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Recent years have seen a rise in the number of claims under the Inheritance (Provision for Family and Dependants) Act 1975 (commonly known as the 1975 Act) as well as increased disputes regarding testamentary capacity. This article looks at the reasons for this as well as exploring what steps can be taken to try and reduce the risk of a claim being brought against an estate and associated disputes from arising.
The 1975 Act: an overview
The 1975 Act allows certain individuals to bring a claim against a deceased person’s estate if it fails to make “reasonable financial provision” for them. These individuals include spouses, former spouses, children, and any other person maintained by the deceased for two years before death. The court assesses whether the will or intestacy rules have adequately provided for these claimants, taking into account factors like the claimant’s financial needs and the size of the estate.
Increase in claims: factors and trends
Several factors seem to be contributing to the rise in claims under the 1975 Act:
- Societal Changes: Increasingly complex family structures, including second marriages and blended families, often lead to disputes over inheritance. With more people feeling entitled to a share of the estate, the number of claims rises.
- Economic Pressures: Economic downturns and rising living costs can push individuals to seek financial relief through inheritance claims, especially if they feel inadequately provided for.
- Awareness and Accessibility: Greater awareness of legal rights and easier access to legal services have enabled more individuals to challenge wills.
- Ageing Population: As the population ages, more estates are affected by issues surrounding deteriorating mental capacity, which can lead to disputes over whether the deceased had the requisite testamentary capacity to create a valid will.
Testamentary capacity: legal standards and challenges
Testamentary capacity is a critical factor in determining the validity of a will. Under English law, as established in the case of Banks v Goodfellow (1870), an individual must:
- Understand the nature of making a will and its effects.
- Understand the extent of the property being disposed of.
- Be aware of the claims to which they ought to give effect.
- Not be suffering from any disorder of the mind that would influence their decisions.
The increase in 1975 Act claims often intertwines with challenges to testamentary capacity. Disputes may arise over whether the testator (the person who made the will) fully understood their actions or was under undue influence.
Steps to reduce the risks of a claim
The rise in inheritance claims impacts legal practitioners and testators alike. Here are some key implications and steps to potentially reduce the risk of a claim:
- Increased Scrutiny of Wills: Lawyers must exercise greater diligence when assessing a testator’s capacity. Comprehensive notes of the testator’s mental state and intentions at the time of making the will is crucial.
- Family Dynamics and Communication: Encouraging open discussions about estate plans within families can reduce the likelihood of disputes. Clear communication and written explanations of decisions can help mitigate feelings of unfairness among potential claimants.
- Professional Assessments: In cases where testamentary capacity is questionable, obtaining professional medical assessments can provide strong evidence to support the validity of the will.
- Estate Planning Strategies: Where appropriate, testators might consider carrying out estate planning during their lifetime (e.g. by way of gifts or setting up trusts), to reduce the assets in their estate on death which could be subject to 1975 Act claims
- Use of Trusts in Wills: Testators might consider leaving their estate on a discretionary trust in their will, under which no beneficiary has a fixed entitlement to anything. Given that wills become public documents following death, this can reduce the risk of an individual feeling that they have been unfairly left out of a will or inadequately provided for compared to another family member. The flexibility of a discretionary trust also allows the trustees to consider the needs of any potential claimants and distribute assets in a way that balances the interests of all beneficiaries, thereby reducing the likelihood or success of a 1975 Act claim.
- Forfeiture Clauses in Wills: Incorporating a forfeiture clause in a will may deter a 1975 Act claim by discouraging beneficiaries from seeking more than they are already entitled to in the will or they may risk losing it all.
Conclusion
The rise in claims under the 1975 Act reflects broader societal changes and economic pressures. For legal practitioners, it highlights the importance of ensuring testators have the requisite testamentary capacity and that their intentions are clearly documented and communicated. As family structures and financial pressures continue to evolve, the legal landscape around inheritance claims and testamentary capacity will likely see further developments. Addressing these issues with sensitivity and foresight at the time a will is created is essential to upholding the integrity of testamentary wishes and reducing family conflicts after death.
Should you wish to discuss any of the issues raised in this article, please contact Gemma Shepherd.
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