Estate administration is a curious beast. On the one hand it is a legal exercise which can often involve complex issues of taxation and succession (amongst others). On the other, it is a deeply personal process that often carries huge significance for both the person carrying it out and the close family and friends of the deceased. Add into this picture cash (and sometimes quite a lot of it!) and it is perhaps not surprising that this heady mix often leads to anguish and expensive and stressful claims against the estate.
These disputes rarely appear out of nowhere and I have learnt over the years to recognise some of the warning signs of a future dispute. Such signs often occur many years before a person passes away and, if you know what to look for, it is often possible to mitigate the risk. I’ve compiled a list of the top things to look out for that make a future claim against your estate more likely:
This is an obvious place to start. If you have one child you haven’t spoken to in years and have cut out of your Will, there is a real chance that person will make a claim against your estate. In recent years several high-profile cases of estranged adult beneficiaries have made the news, and this has only spurred the number of enquiries we have received in this situation.
Conversely, I have also seen Wills that have disinherited a close friend or family member with seemingly no reason at all and this also increases the risk of a challenge.
How to avoid this – Sometimes an estrangement is unavoidable but there are ways of preparing your Will and documents you can put together whilst you are alive that will help your executors deal with a challenge swiftly and cost effectively. Professional advice should always be sought in this situation.
I have also known a lot of people write a child out of their Will even though they are extremely close and often for very good reasons “we love our 2 children equally but 1 of them is a billionaire philanthropist and the other is struggling to meet his rent”. The advice here is always explain those reasons whilst you are alive. It is very easy to draw the wrong conclusion when money is involved and you are not around to explain yourself!
If your beneficiaries’ circumstances vary significantly this can increase the chances of a claim happening. For many people their home is their main asset and I have regularly dealt with beneficiaries with very different ideas of how to sell the property and what price to accept. In one case I oversaw beneficiaries who refused to sell a property for over 4 years because they never received an offer for what the house was ‘worth’. Fortunately, all beneficiaries in that case were in agreement!
How to avoid this – It is your executors who have the final say on how to sell the estate assets. However, people often name their children as executors and as equal beneficiaries, so in practice any disparity between them often causes arguments. If your children’s circumstances are substantially different, I always suggest appointing a professional to administer the estate as this bypasses any disagreements altogether (or, at the very least, lets the solicitor act as the punching bag!).
This is very much linked to the first 2 points. Executors are often named for sentimental reasons not for their suitability to do the job. Many people simply want to name all their children as executors for the (entirely justifiable) fear that it will cause hurt and upset otherwise. When I ask if the children get along, it is not uncommon for parents to eye each other wistfully and with an awkward smile say something along the lines of ‘I’m sure they’ll pull together for this’.
In my experience, they won’t!
How to avoid this – always name executors who get along. Ideally you don’t want more than 2 executors as too many cooks will inevitably spoil the broth. If your children don’t all get along and you don’t want to cut any of them out, then professional executors or other objective family members will avoid this headache quite nicely.
I have my own theory on estate disputes, which is that they rarely have anything to do with money or the wording of a Will at all, but everything to do with lifetime sibling rivalry. Quite often it is the parents being around that kept the rivalry at manageable proportions and a death can often spark a major falling out between siblings.
How to avoid this – again, professional executors are your saviour in this situation or perhaps other family friends or third parties who can mediate any rivalry and who, ultimately, have control over the administration.
Both of the above can inject irrationality into the administration of your estate and irrational people are far more likely to cause a nuisance of themselves (even if inadvertently or without any malice).
How to avoid this – Again professional assistance should be sought when setting up the Will. If you fear a challenge, it is possible to insert provisions that automatically disinherit a beneficiary who challenges an estate. You might also think about setting up trust structures in your Will to provide for vulnerable beneficiaries in a protected manner.
We are all living longer, and many people now receive care services at home. It is also not uncommon for one of your children (invariably the one who lives closest) to provide much more care and support in your later years compared to their siblings.
Perhaps unsurprisingly (and in my view, quite reasonably) you might want to make extra provision in your Will for the person who is caring for you. However, a substantial gift to a carer, or additional provision for one child over another, can often be met with accusations of undue influence. In some very unfortunate situations, undue influence will indeed have taken place but proving this can be a hugely costly and stressful exercise.
How to avoid this – Seek professional assistance when drafting your Will. A qualified solicitor will automatically be on the look out for undue influence and will only take instructions from you in private. Not only does this protect your estate if a person is falsely accused of undue influence, but it will also help you get the advice you need if you are subject to such abuse.
In recent years I have seen a substantial increase in the number of disputes relating to lifetime gifting. This is often due to disparity between your children. Perhaps you gave £50,000 to one child to help then purchase a house but did not reciprocate that gift to their siblings either because they didn’t need it, or because you simply couldn’t afford to do it! Whatever is said at the time, unequal lifetime gifting between children can cause significant friction that comes to the fore after you pass.
How to avoid this – Again professional advice is the key. A well drafted Will will deal with lifetime gifting (usually by making it clear whether the gifting should be taken into account or not). Sadly it is my experience that all homemade Wills, and many professional ones, do not adequately deal with lifetime gifting. At Allan Janes this will be dealt with for you as a matter of course and we always advise on the repercussions of lifetime gifting when drafting your Will.
There are many ways that a second marriage can play havoc with the adminstration of your estate. Often people aren’t aware that their later marriage will revoke the terms of a previous Will leaving the new spouse taking a substantial chunk (and in some cases all) of the estate after you die, cutting your children out of the loop.
I have also seen Wills that leave the estate to the new spouse but with the ‘understanding’ that the spouse will one day leave that inheritance to your children. In my experience, that new spouse will rarely honour this wish. They may also not be able to honour that wish if they have spent the money in the meantime.
Of course, you might want to give your estate to the new love of your life, sod what the kids might say! I am all for the true romantics, but without doubt this can lead to trouble within the estate.
How to avoid this – By now you are probably spotting a theme, but you will never be more protected than by having a professionally drafted Will! It is perfectly possible to provide for a new spouse and also for children, but this can involve a degree of technical drafting that only a professional is likely to be capable of. If you do wish to cut the children out, there is no greater protection than having an independent solicitor confirm that they took those sincere instructions from you.
If you think that any of the above apply to you, please feel free to contact any member of our Wealth Management and Taxation Team for further advice.