Steps Families can take Regarding Inheritance for Estranged Children
The Beckhams have always had an interesting relationship with the British Royal Family: David famously queued with the masses to pay his respects to the late Queen and the Beckhams were often considered a second Royal Family for ‘brand Britain’. Now a son of this pseudo royal family has married an independently famous wife, demanded privacy whilst seeking to commoditise their life and sought to distance himself from the family and their brand. Where history doesn’t repeat, it often rhymes.
At time of writing, no response has been given by the Beckham camp – one imagines teams of lawyers and PR crisis management firms pouring over a generic statement along the lines of ‘We love our son and will be here if he needs us’.
At the heart of this very public drama is a very sad rift within a family, where potentially irreconcilable differences in world views may lead to estrangement. Given the wealth of the Peltz family, the only ‘legacy’ which likely needs to be safeguarded is the cultural impact of brand Beckham and their status as pioneers of 90’s and 00’s celebrity culture; however this is not the case for the many clients we assist in these circumstances.
Clients are often at a loss as to how to deal with their estates when one or more children are estranged from them. This problem is compounded not only by a lack of understanding of the relevant law in this area, but also by a degree of doubt in respect of the moral obligations they feel might owe.
Testamentary Freedom
On the face of it, the answer seems very simple. Unlike other countries such as Spain, France and Scotland, in the jurisdiction of England & Wales there is no ‘forced heirship’ which forces someone to leave a minimum amount to certain relatives within their Wills or, in the absence of a Will, then the laws that come into effect instead.
Judges in English courts have been clear that “English law leaves everything to the unfettered discretion of the testator” and “an Englishman still remains at liberty at his death to dispose of his own property in whatever way he pleases”. In short, people who are “domiciled” in, i.e. retain their connections to, England can create a Will to benefit or exclude whoever they please. This means that people can “disinherit” their family.
International concerns
The Beckhams, along with many of our clients, do not live in England but they do retain connections here. Whilst not wanting to speculate on the Beckhams’ domicile-statuses, for some clients these retained connections may mean that they are considered as “domiciled” in England, even though they may be long-term tax residents elsewhere. Whilst this can create complexities in other areas such as Inheritance Tax, it opens the opportunity for those individuals to create a Will for their Estate to pass under English law and therefore benefit from that same “testamentary freedom”.
Naturally, of course, the matter isn’t quite that simple and even though there is “testamentary freedom” for those domiciled in England, there are other routes for individuals to make claims against someone’s Estate.
Will Validity
A disappointed potential beneficiary may first argue that the Will itself is not valid. The validity of a Will can be challenged on four broad bases:
- Lack of Capacity – the idea that the testator lacks mental capacity in order to make a Will. This currently involves a four-stage test. Having professional solicitors who are both trained and experienced in recognising potential capacity issues can strengthen your Will against such challenges. New legislation is expected in this area, meaning it is all the more important to use a proper solicitor who keeps up to date with changes in the law to best protect you.
- Lack of Knowledge and Approval – the idea that the testator did not understand and agree to the contents of the Will. Nockolds will meet with will clients in order to understand their family, what they want their Will to achieve and explain available options. Detailed notes are retained so as to evidence a client’s understanding and protect their estate from claims.
- Undue Influence – the idea that the Will reflects the wishes of someone else, rather than the testator. The bar for what constitutes undue influence for a Will is currently very high, but there is anticipated legislation which will make these types of claims far easier to bring. It is envisaged that many more families will be placed in a position where they have to prove a testator was not unduly influenced, the evidential burden having flipped to ‘guilty until proven innocent’. As such, it is all the more important to instruct a professional solicitor who will take the necessary steps to ensure that a client is not being unduly influenced and who is sufficiently capable and experienced to attest to such in a court of law.
- Failure to Observe Proper Formalities – the need for the will to be properly signed and witnessed, along with the other necessary formalities. Many will providers offer a ‘binding Will’, but only refer to this single point. In order to defend against challenges to the validity of a Will, all of the potential angles of attack must be defended – and that requires work from the outset.
Inheritance Act 1975 claims
The Inheritance (Provision for Family and Dependants) Act 1975 empowers the court to vary the outcome of an estate in order to make “reasonable financial provision” for various classes of people, including spouses, civil partners, unmarried partners and children. For claims by children, reasonable financial provision is limited to what would be needed for their ‘maintenance’, although adult children are included in the definition. When deciding what is required, judges will consider the financial needs of the relevant people, the size of the estate, obligations of the deceased towards the relevant people, any disabilities suffered by any of the relevant people and any other issue (including conduct of the parties) which the court considers relevant.
He avoids 1975 claims with this one weird trick – lawyers hate him!
The conventional wisdom often cited by clients is that a small gift made to an individual will automatically defeat any claim they can make. That is not the case: a 1975 Act claim is based on “insufficient” financial provision, not “no” financial provision. Whilst making a small gift can demonstrate you’ve remembered the existence of a potential beneficiary and have some merit, it is far from a silver bullet or the most effective defence.
Other schemes we have seen used in an attempt to avoid claims is to use a discretionary trust, or the making of a lifetime gift of the majority of an individual’s assets shortly before they die. Such plans do not stand up to legal scrutiny however, particularly when incorrectly applied. When working for disappointed beneficiaries, Nockolds have been very successful in defeating such schemes.
Steps you can take/How can we help
Factors which may be of assistance include:
- Detailed contemporaneous notes detailing your wishes.
- An objective firsthand account of the history.
- Clarification of monetary transactions during life.
- Consideration of lifetime gifts.
- The inclusion of trust mechanisms, including careful use and subsequent management of discretionary trusts.
- Independent capacity assessments.
- Drafting ‘side letters’ to be stored alongside your Will.
Incorrectly implementing these ideas can, however, cause wider problems. As such, our dedicated team of highly experienced Wills and Probate solicitors will guide you through this process and advise of the best mechanisms for your specific situation. Furthermore, they are also supported by our highly ranked specialist contentious probate team who have completed additional qualifications in this specific area and are one of the largest contentious probate specialist teams in the region.
Why should you bother?
Will-making is something people often put off as an inconvenience or an upsetting task given the requirement to contemplate one’s own mortality. The temptation to not give the Will-making proper thought is compounded when it involves difficult questions regarding what (if any) provision should be given to estranged family members.
However your Will is, essentially, the largest financial transaction you will ever enter into: it is everything you own. Half-measures, outdated Wills and insufficient notes constitute an overwhelming majority of the work completed by our contentious probate team. Many services offer ‘a legally binding Will’ for less money, however for peace of mind this is far below the bare minimum. There is no substitute for a proper meeting with contemporaneous notes, astute questions to draw out potential future complications and a bespoke Will which deals with your needs and situation. One of the greatest gifts you can pass to your beneficiaries is a smooth probate without the cost, stress and heartache that comes with probate disputes.
Conclusion
Whilst gossip columns will no doubt sensationalise and revel in the breaking of a famous family, the reality is that this is not sensational or rare but an increasingly common phenomenon with ordinary families needing specialist advice on how to handle their future.
If you need any assistance with this or other probate matters, please contact us on 0345 646 0406 or fill in our online enquiry form and a member of the team will be in touch.