On Mortgages of Expectancies under Wills

Extract

Insurance Companies are sometimes asked to lend on a prospective interest under the will of a living person. In most cases, such an expectancy would of course be quite out of the question as a security; for besides other circumstances that may arise to defeat it, there is the possibility that the person who has executed the will may change his mind, or get rid of all his property in his lifetime. But in certain circumstances the chance of realizing such an expectancy may be materially increased. For example, the person who has made the will may become lunatic and incapable of dealing with his property or making a testamentary disposition of it. The property would then be placed in the custody of a trustee or the Court, and, subject to a proper allowance for his maintenance, would be kept intact till his death or recovery. And, if there is strong evidence that there is practically no chance of the lunatic recovering his reason, the prospective interest can almost be regarded as an ordinary contingent reversion to fall in on the death of the lunatic, if the beneficiary survive him. In such circumstances, the prospective beneficiary may desire to raise a loan on his interest; and life offices are sometimes approached in this connection. Though, as the writer shows in the following remarks, such an expectancy cannot form a mortgage security, even when the chances of its realization are as favourable as those mentioned above, it may be useful to examine the chief points that come up for consideration in a proposal of this sort, and the reasons for which it should be declined.