“Where a deceased person was immediately before his death beneficially entitled to a joint tenancy of any property, then, if, before the end of the period of six months from the date on which representation with respect to the estate of the deceased was first taken out, an application is made for an order under section 2 of the Act, the court for the purposes of facilitating the making of financial provision for the applicant under this Act may order that the deceased’s severable share of that property, at the value thereof immediately before his death, shall, to such extent as appears to the court to be just in all the circumstances of the case, be treated for the purposes of this Act as part of the net estate of the deceased.”
“In determining the extent to which any severable share is to be treated as part of the net estate of the deceased by virtue of an order under subsection (1) above, the court shall have regard to any capital transfer tax payable in respect of that severable share.”
“For the avoidance of doubt it is declared that for the purposes of this section there may be a joint tenancy of a chose in action.”
“The object” - I interpose to say of section 9 - “is to bring in what could have been severed immediately before the date of death. If the deceased had in fact severed the beneficial joint tenancy immediately before his death, he would have thereupon become entitled to a half-share in the property subject to the mortgage but with the benefit of the half-share in the policy monies and, accordingly, on his death, his net estate would have been left with a clear half-share of the property, half the policy monies having gone to discharge his half-share of the mortgage. I find it slightly startling therefore, and anomalous, that the effect of section 9 should be said to be that, if the court is merely ordering that the deceased’s share of the joint property at the value thereof immediately before his death is to be treated as part of his net estate, the result is that the half-share of the policy monies is to be treated as of no value at all or at best merely a token value. One is looking at the moment immediately before the deceased’s death, which is the last moment for severing the beneficial joint tenancy, and to give effect to that it is necessary, to my mind, to keep in mind that the deceased is indeed about to die the very next moment or very soon, almost immediately, thereafter. Therefore it cannot be right to value immediately before his death without regard to his assumed imminent death. On the actual facts, he died in hospital (where he had been admitted not long before) and the cause of death was cerebral haemorrhage and hypertension. That again seems to indicate that immediately before his death his actual prospects of surviving would have been virtually negligible. Taking that into account, I conclude that the order should reflect that, though the property is subject to the mortgage, the half-share of the policy monies is also to form part of the net estate.”
“I have concluded that the reason, and indeed the sole reason, why the value is to be determined immediately before death is because that is the last moment at which severance is possible and it is the severable share that is to be valued. No such consideration arises under section 8 and that is why by section 8(2) the value is to be taken there as at the date of death. The result is that when the value of the property in question depends upon death, and that will only be the case when, as here, the property is a life policy, the value immediately before death will be effectively the same as the value upon death. So be it. That seems to me both fair and to accord with the literal language of section 9.”
“Next the question arises as to whether it was likely that the parties would have intended to include within a policy a terminal illness benefit that was owed to them jointly and a death benefit that was not. It might at first sight be thought surprising that that would be the case, but on consideration, I do not think so. The benefit payable on terminal illness would be needed by both of the policy holders to defray the cost of that illness; in contradistinction, the benefit on death would only be required by the survivor. On analysis, therefore, the purpose of the benefits was different and different treatment within a composite policy accorded with the obvious intention attributed to the parties in respect of the different nature of the benefits.”
“Suppose that A and B have submitted a claim based on the terminal illness of A and that the company, after proper inquiry by its chief medical officer, is about to accept that claim. When the claim is accepted, the policy monies will be paid to A and B jointly, for the reasons which I have sought to explain. But suppose that, immediately before the claim is accepted, either A or B dies. The policy monies will be payable by reason of the death; it will be the death, rather than the acceptance of the terminal illness claim that will be the relevant Qualifying Event. And the policy monies will be paid by the company to the survivor, because (after the death of the first to die) it will be the survivor who will have become, by survivorship, “the Policyholder”, from whom alone the company can obtain a good receipt. But that will provide no answer to the question “which of A and B was entitled to the rights under the policy immediately before the first to die?”.”
“We can confirm that the above mentioned policy had a terminal illness benefit for joint lives, first death policies, which this policy was. The payment could be brought forward ‘on proof to the company’s satisfaction that one of the lives insured is suffering from a terminal illness. No death benefit will be payable if a claim has been paid’. The letter stated ‘previously no such claim for terminal illness was ever made’; therefore a claim was only made and settled upon the death of Mrs Walia. To admit a claim, ‘on proof to the company’s satisfaction that the life insured is suffering from a terminal illness’, our procedure would be to contact the treating consultant of the life insured for information on the condition and life expectancy. Terminal illness is defined by our terms and conditions as ‘an advancing or rapidly progressing medical condition that cannot be cured and from which the life insured will not survive for more than 12 months from the date the company is notified of the condition’. We must satisfy this definition before any claim would be admitted. As the above mentioned policy was a joint policy, if a claim had been made on terminal illness, a form of authority would have been issued for both policy holders to sign and agree a bank account into which funds would be paid should the claim be valid. We would not accept the signature of only one policy holder. The claim for terminal illness can only be made whilst the life insured is alive.”