- More disputes flare up as value of estates shrink in recession
- Complex family structures and outdated laws widen scope for disputes
- Tenfold increase in disputes in last three years
The number of people challenging the inheritance left by their relatives or partners has jumped another 38% over the past year, according to High Court statistics obtained by Wedlake Bell, the City law firm.
The number of High Court cases (Chancery Division, London) launched by people, such as children, spouses and cohabitees, who feel they have not been properly provided for in Wills or on intestacy, rose from 80 in 2008 to 110 in 2009. Wedlake Bell's analysis of the figures shows a tenfold increase over the last three years from just 10 such cases in 2006. (See graph below). This pattern is likely to be repeated across the country.
Wedlake Bell explains that the sharp rise in disputes is partly being driven by the recession, which saw a slump in the value of many estates. As beneficiaries have inherited less than they were anticipating, this has sometimes triggered disputes between them as they try to secure a bigger share.
Wedlake Bell points out that as many claims are settled out of court, these figures only reflect a fraction of the total number of disputes. The actual number of inheritances being contested is likely to be substantially higher in London as well as nationwide.
According to Wedlake Bell, the growing complexity of extended family structures featuring first, second and sometimes third marriages, combined with outdated intestacy and inheritance laws, is also contributing to this relentless rise in the number of claims by dependants over the last few years.
High Court claims brought by dissatisfied beneficiaries of Wills
(Source: (Chancery Division, London)
Fay Copeland, Partner in the Private Client Team at Wedlake Bell, comments: "The recession has had a hugely detrimental impact on the size of estates with the value of family homes, shares and other assets having all dwindled. As the pie gets smaller, the temptation for beneficiaries to fight for a bigger slice increases."
Wedlake Bell says that the increasing intricacy of family structures has left inheritance laws outdated, meaning that inheritance disputes can flare up more easily.
Fay Copeland explains: "The scope for inheritance disputes increases dramatically with the number of marriages, divorces and children that are involved. Anyone who was in some way financially dependent on the deceased at the time of death may be able to make a valid claim, so that also applies to children outside marriages, cohabitees and even mistresses."
"The number of people who could potentially feel hard done-by is so large that it is hardly surprising that inheritance is one of the most divisive family issues."
Wedlake Bell says that the increasing popularity of "DIY" Will kits through which individuals can write their own Wills without further professional advice, is adding to the risk of disputes.
Comments Fay Copeland: "When writing a Will, a small mistake can actually lead to a big problem further down the line. Individuals should be aware of the danger that comes with DIY Wills or when using apparently cheap unregulated Will writing services because these could potentially leave their loved ones in trouble. Saving costs at the Will writing stage might lead to huge costs later if someone challenges the Will, as well as the distress caused to families."
"The best way to ensure that your family is provided for is to have a carefully-considered, well-drafted Will. Wills that are accompanied by a letter explaining and confirming the testator's wishes can also be harder to challenge and can be particularly helpful to explain the reasons why certain beneficiaries are being left less than others."
Outdated intestacy laws also to blame
Wedlake Bell says that outdated intestacy laws are partly to be blamed for the increase in litigation because they do not take into account the financial need of a dependant when dividing up the deceased's estate. Intestacy laws apply in the absence of a Will.
Says Fay Copeland: "The likelihood of disputes becomes even higher if someone dies without making a Will because the estate is then divided according to intestacy laws which make no allowance for the financial needs of dependants or the extent to which they were financially dependent on the deceased."
According to Wedlake Bell, many of the intestacy rules have become outdated because they were drawn up to reflect the social landscape and family structures of the 1950s, with some of the laws drafted as far back as the 1920s.
The rules are presently being reviewed with the Law Commission having published a Consultation Paper on intestacy and family provision claims on death on 29 October 2009. The consultation closed on 28 February 2010 and a report and draft bill are due to be published in 2011.
Says Fay Copeland: "It will be interesting to see what changes will be introduced and what impact those changes will have on the number of claims being brought going forward."