As a lawyer more interested in the theoretical side of the law, I have been strangely fascinated with the legal questions raised by Downton Abbey. There are a few good sites I have found that explain the fee tail issue that is the heart of why Robert could not leave the estate to his daughters, but I have not found any good discussions of the “death duties” and the will at the beginning of Season 4. If you are confused by how Robert could sell the estate to Matthew, or by what Mary owns in the estate, follow me below where I lay out my understanding. (yes, I know I need a life!)
In Episode 1 of Season 4, we learn that Matthew received half the estate from Robert in exchange for the infusion of capital (from the wholly improbable dead ex-fiancee’s relative in India dying suddenly). But what can Matthew buy if the fee tail is still in place? And what can Matthew leave to his son George and/or Mary that requires payment of large death duties? And how can Robert sell land if it is covered by the fee tail?
First, the fee tail. This is discussed many places so I will try to go quickly. The “fee tail” means that the estate must pass to a succession of heirs. Under law at the time, this really means male heirs (who also must be legitimate). So Robert received the estate as the eldest (and only) son of his father. But Robert does not have sons, so the estate can’t go to his daughters. Instead it must go to the heirs of the most recent Earl who has a succession of sons. I did not follow this point too closely to remember which Earl of Grantham, but apparently Matthew is descended from a younger son of at least the second previous Earl (making Matthew a distant cousin of Robert). This is enough to put Matthew next in line. But it does not make him the “heir apparent” because Robert could still have a son and that son would inherit instead of Matthew. The most likely scenario is that Cora dies and Robert subsequently remarries a much younger woman who then has a son.
With this background (and the assurances of the characters in the show that the "tail" can not be defeated), we know learn that Robert sold half the estate to Matthew. Can Robert do this? What if there is a later born son? The only answer that fits is that Robert sold half his “life estate” to Matthew. As the Earl of Grantham, Robert really only has a legal interest in the property for his lifetime. But this is a valuable interest as he gets to live on the property and manage it how he sees fit. Technically, a life estate is property and Robert can sell part or all of this property. This type of transaction is rare because the buyer will own part of Downton Abbey only for Robert’s life. Most buyers of property do not want to own something for a time period measured on someone else’s life, so selling life estates is hard to do. Matthew, on the other hand, would be willing to do this because it gives him control over half of Downton and, as Robert is older and more likely to die first, all of Downton will become Matthew’s anyway (assuming no surprise son for Robert). Viewed from this perspective, it was smart for Matthew to get some measure of legal control in Downton in exchange for bailing out Robert with a new infusion of cash. This is a time honored tradition throughout time and place: the infuser of a large sum of cash gets an ownership stake.
So Matthew was in a good place: new son (who would become the heir to Downton if Matthew ended up the heir), half ownership of Robert’s life estate and happy marriage. Then he died tragically, leaving half of Robert’s life estate without a will (?) to Mary and George (their baby son). If there is no will, the common law (i.e., old law of England) provided that the wife received one third of the decedent’s property with two-thirds going to children. This means George owns 2/3 of Matthew’s 1/2 , which if you remember your fractions, is 2/6 of Robert’s life estate in Downton. Mary then owns 1/6 and Robert owns 3/6 of his own life estate. These calculations are verified by Robert when he argues that he should the one to act on behalf of George and that gives him 5/6 of the estate and Mary 1/6. If Mary acted on behalf of George, then it would be 3/6 or 1/2 for each.
Quiz time: what happens if Robert dies with the holdings in Downton: Robert 3/6, Mary 1/6, George 2/6?
Hopefully I have been clear enough so that the answer is obvious: If there is no surprise son for Robert, George gets everything (6/6). If there is a surprise son, the new son gets everything. Either way, Mary’s holdings in the estate will vanish when Robert dies because she only holds part of Robert’s life estate. George’s ownership based on Robert’s life estate will also vanish but this will not matter if George is the heir because he then takes all. If there is a new son, then George will own 2/6 of Downton until Robert’s death and then own nothing.
So what about the “death duties”? If Matthew only owned part of Robert’s life estate, why does his estate owe taxes? The answer is that property that passes by inheritance is taxed. As the legal right to live at Downton and spend the cash generated by the estate is valuable, then there is value in the life estate which means three is something to be taxed. The big question where I can’t say much is how this tax will be determined. Under current U.S. law, it would require valuing the life estate by looking at actuarial tables to see how long Robert is expected to live and by estimating the cash generated by the estate and the imputed value of living in a manor house. I imagine a similar approach was used back then, although they would be less likely to discount using present values as is standard today.
Once that number is determined, Matthew’s estate will owe taxes on half of it. As Downton has been valued by some fans at $20 million (in today’s dollars), there is the potential to find that the life estate is worth about half of this as Robert has 20 years or so of life left. This would leave Matthew owing taxes on about $5 million (in today's dollars). And as the tax rate was apparently 40%, it would require payment of $2 million (in today’s dollars). For a land rich and cash poor operation like the Downton estate, this is an impossible amount of money without selling some land or entering a long payment plan (like the 20 years discussed in the show).
So far, I am happy with my explanations for who owns what and why taxes are an issue. The writers of the show have chosen a plausible scenario, even if they haven’t explained it well at all. The big problem I have is that Robert is convinced that selling some land is the only solution. What I don’t understand is how he can do that under the fee tail. The big problem with the fee tail historically is that the owners of the land can’t sell it. This has caused the fee tail to be abolished almost everywhere (including England by the mid-1920s). In fact, this restriction on sale is the whole point of the fee tail, as the original grantor of land wanted to keep the entire estate intact throughout future generations and the fee tail keeps spoiled and lazy third or fourth generation owners from wasting away the family estate.
One solution I can come up with for this puzzle is that Robert has purchased some land over the years that is not covered by the fee tail. He could do this with cash generated by the estate. In that case, he could sell the land anytime. But there is no evidence of this because, if there was property not covered by the tail, he could also give it to his daughters and the clear implication of the show is that there is nothing for the daughters after Robert dies.
A different solution is that Robert is planning on selling land under his life estate. So the buyer would own the land only for Robert’s life. This would bring in some cash, but he would probably not get a good price because it is an uncertain thing to buy land based on a 50+ year old man’s life (in 1922). The last idea I can offer is that Robert was planning on working with the government to have them seize part of his land due to unpaid taxes. If the government seized the land Robert wanted them to have and then conducted an auction for a fair price, then this would achieve the result Robert wanted. I am not an expert in fee tail (I doubt anyone is anymore!) but I suspect government seizing land for nonpayment breaks the tail for that land in the same way seizing property for nonpayment of a mortgage transfers legal title.
If you are with me this far, I hope this has been helpful. The last issue of interest is the will. If the will is valid, then Mary owns 50% and George has nothing (until Robert dies). While this doesn’t change any of the above, it does introduce the new issue of whether Matthew’s will hurts George. Robert grumbles about George’s inheritance being taxed twice under the will, but this is a real grey area to me. Under my analysis, the entire estate passes to George upon Robert’s death and he will owe tax on the entire thing. So I am not convinced it matters whether George already owns 2/6 of Robert’s life estate or not. In other words, if the life estate is valued separately from the remainder (as I argued above it must be for Robert to be able to sell half his life interest now), then the remainder has never had a “death duty” applied and it will be subject to full taxation regardless of whether George owned part of the life estate. Under Robert’s reasoning, George would not have to pay tax again on the 2/6 George already owns after Robert dies (and the tax is only on transfers due to the death). But this reasoning ignores that George only owned part of Robert’s life estate and life estates magically vanish when the person whose life they are measured on dies.
In conclusion, this is like a problem on a law school exam. It seems simple but the answers are really quite complex. I am not sure I am right on this because I am not an expert in English real property law in 1922. But who is?