LIFE ASSURANCE POLICIES.

Dunstan Times, Issue 1802, 18 December 1896, Page 6

LIFE ASSURANCE POLICIES.

AN IMPORTANT JUDGMENT.

! In a considered judgment in re Henderson, \ heard at Christchurch recently, the Court | held that, in the absence of any directions j by the testator making the moneys receiv- ; able from His life policies available for the i payment of testamentary expenses the I executors had no authority or right to use part of them for that purpose, and during the course of the judgment His Honor laid it down practically that policy moneys do not paBS under the general bequest to executors and trustees, and are not subject to the trusts created by him in his will unless he specially directs that they shall be. This, of course, is contrary to what we said last week, and whether Mr Justice Denniston is correct or not in the construction he puts upon an exceedingly difficult and complicated point, his decision must be accepted as an authoritative exposition of the law until and unless the Court of Appeal shall decide to the contrary. It therefore follows that policy moneys are divisible amongst a testator's next of kin, his wife, children, or father and, mother unless he specially directs to the contrary by his will. i If a man dies leaving policy moneys, and 1 makes no will, the moneys bo payable pass to his administrator, who holds tbetn in 1 trust for the wife, to the extent of onei third, and the balance between the children equally; or in the absence of wife and children, to such other persons in the prescribed order who are his next of kin,; If he makes a will, and does not expressly deal with the moneys payable on bis life, they will pass to his next of kin, notwithstanding that his will may clearly show that he intended a different disposition t>i them altogether, and may have arranged the division of his property so that an inequitable result is brought about by the next of kin legally appropriating moneys he never intended them to receive. The statute practically makes his will for him, so far as the policy moneys are concerned, and it therefore becomes necessary for him to revoke the statutory disposition so made, and this mußt be done, , not by presumption from the contents of his will, biit by express words. No matter how clear the implication arising from his will may be, if the testator has not specially said himself what is to be the destination of moneys coming to the estate from his policies, the statute will distribute them. Wc said last week that if a testator's will was silent concerning his policy moneys, but left his estate generally to residuary legatees, they would take policy moneys as part of the residue. In coming to this conclusion we wrote in ignorance of the decision given in re Henderson, and accepted the conclud- '. ing words of the judgment in re Cresson, 10 N.Z L.R., 57} as our authority. This is the passage we refer to: " Wood v. Grey shows that ' residue' is not a • legacy' in the ordinary sense of the term, though the person who takes it is properly called a residuary legatee. If that be so, the provisions of the Life Assurance Policies Act, exempting the money from liability to pay legacies, would not affect a residuary bequest. The learned judge does not, it may be noticed, say positively that the residuary legatee takes the policy moneys in the absence of special direction, and it may be that we have gone further than he ever intended in accepting an authoritative statement of the law, that which he waß prepared to find, only upon a certain hypothesis, and which has since been discarded as untenable. At the time we wrote, how; ever, the judgment seemed to us to justify the conclusion we came to, that the prohibition against payment of legacies out of policy moneys did not apply to gifts of the residue, particularly aa we knew that residue was that portion of a testator's estate which remains after payments of debts and legacies; we therefore think that the legislature has not altered the power of disposition, further than to declare that legacies should stand upon the same footing as debts. It is now not necessary to speculate upon the contraction which might have been pub upon the concluding words of the judgment in re Gressot), because the learned judge who gave that decision has removed all doubts by the construction he has given to the statute in the latter case. Whatever ambiguity there maybe latent in the words we have quoted from in re Gresson, there is none in the decision given in July lastk Mr Justice Denniston there held that policy moneys pass to the next of kin; that if a testator wishes to control their destination he must specifically mention them (is part of his estate. This decision does not, of course, | bind courtsof co-ordinate jurisdiction, but as a considered exposition of an intricate point of law by a learned judge always carries great weight should the same point arise for determination in a court of equal authority, we must accept the judgment in question as an authoritative settlement of the law, so long as it is not over-ruled by the Court of Appeal. It would, therefore, be an act of prudence on the part of persons who have made their wills to frame a codicil setting out that life policy moneys shall be considered part of the trust estate* for all purposes except for the payment of debts and testamentary expenses. Such a clause can do no injury even if the judgment in Henderson and Henderson should ultimately be reversed, while if the decision remains law the insertion in a will of the words we have given may prevent the frustration of testator's intention with regard to a perhaps principal portion of his estate.—'The Mercantile and Bankruptcy Gazette.'