Is that a single portion or a double portion?

What is the “double portions” rule?

There is a presumption under common law that a person would not intend to give a gift twice.  So if two gifts are made to the same person, provided both gifts can be described as a “portion” then the law assumes that the first gift was in effect part payment of the legacy.  That presumption is, however, rebuttable.

What is a portion?

A portion is defined as a gift intended to set up a child in life or to make substantial provision for him or her.  If having left a substantial share of his estate in his will to his children, a parent then gifts a substantial gift during his lifetime to one of those children, if both those gifts have the character of a portion, it is assumed the lifetime gift is a substitute for the bequest in the will.  

To be classed as a portion, a gift must comprise three requirements:

1. The gift must be a gift in lifetime and be of a substantial sum (in its own right and not merely substantial in relation to the estate);
2. Made by a parent (or a person in loco parentis) to a child;
3. Made with the object of establishing the child in life or making provision for them.

How to prevent the rule applying?

In an ideal world, to avoid any future litigation a testator would include a clause in his will, a so-called “hotchpotch clause” which can provide protection against the rule applying.  A hotchpotch clause provides that any gifts made during a parent’s lifetime should not be taken into (or brought back into) account when dividing assets between the children (or other beneficiaries) following their death.

Testators would be well advised to keep a clear note of the reasons why a particular gift was being made and practitioners should take care to ensure they ascertain a testator’s intentions including asking them specifically whether they have made any lifetime gifts and if they have (a) to provide a clear written statement of the gifts made and (b) to confirm whether the gift was intended to be in addition to the gift under the will or a portion of that legacy.  Testators should also be advised to make sure they keep an updated list of gifts made prospectively and to record their intentions as regards their intentions in relation to the gift made during the lifetime as regards the effect on the legacy gift.

Case example

In Re Frost [2013] the testator signed a will which distributed his estate as to one third to each of his two daughters, one sixth to his estranged son and one twelfth to each of his son’s children.  Shortly after execution of the will he sold his house which was his only substantial asset.  Knowing he was dying from cancer, from the net proceeds of sale of about £350,000.00 he made cash gifts to each of his daughters of £100,000.00.  At the date of his death, his estate was valued at just under £140,000.00.

At the time the lifetime gifts were made, the testator was living in one of his daughter’s houses and was being cared for by her as a result of his cancer, having previously been cared for by the other daughter.  During this period, the deceased had no money and was dependent on his daughters.  He had no expectation as to the size of his estate as he was not aware of the value of the house nor did he expect to die so soon after having made his will.

Following his death, a dispute arose between the beneficiaries as to whether the deceased had intended the lifetime gifts to his daughters to be advances on their inheritance or additional gifts.  The deceased’s executor sought guidance from the court as to whether the rule of double portions should apply.

The judge felt that the lifetime gifts were intended in part to repay the daughters for the sums of money they had already spent in caring for him and to assist with the future costs of his care and housing for the remainder of his lifetime.  Accordingly, he found, on the facts of the case, that the lifetime gifts were not intended as portions to the daughters or in anticipation of their share of their father’s estate.  The presumption against double portions did not therefore apply and the daughters were entitled to receive their full entitlement of their father’s estate pursuant to the terms of his will.

Conclusion

As property prices continue to increase and the likelihood of parents providing lifetime gifts to help their children during their lifetimes, particularly as regards monies for a deposit in relation to property, the likelihood is that we are going to start seeing an increase in claims in relation to the double portions rule.  This will especially be true in circumstances where, for example, an elder child has already received a substantial sum of money to assist them with a deposit for a property but the younger child(ren) has not done so by the time of their parent’s death and yet the will still provides for an equal distribution of the estate.