With the increase of blended families, testators are increasingly seeking ways to reduce the risk of a potential claim under the Inheritance (Provision for Family and Dependants) Act 1975 which enables the court to make financial provision out of the estate of a deceased person for his or her family and dependants. Whilst there are no foolproof methods, strategic will drafting plays a vital role in preventing these claims. Probate dispute solicitors routinely examine wills to determine whether these strategies have successfully impacted a potential claim. These strategies include:
The use of a signed letter by the testator
Testators frequently leave a signed letter, commonly referred to as a letter of wishes, alongside the will to explain the reasoning behind the provision in the will (or lack thereof). The provision provided in the will will also often match the award that a court might potentially make. Obviously, this strategy will only work to reduce the risk of a claim if the will is kept under review especially where the value of the estate varies over time.
The use of life interests
Alternatively, a testator may leave a surviving spouse a life interest in their estate to support them during their lifetime. Such a life interest trust enables the testator to preserve the value of their estate for future generations. While it is often considered that a spouse should receive outright provision rather than a limited life interest, it is evident that a life interest can still constitute reasonable financial provision even where the trustees could terminate that life interest.
The use of discretionary trusts
Discretionary trusts are often used by testators who wish the trustees to have maximum control over who will benefit and when. A potential claimant under the 1975 Act will often be included within a class of discretionary beneficiaries to make reasonable financial provision for them. A letter of wishes may also accompany the will to express the wish that the potential claimant should benefit from either the income or capital. This strategy provides flexibility in terms of the extent of the provision given to a potential claimant.
The use of mutual wills
Although comparatively rare, spouses may make mutual wills that leave both their estates to named persons after the death of the surviving spouse. These wills are irrevocable from the moment they are made and create a trust over the property of the first spouse after they die. As a result, a potential claimant cannot bring a claim against the estate as the surviving spouse does not have the power to change the disposition of the estate. They are rarely recommended as they limit testamentary freedom and can be inflexible given that family or financial circumstances may change over time.
The use of these strategies often provides a successful deterrent to Inheritance Act claims and provides a useful toolkit for testators who wish to reduce the risk of such claims.
The author, Alistair Rustemeyer, qualified as a solicitor in 1994 and an accredited mediator in 1999. Alistair is a member of the Association of Contentious Trust and Probate Specialists and is highly specialised and experienced in advising clients across aa range of contested probate and Inheritance Act claims. For an initial free discussion please contact Alistair on email@example.com or call 01273 044516.