HOUSE OF LORDS Special Public Bill Committee Inheritance and Trustees' Powers Bill [HL] Ordered to be printed 16 December 2013 and published 20 December 2013 Published by the Authority of the House of Lords London : The Stationery Office Limited £10.50 HL Paper 105 The Special Public Bill Committee The Inheritance and Trustees' Powers Bill [HL] was committed to a Special Public Bill Committee on 23 October 2013. The members of the Committee were appointed on 28 October 2013. The Bill gives effect to the recommendations set out in parts 2–7 of the Law Commission’s report, “Intestacy and family provision claims on death” (Law Com No. 331). Membership Lord Ahmad of Wimbledon Lord Beecham Earl of Courtown Baroness Hamwee Viscount Hanworth Lord Henley Lord Jones Lord Lloyd of Berwick (Chairman) Lord McNally Lord Plant of Highfield Lord Shaw of Northstead Publications The report and proceedings of the Committee are published by The Stationery Office by Order of the House of Lords. All publications of the Committee are on the internet at www.parliament.uk Contacts All correspondence should be addressed to the Clerk of the Special Public Bill Committee, Legislation Office, House of Lords, London, SW1A 0PW. The telephone number for general enquiries is 020 7219 3153. INHERITANCE AND TRUSTEES’ POWERS BILL [HL]: EVIDENCE 1 Minutes of Evidence TAKEN BEFORE THE SPECIAL PUBLIC BILL COMMITTEE TUESDAY 26 NOVEMBER 2013 Members present Lord Lloyd of Berwick Viscount Hanworth (Chairman) Lord Henley Lord Ahmad of Wimbledon Lord Jones Lord Beecham Lord McNally Earl of Courtown Lord Plant of Highfield Baroness Hamwee Lord Shaw of Northstead Examination of Witnesses Witnesses: LORD MCNALLY, Minister of State, Ministry of Justice, PROFESSOR ELIZABETH COOKE, Law Commissioner, EDWARD NUGEE QC and SIDNEY ROSS, were examined Memorandum by Lord McNally, Minister of State at the Ministry of Justice 1. In this written evidence to the Committee, I do not propose to restate the broad contents and benefits of the Inheritance and Trustees’ Powers Bill. There is already substantial material in existence which explains them and an open briefing session for Peers has already taken place. I am also aware that the Law Commissioner responsible for the work which led to the Bill, Professor Cooke, has provided very comprehensive written evidence to the Committee and I do not wish to duplicate any part of that. 2. Instead, I propose to deal with a number of issues that were raised during Second Reading Committee on 22 October. I dealt with some issues during the debate itself but it may be helpful to discuss some others further here. The first of these is Lord Henley’s remark, echoed later in the debate by Baroness Hamwee, that he foresaw potential problems concerning the Bill’s amended definition of personal chattels. 3. The Bill introduces a new exception, to the definition of personal chattels, for property which is held solely as an investment. I do not anticipate that there will be undue problems in interpreting this provision. Any personal use of the chattels in question would be enough to remove them from the exception and bring those chattels within the ordinary statutory definition which would mean they would pass to the surviving spouse or civil partner on intestacy. There may be particularly difficult cases which may be the subject of litigation on this point. That is potentially the case with all legislation and such cases will be decided on their particular facts but I do not believe that there needs to be any further clarification of this point on the face of the Bill. 4. Lord Wills expressed a number of concerns about the conduct of solicitors when dealing with the estate of a deceased individual or when appointed as an attorney under a lasting power of attorney. I have subsequently met with Lord Wills to discuss his concerns and to emphasise my belief that these are not issues that would be best dealt with in this bill. We have agreed that a better course of action is for me to pursue these issues with the Solicitors’ Regulation Authority. This I am doing and my discussions with Lord Wills will continue outside the context of this Bill. 5. Lord Marks referred to the Government’s intention to delete the provision creating an additional ground of jurisdiction for family provision claims. He particularly asked whether there is any other way of widening the present jurisdictional rule. We have had extensive discussions with Scottish Government colleagues to try to find a way of meeting their concerns whilst simultaneously saving this provision in some form. Unfortunately, such a way forward was not identified and I therefore decided that the best course of action would be to delete this provision from the Bill entirely. 6. This was on the grounds that it was not appropriate for a Bill such as this, which is being taken forward under a very specific Parliamentary procedure designed for non-contentious Bills, to contain a provision that is already subject to significant opposition. I am mindful particularly here of the comments made by Lord Henley who asked for the Government’s assurance that this special procedure for Law Commission Bills is only used for uncontroversial measures. I am happy to give such assurance and it is for this very reason that I do not believe that it is possible to pursue an additional ground of jurisdiction for family provision claims. I understand that Professor Cooke has also written to Lord Marks explaining the Law Commission’s position on this matter. 7. Lastly, I should also mention that Lord Beecham previously raised the issue of joint tenancies and how they relate to the intestacy rules. The Law Commission has written to me giving a detailed explanation of 2 INHERITANCE AND TRUSTEES’ POWER BILL [HL]: EVIDENCE this issue and this letter has been circulated to Committee members although I have attached it again to this evidence for convenience. 8. I am sure that some of these issues will be discussed further by the Special Public Bill Committee. However, I hope that in the meantime, this brief written evidence on behalf of the Government will assist the Committee. Attachment Letter from Professor Elizabeth Cooke to Lord McNally Dear Lord McNally JOINT TENANCIES AND THE INTESTACY RULES During the second reading debate on the Inheritance and Trustees’ Powers Bill Lord Beecham asked whether the Law Commission had, when making our recommendations, taken account of the potential impact of joint tenancies on the assets which are available on intestacy. We are pleased to write to you explaining the position. The Law Commission gave careful attention to this issue when considering both its provisional proposals, and making its final recommendations. The relevant paragraphs of the Consultation Paper are paras 2.34-2.35, 3.14-3.28, and 3.85-3.97, and of the Report are paras 2.45-2.50. The Commission consulted on whether the sharing of intestate estates should focus on the family home. Among other options, we asked for views on whether the law should be reformed to require a surviving spouse to account (perhaps in the context of a larger statutory legacy) for any share of the family home which passed automatically by survivorship. This recognised the impact on the children of the deceased where a surviving spouse acquires the deceased’s interest in the family home by survivorship and the rest of the estate under the intestacy rules. The option did not receive much support on consultation, and attracted considerable criticism. A number of consultees expressed concern that a scheme which required the value of the family home to be set against the statutory legacy would be complicated, difficult to apply and likely to add to costs. It was argued that it would be unfair and inappropriate for a spouse’s entitlement on intestacy to be set against property he or she already owned. It was also suggested that the reform could leave a surviving spouse with the family home but insufficient resources to keep it up. We were convinced by the weight of opposition and concluded that it was not appropriate to pursue this option for reform. It is worth re-stating that property owned under a joint tenancy can be said to demonstrate the deceased’s intention that his or her co-owner should take the whole of the property in the event of his or her death– a joint tenancy has been referred to as the poor man’s will. It is reasonable in principle, then, that such property should not be divided under the intestacy rules. Importantly, however, property which has passed by survivorship is accessible for the purposes of family provision. It is open to the court to make an order which requires the value of the family home to be shared where a child or dependant can show that he or she did not receive reasonable provision from the deceased’s estate. I hope that this is helpful. I am happy to provide any further information that might be useful. Yours sincerely Professor Elizabeth Cooke 28 October 2013 Memorandum by Professor Elizabeth Cooke, Law Commissioner BacKGround to THE BILL 1. The Inheritance and Trustees’ Powers Bill has its origins in the draft Bill which accompanied the Law Commission’s Report Intestacy and Family Provision Claims on Death Law Com No 331 published in December 2011. That Report and draft Bill were the culmination of a project referred to us by the Ministry of Justice, with the support of the Better Regulation Executive of the Cabinet Office, following calls for a review of the intestacy rules in response to the Ministry of Justice’s 2005 consultation on the statutory legacy.