The National Press has increasingly publicised the growth in court cases over family legacies, disputed wills, inheritance claims and family trust matters.
While not always the case, many have come about through a lack of a proper planning by those privileged to be in a position to pass on their wealth. Skimping on necessary steps for will-making and arranging their affairs, even for the good and great, gives the impression of a national pastime.
There is little enthusiasm from the UK Government to intervene, as it often gains through the receipt of higher levels of tax. The Government has recently declined to act on pleas for formal regulation and supervision of those who prepare wills and provide such advice.
Why your clients should secure advice
First, there is the increased burden of inheritance tax, the threshold for which remains stuck on £325,000 while asset values, and particularly house prices, have continued to rise. The need to structure a will to limit, where possible, that tax’s impact is essential. Also, the interpretation of wills and the administration of estates and trusts are subject to laws that are both ancient and complex, so the wording of a testamentary or trust document requires careful and skilful attention. Added to the mix is the Inheritance and Trustees’ Powers Act 2014, which came into effect on 1 October 2014. This Act makes important changes to a number of areas of the law that deal with inheritance rights affecting intestacy, personal chattels, unmarried fathers, adopted persons, and also trustees’ powers for maintenance or capital advances. It also changes the law - contained in the Inheritance Act (Provision for Family and Dependants) 1975 - for those who seek provision when, they argue, a will or intestacy laws fail to make reasonable provision for them.
The changes to the 1975 Act are particularly important: they will give more flexibility in the time to pursue some claims, increase those entitled to bring them and add to the courts’ powers to alter the rights of those involved. Claims based on family ties are widened and now can extend to a family of just one member. The courts no longer regard the 1975 Act as limited in effect: claims seemingly well out of time can be allowed; claims by adult children do not have to show special circumstances to succeed.
Put simply, without the necessary training, it is unwise to attempt to advise on the implications of the above.
Unless a person dies domiciled in this country, no claim can be made against the estate under the 1975 Act. The meaning of domicile, which is not clearly defined, can give rise to issues. It is not the same as habitual residence. Many will have retained this country’s domicile, even if they are habitually residence abroad. While free of 1975 Act claims, non-domiciled persons, whether or not resident here, have their English and Welsh immovable assets still governed by our laws and subject to potential challenges under our laws.
However across much of Europe, where many UK citizens have settled or acquired assets, the law is to change: the EU Succession Regulation will for the estates of those who die on or after 17 August 2015 unify succession laws and apply a single test of habitual residence to determine which EU country’s laws shall apply and a simple system for citizens otherwise to choose the law that governs succession rights. The UK so far has decided not to opt into the Regulation, but it cannot be ignored for those who for any reason have made another EU country their home or wish to elect for their non-UK assets to be governed by non-English laws. The realms of private international law and conflict of laws are no longer confined to the rich and famous. They can require attention for those with moderately valued assets, whether here or abroad.
Thomson Snell & Passmore is well respected for assisting with these issues. We are also members of the Geneva Group International, an international network of independent law, accounting and consulting firms. Membership of GGI allows us to give clients access to other GGI member firms that are familiar with local laws and customs.