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The presumption against double portions

Posted on 27 July 2020

In an environment of high property prices and increasing job uncertainty created by the global pandemic, it is understandable if a parent wants to provide their child(ren) with large sums of money to help establish them in life. This, however, can affect that child's entitlement to their parent's estate because of what is known as the "presumption against double portions".

This is, in short, where a parent has made a will or codicil leaving a testamentary gift to a child of theirs (or someone treated as their child), and if after making the will the parent gives a gift (called a "portion") to that child, the portion provided after the will or codicil was executed will be treated as an advance on the testamentary gift, unless there is evidence of a contrary intention.

Only certain gifts will be classed as portions; there are three requirements:

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

There is no definition of "substantial", but in the case of Re Clapham [2005] £20,000 was established to be a portion.

The presumption against double portions may be rebutted by evidence of a contrary intention. This evidence may be "intrinsic", such as the existence of a clause in a will stating that no subsequent gifts should be taken into account on the distribution of the testator's estate. Alternatively, it may be "extrinsic"; for example, an email, a letter, or even a conversation.

The presumption against double portions can extend to gifts from grandparents to grandchildren if that gift can be viewed as being for the benefit of the grandchild's parent. Thus, in Re Cameron (Deceased) [1999] it was held that a testatrix's payment of her grandchild's school fees – which discharged his father's (the testatrix's son) duty to maintain and educate his son – was held to be a portion. In the absence of any evidence to rebut the presumption that this was not a gift, the payment of the grandchild's school fees was held to be an advance of his father's share in the testatrix's estate.

An interesting case on the presumption against double portions is that of Kloosman v Aylen and Frost [2013]. The testator had left the residue of his estate to his two daughters and an estranged son in equal shares. The two daughters had each received lifetime gifts of £100,000. The court held that these gifts were not to be treated as portions because the money for these came from the sale of the testator's property in Lewisham, which was sold at a higher price than the testator had expected, and that he never intended to benefit his son to a one third share of the money he eventually had.

Furthermore, the testator had intended these gifts to be in part to repay his daughters for the sums of money they had already spent taking care of him and in part to help them finance the inevitable future costs of his care and housing for what remained of his life. The judge explained: "Until the Lewisham house was sold Mr Frost had no money and was dependent on his daughters to manage his financial and household affairs. He had no expectation that his estate would amount to a considerable sum both because he had no idea of the value of the house and because he did not expect to die so soon after making his will. He could not have known that £100,000 would in fact turn out to be about one third of the value of his estate at his death. It is not realistic to expect someone of his background to contemplate recompensing his daughters for their money and time by adjusting the provisions of his will."

Conclusion

It is clear that parents need to think carefully about whether their will ought to take account of subsequent gifts to children (or those treated as children). If a will is already in place, and a parent (or a person in loco parentis) has transferred or intends to transfer a substantial sum to a child, it would be sensible to clearly document the nature of this, that is, whether it is a "bonus" on that child's inheritance, or is to be treated as an advance on this. Failing to do this may end up in costly legal dispute, so specialist legal advice is advisable.  

On the other hand, child beneficiaries can be assured there is legal doctrine to ensure equality between siblings, so that if a sibling receives a substantial sum during the gifting parent's lifetime this will not, unless there is clear evidence to the contrary, be treated as a bonus on their inheritance. 

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