Life Assurance and the Cohabitant: The Law Commission's Reforms on Privity

Abstract

In its recent report on privity of contract the Law Commission considered, inter alia, whether reform of section 11 of the Married Women's Property Act 1882 should be entertained at this time. The title of that Act is somewhat misleading but in essence section 11 provides that a life assurance policy on the life of a man or woman for the expressed benefit of his/her spouse and or children, creates a trust in favour of the named spouse or child. Thus the beneficial interest in the policy never forms part of the assured's estate, which result may be of particular importance to the beneficiary in the event of the assured's insolvency because by section 283 of the Insolvency Act 1986 trust assets are expressly excluded from the bankrupt's estate capable of vesting in the trustee in bankruptey and thereafter being available for distribution to creditors.