Avoiding challenges to your estate post death
Succession planning is important for a number of reasons, including trying to minimise the amount of tax payable on your death, It is also important to consider whether there is a risk of any dispute arising after your death regarding your estate and, if so, how this risk might be reduced. An investment in estate planning during your lifetime should help lessen the chances of your intended beneficiaries having to deal with a dispute.
In England and Wales a person can leave their estate to who they like. However, if this creates a disgruntled or disappointed party then a lengthy, stressful and costly dispute could arise. In this article we consider what might be done in order to avoid this. The most common types of dispute after a person’s death are:
- Challenges to the validity of a will;
- Claims under the Inheritance (Provision for Family and Dependants) Act 1975;
- Proprietary Estoppel claims; and
- Administration disputes.
Challenges to the validity of a will are most often brought by those who expect to be included as a beneficiary in that will but are not (such as an estranged child) and who would have received more from the estate under an earlier will or under the laws of intestacy. Will challenges are generally brought on the basis that the person making the will either lacked the testamentary capacity to do so, which means the necessary mental capacity to make a will. Other challenges may be brought on the basis that the will maker did not know or approve the contents of the will, or was unduly influenced into making it.
Other concerns include people making homemade wills, or executing (signing) wills without the assistance of a solicitor, which could lead to the wills not being valid. This may have happened particularly over the Covid-19 pandemic when people resorted to creating their own wills at home without legal advice. Certain formalities have to be followed in making a will which can be easy for someone not experienced in the area to get wrong. This could lead to will not being valid or a specific gift not reaching the intended beneficiary.
Involving a solicitor in the preparation and execution of your will can help to address these potential challenges. You may be advised to obtain a medical report from your GP or other medical professional which can be used to fend off any challenge on the grounds of testamentary capacity. Further, if your solicitor can demonstrate that they explained the clauses of the will to you, whether in writing or person (or both), this can assist in showing knowledge and approval of the will. With regards to undue influence your solicitor may ask to see you alone, without any of the beneficiaries present. Again, a later confirmation of this can be used in defence of any will made. If you are executing a will at home a solicitor can help guide you to do this properly, particularly in relation to appropriate witnesses.
Inheritance Act claims are for reasonable financial provision from a person’s estate. They can be brought by spouses, former spouses, cohabiting partners, children, someone treated as a child of the family (such as a step-child) or by dependants “maintained by the deceased”. Such claims are for the support needed for someone’s lifetime.
In order to reduce the risk of such a claim on your estate you need to consider carefully who you are providing for in your will and, just as importantly, who you are not. If you are giving financial assistance to someone you need to take advice about the contents of your will. Also, if you are cohabiting with a partner you need to be aware that if you die without a will that the rules of intestacy would not benefit them. Your cohabiting partner would then need to make an Inheritance Act claim which could have been avoided if you had made a will.
You should also keep your will under review and, if your personal circumstances change, seek advice from a solicitor about how to address this. Your solicitor may advise you about writing an explanation for why you are excluding anyone from your will, if you are.
Proprietary estoppel claims are most commonly associated with farming families, but can arise in other situations. If you make a promise to someone that they will receive property and that person reasonably relies on that promise to their detriment, they may seek to claim on your estate if the promise is not fulfilled. One example could be a child working on the family farm for reduced pay due to assurances that they will inherit the farm on the death of their parents. A later fall out could lead to the farm being left to someone else. In this instance a court may order that the farm passes to the claimant. Each case turns on its own facts.
For these reasons it is important to be open about any promises made. You may wish to sit down with your family and discuss your intentions. You should take legal advice about the necessary steps needed to put any plans into action, such as partnership agreements or declarations of trust. Again, if relationships change it is important to take advice about how best to address this.
Often disputes can arise in the administration of an estate after someone’s death. It could be between the personal representatives appointed, between the personal representatives and beneficiaries, or between beneficiaries themselves. There could be a disagreement about the assets in the estate, whether there have been any lifetime gifts or whether assets have been correctly valued. For these reasons it assists if you keep a record of your assets and any lifetime gifts made.
You should consider carefully who to appoint as executor when making a will. Your executors are responsible for dealing with your estate after your death. We commonly find that children are appointed, but then the siblings fail to work together. If you do not make a will then the right to administer your estate will fall in accordance with legal rules, so could be your spouse, children or siblings. More than one person could be equally entitled to apply for probate in your estate, which again could give rise to a dispute.
If there is a risk of a dispute arising after your death you may want to consider the appointment of an independent third party, such as a solicitor, who can remain neutral when dealing with the estate. Sintons have the Sintons Trust Corporation and this can be appointed as an independent personal representative or trustee.
The importance of seeking advice
Estate disputes appear to be on the rise, but that does not mean that certain steps cannot be taken to try to avoid them, as suggested above. It is important to seek advice and be open with your solicitor about your personal circumstances, so that they can best advise you about how to deal with any issues that could arise after your death. It is easy to put this off and hope that everything will be okay when you are gone. However, the costs of taking advice during your lifetime will be significantly lower than those incurred by your intended beneficiaries at a later date, should a dispute arise. It is better for all concerned to seek to address any possible issues during your lifetime.