Can the Charity Claim Rehanna’s Property?

Question from Aaliyah, Can the Charity Claim Rehanna’s Property?

Answer from AI:

When dealing with the distribution of assets after someone’s death, understanding the legal principles that govern wills, trusts, and gifts is crucial. In the scenario involving Rehanna, several key legal concepts come into play, including the validity of verbal gifts, the creation of trusts, and the implications of a will. This explanation will use the IRAC method (Issue, Rule, Application, Conclusion) to clarify the situation, focusing on UK law. It’s important to remember that this is a general guide and not specific legal advice. Consulting a legal professional for personalized advice is always recommended.

Issue

The main issue is determining whether the charity, as the beneficiary of Rehanna’s will, has rights over the properties and shares that Rehanna attempted to distribute before her death. This involves examining the legal status of her actions regarding the shares in Hodan Ltd, the holiday cottage (Windy Hills), and her home (Orchard House).

Rule

In the UK, the legal framework surrounding wills, trusts, and gifts is complex. The key principles that apply in this scenario include:

1. Validity of Gifts: For a gift to be legally valid, it must meet three criteria: intention, delivery, and acceptance. This is straightforward for tangible gifts but can be complex for shares or property.
2. Creation of Trusts: A trust is created when a person (settlor) transfers property to another (trustee) to hold for the benefit of a third party (beneficiary). Trusts can be created through a written declaration, but the formalities depend on the type of trust and the property involved.
3. Wills and Testamentary Dispositions: A will is a legal document that outlines how a person’s property should be distributed after their death. For a will to be valid, it must comply with the requirements set out in the Wills Act 1837.

Application

Applying these rules to Rehanna’s actions:

• Shares in Hodan Ltd: Rehanna’s verbal instruction to her trustees to give the shares to Manshun could be seen as an attempt to make a gift. However, for shares, the transfer needs to be executed in accordance with the company’s articles of association and typically requires a written transfer form. Without this, the gift may not be legally effective.
• Windy Hills: Rehanna’s actions—sending the deeds and a note to Aisha—indicate a clear intention to create a trust for Roy. If the formalities for transferring property (which usually require a written document signed by the settlor) are met, this could constitute a valid trust.
• Orchard House: Rehanna’s verbal gift to Leith, accompanied by handing over the keys and explaining about the deeds, presents a more complex issue. While there was clear intention and acceptance, the legal formalities for transferring real property (which typically require a deed) were not met. This gift might not override the provisions of the will.

Conclusion

The charity’s rights over Rehanna’s property depend on the legal validity of her actions before her death. The shares in Hodan Ltd may still belong to her estate if the proper transfer formalities were not completed, meaning the charity could have a claim. The holiday cottage could be considered a valid trust for Roy, potentially excluding it from the estate. Orchard House is likely to remain part of Rehanna’s estate due to the lack of formalities in the attempted gift to Leith, thus falling under the will’s provisions.

It’s crucial for Aisha, as the executor, to seek legal advice to navigate these complexities. The outcome will depend on detailed examination of the facts, the application of law, and potentially, the decisions of a court.

For more information on the legal principles involved, the UK Government’s guidance on making a will and the Law Society’s resources on setting up a trust can provide valuable insights.