Legal Experts Welcome Changes But Warn Some Aspects May Lead To Further Disputes

Specialist lawyers have described new inheritance legislation set to come into force in October as an important step towards ensuring people gain access to what they deserve, but warned that some aspects may only lead to more disputes among families who have lost loved ones.

Expected to be introduced from October 1st, the Inheritance and Trustees’ Power Act 2014 is designed to provide clarity around the regulations which govern wills and estates, with key changes including:

• How the estate of a person who dies intestate, without a will, should be handled
• Making it easier for stepchildren, those treated as a member of a family by the deceased and those maintained by the deceased to make an inheritance claim 
• Further clarity regarding deadlines for issuing proceedings and when claims can be launched
• The closure of a loophole related to claims that can be launched by adopted children

Irwin Mitchell’s Will, Trust and Estate Disputes team,  which specialises in helping people involved in challenges to decisions made regarding wills and inheritance issues in general, say the changes are a ‘mixed bag’ which offer up both pros and cons – depending purely on the point of view of those affected.

Recent research by Irwin Mitchell revealed that 60% of people don’t have a will and 47% of Britons admitted they have no idea how assets are distributed after death.

Expert Opinion

Arguably the key underlying purpose of the Inheritance and Trustees’ Power Act 2014 is to ensure that the law reflects modern society and takes into account the sheer number of people who choose to cohabit without getting married, as well as those who have died intestate – without making a will – in recent times.

"While much of the new legislation undoubtedly brings the law on wills into the 21st century, there are aspects which raise questions and could in the long term lead to an increase in the number of legal disputes launched regarding inheritance issues.

"Losing a loved one is incredibly difficult, but we often in see how such situations can be made worse when people are left to fight for inheritances or property. As a result, it is vital that the public understand both the key changes and what it may mean for them should they need to bring legal action to access what they deserve." Paula Myers - National Head of Will, Trust and Estate Disputes

Paula has provided the following advice regarding the key changes and what they could mean for people in a variety of positions:

Intestacy

Expert Opinion

Arguably the most significant change is that the estate of a person who dies intestate, leaving a spouse but no children or other dependants, will pass entirely to the surviving spouse. This marks a change from current rules which dictate a spouse would receive the first £450,000 and personal chattels from an estate, with the rest being divided equally between the spouse and parents or other relatives.

"This is important as it is not uncommon in cases when a property is worth more than £450,000 to see spouses forced to face up to the emotionally draining prospect of taking legal action in order to stay in the property they have called home for many years.

"Changes are also being made in relation to cases when a person dies intestate leaving a spouse and children. The new position will be that a spouse would receive the first £250,000 plus personal chattels, with the remaining estate being split between the spouse and children.

"This is likely to reduce the number of claims made by spouses, who previously faced going through a more complex and time-consuming process regarding their 50 per cent share of the remainder of the estate. The flipside however is that it may increase claims from children, who may have received a larger share of the parent’s estate under previous rules.

"In addition, these changes also do not resolve the complications which can arise when a property involved is worth more than £250,000. We’ve seen many cases of this nature, when a spouse has little option but to launch legal action against their partner’s children in order to retain the family home." Paula Myers - National Head of Will, Trust and Estate Disputes

Stepchildren, adopted and those cared for by deceased

Expert Opinion

The current law allows a person to make a claim if they have been treated as a child within a family unit which revolved around a marriage involving the deceased.

"The most common type of claimant in this situation would be a stepchild, as it essentially means a person can claim against the estate of someone who was married to their parent or someone else who cared for (eg. a grandparent).

"The new Act states that the deceased must have stood in a role akin to that between a parent and child and there is now no requirement for the treatment of the child to be in relation to a marriage.

"This means a person will be able to claim against the estate of their parent’s late partner regardless of whether they were married, as well as in situations where the person who treated them as a parent was single.

"The new legislation also closes a current loophole which means that children lose their interest and a right to inherit from a deceased parent’s estate when they turn 18 if they are adopted by another family prior to reaching that age.

"Under the new Act, children would maintain their interest even if they are adopted later on – which will undoubtedly be a relief to parents who would only want the best for their offspring in the event that they passed away." Paula Myers - National Head of Will, Trust and Estate Disputes

Maintained by deceased

Expert Opinion

The new Act also removes the requirement for those making a claim to show that the person who has died contributed more to the relationship than they did. It also removes the requirement to show that the deceased had formally ‘assumed’ responsibility for the claimant’s maintenance – something that was previously key in determining a reasonable financial provision for a claimant.

"The changes will open up this category to situations where the claimant and the deceased were mutually dependent on each other. An example of someone who might now be able to claim is a partner in a non-cohabiting couple where each had assumed some responsibility for each other." Paula Myers - National Head of Will, Trust and Estate Disputes

Other key issues

Expert Opinion

Previous legislation stated that a claim could only be launched once work had formally begun to divide the estate involved – through the use of a grant of probate. However, the new Act states proceedings can begin prior to this, bringing an end to cases when people refuse to issue a grant in order to prevent others from launching claims.

"At present, the law also states that the six month deadline – or limitation period – to issue proceedings starts on the date that the “first” grant is issued. The new Act changes this to clarify that certain grants will be disregarded from this." Paula Myers - National Head of Will, Trust and Estate Disputes

If you want to safeguard your loved one's future, get in touch with Irwin Mitchell's private wealth team and find out how we can help with matters relating to will, trust and estate disputes.