On the death of a person entitled to property the following duties are now payable.

1. Estate duty on the whole estate, varying in amount according to the value of the estate.

2. Succession duty on all land, including leaseholds.

3. Legacy duty on all legacies of personal property other than leaseholds.

The present law on this subject is due in large measure to the Finance Act of 1894 (a) as amended by the Finance Act, 1907 (b).

The duties payable are as follows: -

1. In the case of a person who died before the Finance Act, 1894.

Personal property was liable to pay -

(a) Legacy duty (on the amount of each legacy, varying from 1 to 10 per cent., according to the relationship of the legatee to the deceased).

(b) Probate duty. - A duty at a fixed rate, payable on all property in respect of which probate was granted.

Leaseholds did not pay legacy duty, but were liable to pay - -

(a) 57 & 58 Vict. c. 30. (b) 7 Ed. 7 c. 13.

(a) Succession duty on the value (c) of the interest which descended to each person entitled.

(b) Probate duty.

(c) Temporary estate duty of 1 per cent, on all successions of over 10,000.

Freeholds were liable to pay -

(a) Succession duty.

(b) Temporary Estate duty (as above).

Account duty was also payable on gifts mortis causa, life policies, etc.

2. In the case of a person who died after the 1st of August, 1894 (d).

Probate duty, temporary estate duty, and account duty are no longer payable; but personal property still pays legacy duty, and freehold and leasehold property still pay succession duty.

And all property, real or personal, pays a new duty, called Estate duty, which varies from 1 per cent, on properties over 100 and not more than 1000 to 15 per cent, on properties over 3,000,000 (e).

The duties now payable in respect of land are therefore -

Succession Duty. - This was created in 1853 (f), and is payable by each person who succeeds to the beneficial interest in real or personal property (except such personalty as is charged with legacy duty), and the amount varies from 1 to 10 per cent, of the value of the succession according to

(c) The value on which succession duty was payable was (before 1894) the value of the property considered as an annuity for the life of the successor. Since the Act of 1894 (s. 18) the duty is payable on the capital value if the successor is competent to dispose of the property.

(d) Finance Act, 1894, s. 24.

(e) This applies in case of death after 19th April, 1907; 10 per cent. is payable on the first 1,000,000.

(f) 16 & 17 Vict. c. 51.

the relationship to the deceased of the person who takes the succession.

A succession occurs in each of the following cases -

(1) When a tenant in fee simple or owner dies intestate or leaves the property by will.

(2) When one joint tenant dies and the land survives to the other.

(3) When a person becomes entitled to property under an exercise of a power of appointment on the death of the appointor.

(4) When a life interest or annuity ceases and thus increases the value of the property which was subject to the life interest or annuity.

(5) When a person dies who has granted his land to another reserving to himself a life interest. (Except where the transaction was a bona fide sale.)

Succession duty is a first charge on the interest of the successor in the land to which he succeeds.

A purchaser of any land therefore should satisfy himself that any succession duty which is payable has been paid.

The right to claim succession duty is, however, barred, if not claimed by the revenue authorities within either of the following periods -

(1) Within 12 years after the death which gave rise to the claim for duty; or

(2) Within 6 years after the authorities had notice of the succession.

Where land is sold under a power of sale, or a trust for sale, the duty is not charged on the land but on the proceeds of sale.

Exemptions from Succession Duty.

(1) Husband or wife of deceased;

(2) Lineal issue or ancestor of deceased if [probate (g) duty or] estate duty has been paid.

(g) On death before 1894.

Estate Duty. - This duty is payable on all property, real or personal, passing on the death of any person after the 1st of August, 1894.

On the death of any person the following property is held to "pass on his death."

(i.) Property of which he was competent to dispose when he died.

(ii.) Property in which he had a life interest, or in which any other person had an estate for his (the deceased's) life.

(iii.) Gifts mortis causa and life policies.

(iv.) Annuities which on his death survive to another or in any way benefit another person.

Exemptions from estate duty.

(1) Property held by the deceased as a trustee.

If however the deceased himself created the trust, duty is payable unless the beneficiary bond fide took possession of the property for 12 months.

(2) Property which passes to another on the death of the deceased by reason of a bond fide sale for full value.

(3) Property of soldiers and sailors killed on active service.

There are several other exemptions, but these are the most important.

The duty is a charge on all property which did not pass to the executor as such before the Land Transfer Act, 1897.

Thus the duty is a charge on freehold estates but is not a charge on leasehold estates, because they passed to the executor and it was his duty to pay the estate duty.

Estate duty is barred after 12 years in the same way as succession duty, but there is no exemption in favour of property sold under a power of sale or trust for sale.

A purchaser should therefore demand a certificate to prove that any estate duty which has become payable has been paid.

Settlement Estate duty. - When by the will of the deceased (or otherwise on his death) the property is settled in such a way that the first person interested under the settlement cannot dispose of the property, a further duty of 1 per cent. is payable; and then no further duty is payable until the death of the first person who under the settlement has power to dispose of the property.

E.g.- - A by will settles land on B for life, remainder to C for life, remainder to D in fee simple.

On the death of A settlement estate duty will be payable as well as estate duty, but no estate duty will be payable on the death of B or of C.

On the death of D, estate duty will be payable.

Where the only life interest created is that of the wife or husband of the deceased no settlement estate duty is payable.