Recent Cases

Just a quick post to update on a couple of recent cases which are of interest to Plantagenet clients.

First, a case on Wills and Inheritance which turned on a question we are often asked: what happens if a couple both die at the same time?

In this particular case, the unfortunate Mr & Mrs Scarle were found in their bungalow in Leigh-on-Sea in Essex, both having apparently been dead for some time. Which had died first mattered a great deal, because the bungalow and a bank account were both in joint names, meaning the share of the one who died first passed to the survivor. Moreover Mrs Scarle had left a Will benefitting her daughter, Deborah whereas Mr Scarle died without leaving a Will, which meant that his estate would pass to his daughter, Anna.

Wherever two people die in circumstances where it is uncertain which of the two died first, the presumption of the law, under s.184 of the Law of Property Act 1925, is that the older person died first. Mr Scarle was 10 years older than his wife, so Deborah naturally claimed that the joint assets fell into her mother’s estate, as she was younger, whereas Anna claimed that the forensic evidence showed enough proof to displace the presumption. If she could show it was probably her stepmother who had died first, s.184 would not apply and the joint assets would be part of her father’s estate, and be inherited by her.

The Judge found that the evidence was not sufficiently clear, the order of the deaths remained “uncertain” and the presumption still applied. Perhaps the moral of this sad story is that couples should both make Wills which, whatever the order of events, will result in a fair sharing of their estates between both their families.

Secondly, there is a tax case casting doubt on the assumption, that many people make, that so long as you only have one house at a time, the gains on sale will always be free of Capital Gains Tax because the “main residence” exemption applies.

In this case a Mr Fitzjohn, after breaking up with his wife and moving out of the matrimonial home, bought himself a flat but hoped to be able to bring about a reconciliation so regarded the situation as temporary. He then sold the flat just 3 months later for a gain of over 10% (Mr Fitzjohn was an estate agent, and seems to have been rather good at spotting these bargains). He then purchased another property, which he sold 4 months later for a gain of 40%. He then purchased a third property, which he sold within 6 months for a gain of approximately 20%. Although he declared the gain on the first property, he did not declare the gain on the other two, on the basis that at the time he lived in them and they were his “main residence” and so the gains were exempt from CGT. The First Tier Tax Tribunal decided otherwise. They found that Mr Fitzjohn, having reported the gain on the first property, was clearly aware that a “degree of permanence” was required to establish occupation of a property as a main residence, and would have been aware that his occupation of the second and third properties suffered from the same temporary nature, as there was evidence he was still trying to effect a reconciliation at the time. As a result, he was liable for tax on the gains on all three properties.

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