Seeking to avoid Inheritance Act claims

I joined Barker Gotelee in late 2018 to assist with dispute resolution, which historically involves advising once a dispute arises. However, I endeavour to assist clients in avoiding disputes and am currently conducting a series of seminars with that in mind. The most recent was during an Ensors/Natwest seminar and the next will be to the Steeple Bumpstead Agricultural Discussion Group.

During these seminars, I set out typical case studies and then identify steps that might have been taken to avoid the problems arising. Here is one example, with more to follow in due course: –

Claims under the Inheritance (Provision for Family and Dependants) Act 1975 (“the Act”) are now all too common. It is assessed that as many as 25% of wills are challenged today.

Imagine a typical farming family: Mum and Dad have 1 son and 1 daughter. As the children grow up they are a tight knit family but as the children mature into teenagers, problems arise. The son becomes involved in alcohol, girls, drugs and parties and his relationship with his parents sours. Nonetheless he remains a dependant.

Despite this, the farm is small enough that it can only be passed to one child and remain a going concern, therefore Mum and Dad prepare parallel wills that pass the farm to the son on their deaths. However, the son’s behaviour worsens at university and he fails his degree. He becomes estranged from his parents and they rarely speak. Meanwhile, the daughter is bright and hard-working. She attends agricultural college and obtains a 2:1 before returning to work on a local farm.

Despite the parents supporting their son from time to time, when the parents update their wills, they decide to leave not just the farm but everything to their daughter. Unfortunately they don’t leave any letter of wishes/explanation as to the change and do not explain this to the son. Sadly both parents die early, only a little time thereafter, and the details of the will come to the attention of the children.

Although the son was not a spouse, he is able to argue that he is a dependant under the Act and the sum provided for him is not sufficient for his maintenance under section 1(2)(b). This was not accepted by the daughter (notably the executors of wills sensibly stay neutral in these cases) and so the son commenced proceedings in the High Court. However, the son did not commence proceedings within the relevant time period (measured from the Grant of Probate), so he had to apply to Court for permission to apply out of time.

In this example, a painful and costly court dispute has begun – assuming the son is granted to apply out of time – so what steps could the parents have taken to minimise the scope for dispute?

Aside from seeking to bring the son back into the bosom of the family, which is beyond the scope of legal advice, their best option would have been to leave a letter called ‘an expression of wishes’ with their wills. This could explain why the son had been excluded from the will, however this does not, of itself, extinguish the scope for a claim by the son.

In addition to the expression of wishes, the parents should have communicated their decision to the son openly and perhaps, although they chose to leave the farm to the daughter, they may have been advised to leave some kind of limited legacy to the son; perhaps leaving that legacy in the form of a discretionary trust for the benefit of both the son and the daughter. The trustees of the will trust could be guided by a further letter, suggesting that the trustees should provide the bulk/all of the will trust to the son, but only in certain circumstances.

Ultimately there are many ways to mitigate the risk of a will being challenged, but none entirely extinguish the risk. Although clients expect to have the right to choose how their property is transferred on death, the law is increasingly used to challenge wills. The best approach to minimise this risk is open and honest dealings. These kinds of legal challenges are rarely stand-alone and in the farming context are often linked to proprietary estoppel claims, which I won’t touch on there, but in either case, clarity of intention through clear and consistent communications is essential.

Therefore if you do wish to make changes to your wills, it is important to obtain suitable legal advice and, of course, to assess any tax implications with your accountant for the avoidance of doubt.

Mark Wrinch is a solicitor specialising in dispute resolution in the Business Services Team at Barker Gotelee Solicitors.

Suffolk Business Solicitors – for more information on our range of legal services, please call the team on 01473 611211 or email [email protected]