Make your will as all-encompassing as possible to enjoy the holiday season conflict-free, writes Rebecca Waterhouse
A daughter disinherited. A greedy grandson. A lover left out. Sensationalised stories of bitter arguments over the assets left behind on the death of a family member are often reported in the media and disputes relating to probate are not uncommon. However, many people are surprised by the ability of third parties to bring a challenge after the death of an individual to gifts they have set out clearly in a valid will.
It is a long established principle that the law of England and Wales allows complete testamentary freedom. Contrary to the law in many countries, an individual is not bound by English law to leave certain proportions of their estate to close family members – one can make a will leaving assets however one wishes.
What is less commonly known is that there are options available to third parties that could lead to an individual’s estate being distributed on different terms from those set out in a valid will.
For example, the recipient of a gift under a will is not bound to accept the gift. A gift recipient can simply ‘disclaim’ (refuse) a gift but can also act to divert assets that have been gifted to him to a third party by varying the gift using a formal document, known as a deed of variation. Where a deed of variation is used the will is read, for tax purposes, as though the gift to the original recipient had not taken place and the gift is instead made to any one or more persons selected by the original recipient. This is often a very useful planning tool, particularly as it can mean that children who inherit from their parents are able to divert assets to their own children (the deceased’s grandchildren), without incurring additional tax charges.
Additionally, the court has powers to intervene and make amendments to the distribution of assets where an individual makes a claim to the court for support from the deceased’s estate. A claim for support can only be made by specified individuals (such as spouses, civil partners and children of the deceased and others who were being maintained by the deceased immediately before their death) and the court will only step in where, in all the circumstances, an applicant (other than a spouse) can prove that reasonable financial provision has not been made for them. The court also has powers to intervene where the deceased made a representation or assurance to a third party ‘promisee’ and the promisee has relied on the assurance that the promisor was going to make good on his promise. In these circumstances, where the court determines it would be unjust or inequitable to allow the deceased promisor to renege on his promise, then the court will enforce the promise notwithstanding anything in the contrary written in the deceased will.
But flexibility isn’t necessarily a bad thing. In fact, there can be great benefits to ensuring that your estate is left on flexible terms. It is possible to create a will under which many individuals may benefit and to provide a letter of wishes to those administering your estate setting out considerations that should be borne in mind when distributions are made from the estate. This combination provides those administering your estate with discretion so that they are able to make arrangements to achieve your wishes as far as possible, notwithstanding circumstances which you could not have foreseen may have arisen.
Ultimately, the stories that hit the tabloids often follow a similar pattern. Often, though it may seem clinical, the best way to avoid conflict arising in relation to your estate after your death (which might only be resolved at huge financial and emotional cost to all those involved) is simply to talk openly about plans and ensure that family members understand your intentions.
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Rebecca Waterhouse is an associate at boutique private wealth law firm Maurice Turnor Gardner LLP