- Survivorship destinations in the form of A + B + survivor are often used when taking title to property. Notwithstanding the frequency of their use there appear to be pitfalls for the unwary. The most recent example of such issues being aired in court is Povey v Povey’s Executor  CSOH 68. This post is referenced by Notary public London
Critically assess the consequences of survivorship destinations and the pitfalls which may be associated with them.
The convenience of using special destinations has to be balanced with the disadvantages which only becomes apparent on death. As s 20 of Succession (S) Act 1964 permitted wills of heritage, the need for special destinations had gone.
The Barclays Bank Ltd v McGreish 1983 case was widely criticised. It was ruled that property under the survivorship destination passed automatically to the survivor and did not vest in the executor of the deceased for the purpose of paying the deceased’s debts. The survivor took the share free of those debts. This is surely unfair on the creditors.
In Fleming’s Tr, it was held that, survivorship destination took effect and conveyed property on to the widow, but was liable for debts of deceased up to value of property received. They got the property but no value. Thus, Barclays Bank Ltd was overruled.
The problem for the unwary conveyancer dealing with relationship breakdown is illustrated in the in Gardner’s Exrs v Raeburn 1996 case. A property was in joint names of a husband and wife and the survivor. They separated and subsequently divorced. On the divorce the husband paid £40,000 to the wife and the wife conveyed her one half share to the husband. H’s original share destination still kicked in and made property over to her. The court agreed
In the Redfern’s Executor v Redfern 1996 case, wife claimed property on basis of survivorship destination. Held, she had renounced right which prevented evacuation. Held, wife not entitled to property.
The difference between contractual rule being withdrawn by separation agreement and effective evacuation of destination. No conveyance inter vivos. The Family Law (Scotland) Act s19 had attempted to sort this problem. It states that where title is held in names of A and B and survivor and the marriage of A and B ends by divorce or annulment A dies then for the purposes of the destination B shall be deemed to have failed to survive.
The mere existence of a survivorship destination can pose problems. It can lead co owners or one of them to believe that it operates to prevent disposal inter vivos as well or at least to create a right of pre-emption. This issue was highlighted in the case of Steele v Caldwell 1979 and Smith v Macintosh 1989. It was held that destination only takes effect on death has no effect to restrict ability to dispose inter vivos.
The Povey v Povey 2014 Settles a number of outstanding issues in relation to survivorship destinations; For a half share owner is institute, survivor is substitute. This case indicated that the court would be unlikely to find that such an unregistered renunciation by a substitute would be considered to be effective. Presently, a destination cannot be revoked unilaterally where it is contractual as seen in the Perrett’s Trs case or the condition of a gift Haining v Renouf’s Trustee. However, where the destination is self imposed and neither contractual and since it cannot be the condition of a git, it may be revoked at will.
It also concluded that an agreement can determine that a destination is no longer contractual. But an agreement is just that it does not revoke the destination. It needs clear words to revoke. It needs to renounce rights as substitute in relation to each half share.
Also it concluded that A disposition by self to self is a nullity as seen in Youngson v Aberdeen College. So a disposition by self to self of a one half pro indiviso share is a nullity and does not revoke a destination. The effect of a survivorship destination is automatic under the Succession (S) Act 1964 s18. A substitute can renounce their right to succeed.
Such a renunciation needs clear words. The renunciation requires to be communicated. An agreement to renounce is personal, the renunciation is real. In Povey there was no effective renunciation. The registration of a deed post mortem was of no effect. The destination was accordingly effective
Full consideration of how a title should be written ought to take place at the time of purchase as the consequences of a special destination can be difficult to unravel later if the relationship fails.
Special destinations can only be “evacuated” or discharged by agreement between both parties, following a sale of a property, or on a divorce or dissolution of a civil partnership. Following the breakdown of a co-habitation, the special destination will only be evacuated by agreement or following a sale of the property.
Special destinations should not be used. It was pointed out that it was wrong for conveyancers simply to insert a survivorship destination automatically in a husband and wife situation without explaining the effects and taking proper instructions on this. The only advantage in using a survivorship destination is the automatic transfer to the survivor without the need for a conveyance. There is no great need to change the law on special destinations in any event. Conveyancers could simply cease to use them.