One of the fastest growing areas of dispute is inheritance claims or will disputes. Unfortunately these often arise in families when a loved one passes away and beneficiaries feel that they haven’t received their fair share. The case of Rita Rea is an example. She was involved in a dispute with her siblings about her mother’s will. The argument about whether she had used undue influence over her mother went to the Court of Appeal where she won. Her siblings were ordered to pay £119,200 in costs, which is only an interim payment. The final costs bill is likely to be higher.
It has been reported that disputes over inheritances are on the rise thanks to increasing house prices, complex families and growing rates of dementia. It is also suggested that the increase in blended families has resulted in more disputes. Families are now more complicated and there are often competing siblings and former or new partners.
Over 10,000 wills were challenged last year. To dispute a will, the person will usually lodge a “caveat”. This blocks the granting of probate, and puts on hold the administration of the estate, but only for a limited period and then the estate can take issue with the caveat and the case may end up in Court with expensive repercussions. 10,409 caveats were applied for in 2023, up 43pc since 2019, figures from the Ministry of Justice show. There are only limited circumstances in which a will can be challenged and so drafting a will is the best way of preventing any dispute arising. Nonetheless there can be arguments over whether the person has mental capacity to write a will, that they have been forced to change their will or that it wasn’t executed properly. These arguments are hard to prove but can delay the administration of an estate for a long time and result in costs being incurred. A relative who is a dependent who feels they have not received enough can also apply under the Inheritance Act for reasonable provision. When drafting a will we recommend using a professional who can help make the will less easy to challenge by making sure that the person has evidence of capacity, that they are entering into the will freely and not being coerced as well as making sure there are no drafting errors and that the will reflects the person’s intentions. Communication is key and although it is a difficult subject to broach it is best to explain to people why decisions have been made in advance. Even so, my recommendation is not to cut anyone out of a will or divide an estate unequally. This often happens when one child stays close to Mum or Dad and looks after them whereas a sibling moves away and has less contact. Inevitably the parent will think about giving more of their estate to the child who has stayed by them. It seems to me that it is a recipe for a dispute to treat the siblings differently. There is item resentment and ill feeling. This can simmer and boil over into litigation which can then swallow up a large part of the estate and only the lawyers end up benefiting. It seems to be almost something of a fallacy to think that there is such a thing as testamentary freedom to leave your estate to whomsoever you please. The fact is that disgruntled beneficiaries can spell trouble. There is also the option of making lifetime gifts which can be free of inheritance tax after 7 years. Obviously if there is less in the estate then there is less chance of arguments arising. The main asset in an estate is usually the house and often people own their home as “joint tenants” so the other person’s share automatically passes to the other. People can also leave their pension on trust. This means that a pension never actually go into the estate and so arguments can be limited. 79.2 per cent or 175,000 of the 221,000 estates containing assets in the 2021-22 tax year held a property. In time this may reduce as more people are forced to rent, but increasing prices means that properties are becoming more valuable. When a dispute does sadly arise we do recommend trying to resolve it before going to Court. Mediation can be a good way to resolve such disputes as it is cost effective by comparison with legal proceedings and people can mediate online. A dispute can be done and dusted quickly but there is one catch: People have to be open minded about finding a solution and be willing to compromise. That is easier said than done when family finances are concerned and there is often a lot of emotion wrapped up in a dispute as well. For many it is often about the principle rather than the money and there is often underlying pain and hurt feelings that need to be addressed. There is perhaps nothing more upsetting than being cut out of a will or receiving less than another family member. This is often what drives a dispute and where the services of an expert independent mediator can help.