A recent Bahamian case, Flowers v Scavella [2024], examined an interesting point regarding how a mortgage on a jointly owned property should be settled on death. The Bahamian law in question derives from section 35 of the Administration of Estates Act 1925 (UK law) and so whilst the decision in this case is not binding in English law, the decision is likely to be highly persuasive.
The deceased owned a property with his wife as joint tenants, to which the principle of survivorship applies. This means that the property automatically passes on death to the surviving legal owner(s), regardless of the content of a Will or the Intestacy Provisions.
The deceased died intestate. He had a life insurance policy that was payable to his estate on his death. This was claimed by the deceased’s widow who had obtained a Grant of Letters of Administration to administer the deceased’s estate. The deceased had previously been married and had two daughters with his ex-wife.
When the money from the life insurance policy was paid to the estate, the deceased’s wife used it to repay part of the mortgage debt. This resulted in a claim against the widow by the deceased’s ex-wife on behalf of her two daughters for failing to make the correct payments from the estate to his daughters under the intestacy rules.
It was not disputed by either party that by law, half of the residue of the estate belonged to the deceased’s widow, and the other half to his surviving children in equal shares.
The ex-wife’s claim was based on a law which states that:
The court originally found in the favour of the ex-wife stating that the widow misused the life assurance funds and as beneficiary of the charged property interest, the widow was primarily liable for the mortgage in exoneration of the estate. However, the widow then appealed to the Court of Appeal and the judgement was overturned on the basis that the law has no application as between the beneficiaries in the estate and the survivor of two beneficial joint tenants. Further, the Court decided that the law did not apply to an intestate estate.
The ex-wife subsequently appealed to the Privy Council arguing that both conclusions were incorrect, but the decision of the Court of Appeal was upheld.
As noted above, this case is not binding in English law, the decision is likely to be highly persuasive with regard to the nature and meaning of co-ownership of property as beneficial joint tenants.
The moral of the story being that in order for your assets to pass where you wish or indeed expect them to, you should always take professional advice. Assumptions as to how assets pass whether by will or intestacy do not always prove to be correct.
If you wish to discuss this or any other matters relating to your Will or estate planning, please do not hesitate to get in touch with a member of our Private Client team here.
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