Looking a gift horse in the mouth? An overview of the ‘Doctrine of Election’ in the context of testamentary legacies

One of the key requirements for the Doctrine of Election to apply is that a testator has gifted an asset under their Will which does not belong to them. At first glance you may think this is a very unlikely scenario, surely an individual knows what their own assets comprise of?

However, an easy mistake can be made when looking to gift a property or interest in land that is held as joint tenants. Where property is held as joint tenants it automatically passes to the surviving joint tenant(s) on death, regardless of what might be said in the Will.

For example:

Olivia and Taylor are friends, they own a rental property called ‘Woodlands’ together as joint tenants. Olivia has executed a will leaving two legacies: 1) Woodlands to her niece Eva and 2) a cash legacy of £200,000 to Taylor. The residue of her estate is left to her son Isaac.

On Olivia’s death, Woodlands automatically passes to Taylor outside of Olivia’s Will due to the principle of survivorship. However, Olivia’s Will seeks to gift Woodlands to Eva (as if survivorship did not apply) but Woodlands actually belongs to Taylor.

There are three key requirements for the Doctrine of Election to apply: 

1. The Testator leaves a legacy under their Will to Beneficiary A
2. The legacy left to Beneficiary A is comprised of an asset that actually belongs to Beneficiary B, and
3. The Testator also leaves a legacy under their Will to Beneficiary B

We will apply this to Olivia, Taylor and Eva.

As above, Olivia’s Will states that Eva (Beneficiary A) should receive Woodlands. However, due to the joint tenancy, Woodlands belongs to Taylor (Beneficiary B). Olivia’s Will also provides a legacy of £200,000 to Taylor. All three requirements are met.

In this situation, Taylor is set to benefit from a legacy of £200,000 under Olivia’s Will. However, what can Taylor do about Woodlands given that Olivia has attempted to provide this to Eva?

As the Doctrine of Election applies, Taylor has three choices:

Choice 1- Disclaim

Taylor can choose not to receive the £200,000 under Olivia’s Will. As a result, Taylor keeps Woodlands.

Choice 2 – Elect under the Will

Taylor can choose to follow Olivia’s Will, this would mean Taylor accepts the £200,000 legacy but allows Eva to receive Woodlands as the Will directs.

Choice 3 – Elect against the Will

Taylor can choose to accept the £200,000 legacy but may also want to keep hold of Woodlands, the Doctrine of Election requires Taylor to compensate Eva for the loss of Woodlands to the requisite value of Woodlands at Olivia’s date of death.

In light of the above, for Taylor to elect against the will to keep Woodlands, her £200,000 legacy must be of equivalent or greater value to Woodlands so that there is adequate compensation available for Eva.

If Woodlands is worth £150,000 and Taylor has elected against the will, Taylor keeps Woodlands and would then pay Eva £150,000 compensation from the £200,000 received.

In this situation Taylor ends up with Woodlands plus £50,000 cash.   

The Doctrine of Election must be carefully considered. In reality, each case where this doctrine might apply would be decided on its own facts. It is important to seek thorough professional advice when making a Will and to consider the nature of how property is held.

The above example highlights the unintended consequences where advice is not sought. If Olivia had known she held Woodlands with Taylor as joint tenants she may have chosen to take steps to sever the joint tenancy to ensure she could leave her share to Eva without risk of the Doctrine of Election governing the legacy. Alternatively, she could have chosen to benefit Eva in some other way.

Mills & Reeve can provide expert advice in this area so please get in touch for further information if you need legal advice on this Doctrine.