the annuity. The duty on the annuity is to be
paid by the legatee, and he is to retain the same out of the annuity («),

If an annuity is directed to be purchased, the duty (whether legacy
or succession) will be calculated upon the sum necessary to purchase the



[p) L. D. Act, 1799, Schedule, Part III. ; S. D. Act, 1853, s. 18.

\q) S. D. Act, 1853, s. 18 ; Oust. Act, 1880, s. 13.

(r) L. D. Act, 1796, s. 14 ; S. D. Act, 1853, s. 32.

(s) S. D. Act, 1853, s. 11.

(0 S. 31.

\u) L. D. Act, 1796, s. 8.

[x) lb., s. 9.



WILLS (death duties).



773



annuity according to the before-mentioned tables, and the annuity to
be purchased is to be reduced proportionably {y).

The duty on legacies whose value can only be ascertained by actual
application of the allotted fund is to be charged on the money or effects
as applied {z).

If personal estate subject to legacy or succession dutj is given so as to
be enjoyed by different persons in succession, the duty will be charged
as follows : If all the persons interested are chargeable at the same rate,
the duty is to be charged on the capital and paid as if it were a gift to
one and the same person ; but if the persons interested are chargeable
at different rates, then the persons having life or other temporary
interests are to be charged on such interests as if the annual produce
had been given to them by way of annuity, and the person who becomes
absolutely entitled is to be charged with duty on the capital when it falls
into possession (a).

The duty on legacies enjoyed in succession is to be charged as such,
whether the persons entitled take under the Will or by intestacy (6).

Where a legacy is subject to a contingency which may defeat it or
cause it to go over to some other person, the duty is payable as if it were
an absolute legacy to the first legatee, although the person entitled to
the benefit of the contingency may not be liable to the same duty or to
any duty ; and if the contingency happens and the person thus becoming
entitled is chargeable with a higher rate of duty, he must pay the
difference (c).

Where a legacy is subject to a power of appointment in favour of
special objects, the property is charged with duty as property given to
different persons in succession, and if the power is exercised, the
appointees are chargeable as if they had taken under the Will creating
the power. Where any property is given for a limited interest, and an
absolute power of appointment is given to anj' person to whom the pi'o-
perty would not go in default of appointment, the property is, upon the
execution of the power, charged with duty as if it had been immediately
given to the donee of the power, after allowing for any duty previously
paid in respect thereof. Where any property is given with an absolute
power of appointment, and in default of appointment to the donee of
the power, the property is chargeable as if it had been given to the
donee in the first instance without the power (d).



Duty on
legacies whose
value can only
be ascertained
by application
of the allotted
fund.

How duties on
personal
estate, &c.,
enjoyed by
XJersons in
succession
shall be
charged.



Duties apply
to intestacies.

Legacies
given on
contingencies.



Legacies
subjected to
power of
appointment,
how to be
charged.



{y) L. D. Act, 1796, s. 10; S. D. Act, 1853, s. 32.

(z) L. D. Act, 1*796, s. 11 ; S. D. Act, 1853, s. 32; and see A.-G. v. Wade,
1910, 1 K. B. 703 ; 79 L. J. K. B. 569.
(a) L. D. Act, 1796, s. 12 ; S. D. Act, 1853, s. 32.
{h) L. D. Act, 1796, s. 15; Hanson, oth ed., 397.
(c) S. 17.
\d) S. 18.



774



WILLS (death duties).



Money left to
pay duty not
chargeable.



Specific
legacies.

Duty on

legacies not
satisfied in
money, &c.



Legacy duty,
by wliom and
when payable.



When legacy
is given to dif-
ferent persons
in succession,
whether
payable by
executor or
by trustees.



Personal estate
directed to be
applied in
purchase of
real estate.



If a legacy is given with a direction to pay the duty out of some
other fund, the money applied in payment of the duty is not chargeable
with the duty (e).

Specific legacies and bequests of property not reduced into money are
to be valued in the manner pointed out in the Act (/).

Where a legacy or the subject of a succession is satisfied otherwise
than by actual payment, or is released for consideration, or is com-
pounded for, the duty is chargeable on the amount or value of the
property taken in satisfaction thereof, or as the consideration for the
release thereof, or composition for the same ; and where any gift of
personal estate is made in satisfaction of any other property, the duty
is not to be paid on both subjects, but on that yielding the largest
duty {g).

Legacy duty must be paid by the executor upon the payment of the
legacy, and in default of payment the duty is a debt from the executor,
and also from the legatee. On payment of the legacy the executor
must take a receipt, which receipt must be stamped, and an executor
paying or receiving a legacy without such receipt is liable to a penalty
of .£10 per cent, on the amount of the legacy {It).

Where the duty payable on a legacy given to different persons in
succession is chargeable at one and the same rate, the executor is to pay
it before he transfers or pays the legacy to the trustees of it ; but if it
is chargeable at different rates, payable at different times, it is to be paid
by the executor, unless the legacy has been paid to or vested in any
trustee, in which case the trustee is liable for the duty as if he were the
executor (i).

Personal estate directed to be laid out in purchase of real estate is
charged with duty as personal estate, unless it is given so as to be
enjoyed by different persons in succession, and then each party is to pay
duty as if it had not been directed to be laid out in real estate, unless it
shall have been actvially so laid out before the duty accrued, but no
duty shall accrue in respect thereof after it has been so laid out. If
before the personal estate is laid out any person becomes entitled to an
estate of inheritance in possession in the real estate to be purchased
therewith, the duty is to be charged on it as personal estate and



Online LibraryFrederick PrideauxPrideaux's forms and precedents in conveyancing : incorporating Wolstenholme's forms and precedents with dissertations and notes on its law and practice (Volume 2) → online text (page 90 of 138)