The Net Estate
| Author | Nasreen Pearce |
| Pages | 271-296 |
Chapter 9
The Net Estate
9.1 INTRODUCTION
I(PFD)A 1975, s 2 gives the court power to make orders for financial provision
out of the net estate of the deceased. The definition of ‘net estate’ under the Act
is set out in s 25(1) and replicates the definition in I(FP)A 1938, s 5(1), but is
wider in scope in three respects (I(PFD)A 1975, ss 10 and 11):
(1) any property may be treated as part of the net estate if the court considers
it just so to order;
(2) ‘net estate’ includes property held on a joint tenancy which can be treated
as forming part of the net estate by the court, overriding the law of
survivorship (s 9); and
(3) the court may order that ‘net estate’ also includes any property which
forms part of a transaction intended to defeat an application for financial
provision.
I(PFD)A 1975, s 25(1) nevertheless restricts the meaning of ‘net estate’. This
chapter deals with the definition of ‘net estate’ in s 25(1), and the provisions
which permit the court to treat certain property as part of thenet estate if necessary
to make an award for financial provision under the Act. These include nominated
property and donatio mortis causa which comes within the definition of net estate
by virtue of s 8, and property held jointly by the deceased and another which is
included in the net estate pursuant to s 9. Any property which may be included in
the net estate by reason of the deceased disposing of it with a view to defeating
or decreasing a claim is dealt with in Chapter 10.
9.2 DEFINITION – I(PFD)A 1975, SECTION 25(1)–(3)
I(PFD)A 1975, s 25(1) defin es the ‘net estate’ from which any order for financial
provision may be made as follows:
272 A Practitioner’s Guide to Inheritance Act Claims
(a) all property which the deceased had power to dispose of by his will (otherwise
than by virtue of a special power of appointment), less his funeral, testamentary
and administration expenses, debts and liabilities, including any inheritance tax
payable out of his estate on his death;
(b) any property in respect of which the deceased held a general power of
appointment (not being a power exe rcisable by will) which has not been
exercised;
(c) any sum of money or other property which is treated for the purposes of the Act
as part of the net estate of the deceased by virtue of section 8(1) or (2) of this
Act;
(d) any property which is treated for the purposes of this Act as part of the n et estate
of the deceased by virtue of an order made under section 9 [see para 9.8];
(e) any sum of money or other property which is, by reason of a disposition or
contract made by the deceased, ordered under section 10 or 11 of this Act to be
provided for the purpose of the making of financial provision under this Act [see
Chapter 10].
‘Property’ is defined as including any chose in action. It would also appear that
cryptocurrencies and other forms of crypto-assets are also likely to be included
within this definition (see the Legal Statement on Cryptoassets and Smart
Contracts, published on 18 November 2019 by the UK Jurisdiction Taskforce,
chaired by Sir Geoffrey Vos, available at judiciary.uk/the-chancellor-of-the-high-
court-sir-geoffrey-vos-launches-legal-statement-on-the-status-of-cryptoassets-
and-smart-contracts/; see, also, AA v Persons Unknown [2019] EWHC 3556
(Comm)and Wang v Darby [2021] EWHC 3054 (Comm) and Tulip Trading Ltd
(a Seychelles company) v Van der Laan and Others[2022] EWHC 667 (Ch)).
There are some useful publications which provide detailed legal implications of
such assets which should be consulted, and where appropriate itis suggested that
expert evidence on the issue should be obtained.
9.3 PROPERTY WHICH THE DECEASED HAD POWER TO
DISPOSE OF BY WILL
This category corresponds to that set out in I(FP)A 1938, s 5(1). It will include
payments payable to the deceased under life insurance policies or outstanding
debts which were due to the deceased before death, such as lump sums due on
early retirement or damages awarded in civil litigation. Note also that under
I(PFD)A 1975, s 25(1) under para (a) of the definition of ‘net estate’, liabilities
and debts and expenses due are excluded. Creditors take priority over beneficiaries
and dependants. Property subject to a special power of appointment is excluded.
I(PFD)A 1975, s 25(2) provides that, for these purposes, a person who is not of
full age and capacity is treated as having power to dispose by will of all property
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