Charles Anderson throws some light on the terminology used in the world of property legacies.
Many large charities have legacy and property teams which are well-equipped to steer them through the process of dealing with properties left to them by supporters.
However, for some charities, receiving a property as a legacy can be a bewildering experience. To enable readers to begin to get to grips with this complex area, I list below a glossary of some of the terms which charities may encounter in this field.
The legacy
- Codicil – a document altering the terms of an existing will.
- Claims against the estate – claims may come from a variety of sources, including people who consider they have not been reasonably provided for by the deceased, creditors, and those who doubt the will’s validity.
- Deed of variation – a document varying the terms of a will after death.
- Disclaiming a legacy – a beneficiary is not obliged to accept a legacy. This can be of importance if the gifted asset comes with burdens.
- Estate – the assets and liabilities of a deceased person.
- Executor – someone appointed in a will to administer the testator’s estate. An executor has a duty to collect in the deceased’s assets, pay any debts and expenses of the estate and distribute the balance to beneficiaries.
- Intestacy rules – the rules that will apply where the will does not fully dispose of the estate.
- Personal representative – generic term for a person who administers a deceased’s estate, known as an executor if there is a will or administrator if there is no will.
- Probate, or grant of probate – the document issued by the court to confirm legal authority to administer the estate.
- Testator – a person who has executed a will.
- Residuary estate – the remains of a person’s estate once debts, funeral expenses, inheritance tax, administration expenses and legacies have been paid.
The property
- Freehold interest – gives the holder ultimate ownership of the property.
- Leasehold interest – gives the holder exclusive rights of possession and use of the property. It is granted by way of a lease for a term. For certain residential leases, statutory rights to extend the term or to acquire the freehold may apply.
- Licence – a mere personal permission to occupy or use the property – not a leasehold interest.
- Permitted use – the ways in which the property may be used under the lease. Restrictions may affect the value of the lease. In some cases, the will may contain specific directions on how the property must be used.
- Alienation – the extent to which the lease may be transferred or sublet. Restrictions may affect the value of the property.
- Covenants – obligations to which land and landowners may be subject and which may have an important impact on value – particularly if they restrict use or development.
- Easements – rights over land which benefit nearby property or adjoining owners – such as access, passage of services and light. These may impact upon development potential.
The planning law framework
- Lawful use – the use of land permitted under planning law as a result of a grant of planning permission; because of permitted development rights; or because the use has been long-established and can no longer be enforced against.
- Development – certain works or changes of use of land which need to be authorised.
- Planning enforcement – the range of statutory powers available to local authorities to investigate and prohibit unlawful development on land.
- Permitted development rights – these are automatic rights, granted at central government level, to carry out development of a relatively minor or temporary nature, subject to compliance with various strict limitations and conditions.
- Local plan – the Local Planning Authority’s public planning policy document which indicates the type of development likely to be granted planning permission in different parts of its area.
- Allocation in the ‘local plan’ – the public process of allocating land for specific types of development in a local plan. Once allocated, securing planning permission for that development is much easier.
Charles Anderson is a partner at Farrer & Co.
