Record Number of Inheritance Disputes in UK

According to recent reports by private wealth law firm Boodle Hatfield, there was a record number of inheritance disputes in the UK high court last year. According to the firm, there were 192 cases brought by people who claimed they were entitled to a share or larger portion of a deceased’s estate in 2020, up from the 188 in the previous year and a 50% increase from 2018.

The law firm said that covid was a “potentially significant factor” because many people suffered financial loss during lockdown; while several estates saw their value increase thanks to the Stamp Duty Land Tax holiday.

Boodle Hatfield believes that this may be just the beginning, because social distancing measures during lockdown likely disrupted succession planning for many, which could lead to a higher number of disputes in the future.

For instance, Wills that were signed and witnessed over video may be easier to challenge in court.

inheritance disputes

Common Inheritance Disputes

The most common inheritance dispute we deal with at The Inheritance Experts is when a person wants to contest the Will of a relative. Many of these claims fall under The Inheritance Act.

The Inheritance (Provision for Family and Dependants) Act 1975 states that it is

“An act to make fresh provision for empowering the court to make orders for the making out of the estate of a deceased person of provision for the spouse, former spouse, child, child of the family or dependant of that person; and for matters connected therewith.”

Put simply, this act ensures that when a person passes away, every beneficiary receives part of their estate. A beneficiary is anyone who receives anything in a Will.

The Inheritance Act details who specifically can and cannot contest a will. Moreover, those who can legally challenge a will include the following.

  • Direct family members, including children or grandchildren.
  • Spouses.***
  • Beneficiaries (given that the previous Will includes their name).
  • A person who relies on the testator financially.
  • A creditor to whom the testator owes money.
  • The testator promises a particular item/asset to someone, but that promise is not part of the will.

If anyone believes the will is not legally valid, it’s their right to challenge it. Valid grounds for contesting the will, include:

  • If the testator was not in their right mind when they sign the last Will.
  • They were unaware of what they were signing.
  • The will was drawn up incorrectly or is completing without valid co-signing witnesses present.
  • Forgery of the signature(s), which requires handwriting expert to prove.
  • The beneficiaries have a right to the estate. Yet there is either no naming of them, or the caring for them is inadequate.

How We Can Help

Here at The Inheritance Experts we work with solicitors who have years of experience dealing with inheritance claims. This includes inheritance disputes. Contact us today by filling in our contact form. Or call us on 01614138763 to speak to one of our friendly knowledgeable agents.

Trust Reporting Deadline Extended, Which May Lead to Rise in Trust Disputes

According to recent reports, the Trust Registration Service has extended the deadline to report trusts. It has also opened to non-taxable trusts to register. All relevant trusts that were in existence on or after 6th October 2020 must be registered by 1st September 2022. For trusts created after 1st September 2022, the person writing the trust would originally have to register within 30 days of creating the trust. However, HMRC has increased the 30-day limit to 90 days. There have also been concerns that many trustees may be caught out in the new registration requirement. This may lead to more trust disputes.

The obligation extends to all UK express trusts and some non-UK express trusts unless the trust is of a type specifically excluded by HMRC’s guidance. Excluded Trusts include:

  • Life policies or pensions written into trust
  • UK-registered charities
  • Will trusts with limits of two years
  • Trusts for bereaved children

A partner at tax advisors RSM UK says: “What constitutes a trust arrangement under the TRS may no longer correlate with what an individual would consider to be a trust,”

“Some arrangements popular among parents and grandparents, such as bare trusts and bank accounts held for minors, are not exempt. This means they need to register those trusts.”

“(However) it remains unclear whether other joint property holding arrangements, including those where more than four individuals have a joint interest in a property or tenancy agreement, are covered by the exemption or not,”

She also notes that a lack of understanding of obligations is not a defence for failing to comply, adding that lack of awareness, and consequently lack of action, may lead to more people being handed penalties.

trust disputes

Trust Disputes

The cause of trust and inheritance disputes can vary enormously. However, at the centre of every challenge is a person who believes they’re victims of unfair treatment. For instance, trust suffers from improper management. Additionally, the trustees may interpret the intentions of the trust.

People make challenges in a number of ways. For instance, they target the value of the assets within a trust. Or there might exist a fundamental disagreement between beneficiaries.

Handling Trust and Inheritance Disputes

The nature of a trust’s existence is to prevent financial disputes. Unfortunately, even those that are established with careful consideration to both tenants and beneficiaries can still be subject to dispute. It is important that trust disputes are handled with care and sensitivity. This is because they usually involve family members. Working with the right solicitors means you can protect both your rights and your relationship with your family.

Trusts created on or after 1 February 2001 are legislated under the Trustee Act 2000. Those created before this date are subject to different laws. Our team has a comprehensive working knowledge of all of these.

How We Can Help

Here at The Inheritance Experts we work with solicitors who have years of experience dealing with inheritance claims. This includes trust disputes and all things related to trusts. Contact us by filling in our contact form. Or call us on 01614138763 to speak to one of our friendly knowledgeable advisors.

Can you Include Cryptocurrency in Inheritance?

Cryptocurrency has blown up in the last few years. It is now becoming more popular in everyday use. So many people have raised the question can you include cryptocurrency in inheritance?

What is Cryptocurrency?

According to Forbes, cryptocurrency is a digital means of exchange which uses cryptography as a means of security. Most cryptocurrencies operate without the backing of an authority, such as a central bank or government. This fundamentally differentiates them from traditional currencies, such as the pound sterling or the dollar.

Rather than existing as a physical stack of notes or coins, the way to store and use cryptocurrencies is on the internet. 

Mainstream investors are also taking more than a passing interest in cryptocurrencies. Investment firm Ruffer recently spent about £550 million (equating to 2.5% of the £20 billion it has under management) on buying Bitcoin.

Concern over the safety of cryptocurrencies as an investment class has prompted the UK’s financial watchdog, the Financial Conduct Authority, to describing them as “very high risk, speculative investments”.

Can you include cryptocurrency in inheritance?

Can you Include Cryptocurrency in Inheritance?

Cryptocurrencies such as bitcoin are considered by HMRC to be property for inheritance tax (IHT) purposes which means they form part of your partner’s taxable estate on death. If the value of the Estate is higher than £325,000, then the beneficiaries must pay Inheritance Tax.

So cryptocurrencies can be included in inheritance, but they face the same inheritance tax rules as the rest of the Estate.

There are two ways to include cryptocurrencies in inheritance- a Will and a trust. Putting cryptocurrency in a Will or trust makes it less likely that the cryptocurrency will go undiscovered after your death—because the existence of your cryptocurrency will be documented in the Will or trust. This is important because, unlike other property, cryptocurrency is not an easily discoverable asset. It has little to no paper trail, so it’s difficult for your loved ones to discover it after you die. If they don’t already know you have cryptocurrency and how to access it, it may be lost to them forever.

When you die, the law requires your property to go through probate. If you leave your cryptocurrency through your will (or make no plan at all), your cryptocurrency will go through probate. Your beneficiaries will not have access to your cryptocurrency until the probate process is complete.

Any property included in your trust won’t go through the probate process when you die. Instead, your successor will immediately have the right to access and distribute your cryptocurrency following the terms of your trust.

How We Can Help

Here at The Inheritance Experts we work with solicitors who have years of experience in all manner of inheritance claims. This includes alternative kinds of inheritance. Contact us today by filling in our contact form. Or call us on 01614138763 to speak to one of our friendly knowledgeable advisors.

Research States Only Four in 10 UK Adults Have or are Writing a Will

A recent report by IRN Research into Wills and Probate has found that only four in 10 adults in the UK have made or are writing a Will. UK Wills & Probate Market 2020: Consumer Research Report also shows that there has only been a 1% increase in Will-making between 2019 and 2020.

This has come as a surprise to the industry, as there was a rise earlier in the pandemic in people enquiring about making a Will, which we reported on at the time.

Although the number of adults with a Will increases with age, for example, the report states 79% of over 65s and 57% aged between 55 and 64 have one, the main driver for those choosing not to make a Will is because they don’t think they have anything of value to pass on. This is despite one in six owning a property. A recent study by Royal London found that of people aged over 55 without a Will, 16% own a home either outright or with a mortgage.  

For those that have made a Will the IRN report cites the number one reason amongst respondents for doing so was that they felt it provided “peace of mind”, with 67% stating this was the main driver behind their decision. Just under half of respondents (49% decreasing from 51% in 2019) stated that a Will ensures that their estate is distributed as they intended when they pass away. 

writing a Will

Issues that can Arise with not Writing a Will

If someone dies without making a Will, this is known as dying intestate. Usually when a person dies, their Estate is divided according to their Will. This means that their estate goes to who they want, how they want. If a person dies intestate, then laws known as laws of intestacy come into effect. These laws place relatives in a priority order of who inherits the estate, starting with the spouse. After this, the order is:

  1. Children
  2. Grandchildren
  3. Great grandchildren
  4. Parents
  5. Siblings
  6. Nieces and nephews
  7. Other close relatives

When someone dies intestate, only a beneficiary of the estate can apply for the authority to administer the estate. This person will be known as the administrator of the estate (as opposed to an executor when there is a Will). The role of the administrator is very similar to the role of the executor.

The administrator must apply to the Probate Registry for a legal document called a grant of letters of administration. This document grants them legal authority to deal with the deceased person’s assets and administer their estate. Without this document, the administrator will not be able to sell their property and they may not even be able to close their bank accounts.

When it comes to probate property the complications become even greater. For example, houses can become unsellable while trying to track down relatives. Other issues arise in cases of jointly owned property. This includes holiday homes owned by a group of people. If someone in the group dies, their share will pass to their family rather than the ownership group of friends. This is despite what they may have intended. The Will ensures that there are no ambiguities for the wishes of the deceased when it comes to property.  

How We Can Help

Here at The Inheritance Experts we work with solicitors who have years of experience dealing with inheritance claims. This includes writing and contesting a Will. Contact us today by filling in our contact form. Or call us on 01614138763 to speak to one of our friendly knowledgeable advisors.

What Happens if A Beneficiary Dies First?

In simple terms, if a beneficiary dies first, before the deceased, then they do not inherit anything. It usually takes several months to deal with the administration of an Estate in full. This is especially true if there is property that needs to be sold. Because of this, there may be situations where a beneficiary who was living at the time of the deceased’s death dies before receiving their inheritance. This can cause confusion as to what happens to their share of the Estate.

Many Wills contain a survivorship clause. These usually state a beneficiary must survive the deceased by a certain length of time to inherit. This is normally 28 days. If they die before this, they are treated as having died before the deceased.

Where there is no Will, then under the Rules of Intestacy a spouse or civil partner must also survive by 28 days to inherit from the deceased’s Estate.

If the Beneficiary Dies Before the Deceased

Generally, if a beneficiary dies before the deceased, they will not inherit anything from the deceased’s Estate. Whatever they were due to receive will fall back into the deceased’s Estate. However, the deceased may make provision in their Will for the gift to be redirected in those circumstances stating that if the original beneficiary dies before them then alternative beneficiaries will receive the gift instead.

This can also happen under general law where a Will contains a gift to a child, adopted child or grandchild of the deceased, and the child dies before the deceased, leaving children of their own. Then, unless the Will expresses a contrary intention, the gift will go to the children of the initial beneficiary.

In effect, this means that if a parent leaves their child a gift in a Will and that child dies before the parent, leaving children of their own, then those children (the parent’s grandchildren) will receive their parent’s share.

If the Beneficiary Dies After the Deceased

As long as the beneficiary is alive for the time in the survivorship clause, their share of the deceased’s Estate will pass to their Estate. This will then be distributed according to their Will or the Rules of Intestacy.

If the beneficiary’s estate needs a Grant of Probate, then the executor needs to know the total value of their Estate to apply for the Grant of Probate. They then need to declare this on the Inheritance Tax forms for their Estate.

If the executor cannot calculate the exact amount, then they can use an estimate figure and correct it later. An example of this is if the deceased’s property has not yet been sold.

How We Can Help

Here at The Inheritance Experts, we work with solicitors who have years of experience dealing with inheritance claims. This includes cases where a beneficiary dies first. Contact us today by filling in our contact form. Or call us on 01614138763 to speak to one of our friendly knowledgeable advisors.

Plans to Modernise Power of Attorney System

The government has announced that they are planning to modernise the lasting power of attorney system in the UK. They will hold a three month consultation to examine how technology can be used to speed up the service. This consultation will also reform the process of witnessing and improve access. It will look at making the process of objecting to an LPA simpler. It will also introduce new safeguards to protect against fraud and abuse.

The government is also considering creating a fast-track for families who need to quickly set up an LPA for a relative who has suffered a sudden change in their health.

Under the current paper-based application process, it can take months for powers to be handed over. These changes will see the service become predominantly digital, whilst also keeping alternatives for those unable to use the internet.

Lasting Power of Attorney

A Lasting Power of Attorney document (LPA) is a legal document that allows you to appoint one or more people to make decisions on your behalf during your lifetime.

If you one day lose your mental capacity to make decisions, then someone you know, and trust, can make them for you. They are the Attorney.

To make a Lasting Power of Attorney document, you must be over 18, and have mental capacity to do so. Mental capacity is a legal term that means you understand the decisions you make, and why you are making them. Only you can put an LPA in place; someone cannot do it on your behalf. You must be able to act independently and be able to make independent decisions about what you would like to do.

There are two types of LPA. These are:

  • Health and wellbeing Lasting Power of Attorney
  • Property and financial affairs Lasting Power of Attorney

Health and wellbeing LPA

A health and wellbeing LPA can make decisions about your healthcare, treatments and living arrangements if you can no longer make them for yourself. For example, if you want to stay in your own home rather than moving to a care home. Then, your LPA would have the authority to ensure you can do that.

A health and wellbeing LPA is only consulted if you have lost the mental capacity to make these decisions for yourself.

Property and financial LPA

A property and financial LPA makes decisions on your financial affairs, as well as your property decisions in England and Wales. They can make decisions for you in terms of selling your property, for example.

The person or people you choose can either be attorneys if you lose mental capacity, or in a broader sense, for example, through age or an accident. You can also use them if you move out of the UK and wish for them to deal with your finances in the UK.

How We Can Help with Power of Attorney

Here at The Inheritance Experts we work with solicitors who have years of experience dealing with different inheritance matters. This includes power of attorney matters. Contact us today by filling in our contact form. Or call us on 01614138763 to speak to one of our friendly knowledgeable advisors.

Rising Property Prices May Mean More will Pay Inheritance Tax

The rise in property prices in the past year may have an effect on the number of people who have to pay inheritance tax, experts have warned. House prices have reportedly increased by 8.9% in the past year. This may mean that more will pay inheritance tax when someone leaves them property in their Will.

New figures from HMRC show that inheritance receipts in April to May 2021 were £966million – £340million higher than the same period last year, due in part to an increase in the value of many people’s homes.  

Financial advisers say significant increases in property values may mean that more estates will nudge past the threshold where inheritance tax is due, without them realising it.   

Current rules state that if you give away your family home to your children, £500,000 is the maximum value that your estate can reach before you start being liable for inheritance tax – or up £1million if you are a surviving spouse or civil partner who already inherited the property from them.

If you do not fall into this category, your limit is £325,000. This is the standard nil-rate band. The nil rate band is the threshold above which Inheritance Tax is payable.

Why More Will Pay Inheritance Tax

Inheritance tax (IHT) is payable at 40 percent on the value of an estate above a certain threshold of a person who has passed away. To avoid taxation as much as is legally possible, many people choose to take preventative action before they pass away.

In England and Wales, if an Estate is worth more than £325,000 when a person dies, then they typically have to pay Inheritance Tax. Currently, the Inheritance Tax rate is 40% on anything above the threshold. If a person leaves more than 10% of the estate’s value to charity, then the rate may reduce to 36%.

If inheritance tax is payable

The grant of representation will not usually be issued until the inheritance tax (IHT) has been paid to HMRC. This can potentially cause a delay in the administration of the estate.

You usually have to pay 10% of the tax due on the value of property and shares plus all of the tax due in respect of the rest of the estate. This tax payment should be made within six months of death. The additional tax is payable in yearly instalments over a ten-year period, or as soon as they are sold. Interest will start to accrue on any outstanding inheritance tax after six months from the date of death.

Due to the rise in house prices in 2020-2021, it may mean that more will pay Inheritance Tax.

How We Can Help

Here at The Inheritance Experts we work with solicitors who have years of experience dealing with inheritance claims. This includes inheritance tax matters. Contact us today by filling in our contact form. Or call us on 01614138763 to speak to one of our friendly knowledgeable advisors.

Unofficially Adopted Children Treated Unfairly in Inheritance

In 2021, a typical family does not exist in the way that it used to. Every family is different; some people remarry, have stepchildren, adopt children. However, the laws surrounding inheritance do not reflect this. According to reports, unofficially adopted children are treated unfairly in inheritance matters. This is because there are certain rules surrounding inheritance tax depending on your relation to the deceased.

Different Rules for Unofficially Adopted Children

One of the rules that is different for children related by blood and unofficially adopted children is the Residence Nil Rate Band. With the Residence Nil Rate Band, each individual has an allowance regarding inheritance tax. Currently, the value is £325,000 – but if you have a property or if you have owned a property, and in your will, you leave your estate to your direct descendant, then you may claim an additional threshold before inheritance tax of £175,000, bringing the total allowance to £500,000. You do need to meet other certain criteria to claim this extra allowance.

However, the Residence Nil Rate Band – although it includes stepchildren or foster children – excludes people who have not got children but want to leave it to nieces and nephews or persons who they view as a child.

This means that unofficially adopted children must pay more inheritance tax than children or stepchildren.

Dying Intestate

There are also problems when someone dies without making a will – also known as Intestacy Rules.

If this is the case, it completely and utterly excludes unofficially adopted children and even stepchildren. If you die without making a will, you must follow the Intestacy Rules and that does not even include stepchildren. 

Inheritance Act Claims for Unofficially Adopted Children

The Inheritance (Provision for Family and Dependants) Act 1975 states that it is

“An act to make fresh provision for empowering the court to make orders for the making out of the estate of a deceased person of provision for the spouse, former spouse, child, child of the family or dependant of that person; and for matters connected therewith.”

Put simply, this act ensures that when a person passes away, every beneficiary receives part of their estate. A beneficiary is anyone who receives anything in a Will.

Certain people, if a Will does not include them, and they believe it should, may be able to make an Inheritance Act claim. So if they believe that they were wrongly left out of a Will, they may be able to make a claim.

How We Can Help with Unofficially Adopted Children being Treated Unfairly in Inheritance

Here at The Inheritance Experts we work with solicitors who have years of experience dealing with inheritance claims. This includes claims for unofficially adopted children being treated unfairly in inheritance. Contact us today by filling in our contact form. Or call us on 01614138763 to speak to one of our friendly knowledgeable advisors.

Manager Fined After Firm Took on Probate Matter with No Experience

The compliance officer and manager of a firm has to pay a fine of £2,000 after the firm took on a probate matter with no experience. The Solicitors Regulation Authority (SRA) imposed the penalty after the solicitor showed a ‘disregard for his regulatory obligation to exercise proper management’ over the business. This lack of control and oversight allowed for almost £58,000 in client monies to be held without the firm even having a secure client account.

In December 2017 the firm began work on a probate matter despite having no prior experience. The fee-earner assigned to the work had never handled a probate matter previously.

No file reviews were completed by any manager at the firm and there was no due diligence of any client. It was not spotted that the estate of the probate matter had debts of £6,000 before estate monies were distributed to beneficiaries, and potential beneficiaries with equal or greater claims to the estate were not identified. A total of £37,600 of estate monies were paid out to several third parties inappropriately, including payment of hospital bills for relatives of the deceased.

probate matter with no experience

What is Probate?

Probate is the legal and financial process that deals with the property, money, and possessions of someone when they die. When a person dies, before the executor of their Will can distribute their estate, they must apply for probate. After the court grants probate, the next of kin or executor can then deal with the deceased’s assets.

The Process of Probate

The process of probate often involves a lot of complicated tax, legal and financial work. Therefore, it breaks down into five stages.

  1. Identifying all the deceased’s assets and liabilities to determine the value of the estate.
  2. Paying inheritance tax and applying for the Grant of Representation.
  3. Selling the deceased’s assets, paying liabilities, and accounting to HMRC for any further tax due to or from the estate.
  4. Preparing estate accounts showing all payments, and showing the balance left for the beneficiaries. Sending the accounts to the executor for approval.
  5. Transferring the assets that the beneficiaries wish to keep, and distributing the Estate.

Probate is required in England and Wales when the deceased owns property. This includes houses, buildings, and land. When a bank or financial institution requests a Grant of Representation, this also requires probate. Usually, this happens when property goes over the threshold that the institution sets.

The process of probate can be long and complicated. This is why it is important for the solicitors dealing with the case to know what they are doing. If they do not know, they can make mistakes or distribute the estate incorrectly. This was the case at the firm who had no experience handling probate cases.

How We Can Help

Here at The Inheritance Experts, we work with solicitors who have a wealth of experience dealing with Probate. Contact us today by filling in our contact form or by calling us on 01614138763 to speak to one of our friendly knowledgeable advisors.

Stepparents Exclude Stepchildren from their Will, Research Finds

According to recent reports, research shows almost half of stepparents in the UK plan to exclude their stepchildren from their Will. Tower Street Finance conducted the research to examine people’s attitudes towards inheritance.

They surveyed 2000 people, and of the 2000, 32% say that they currently have a Will which does not treat their children and stepchildren equally. And 17% excluded stepchildren from their Will completely.

This research may eventually lead to a generation of stepchildren being left out of Wills. These stepchildren may feel that they have been left out of the Wills unfairly, and it may mean that they can make an Inheritance Act claim.

stepparents exclude stepchildren from their Will

Inheritance Act Claims if Stepparents Exclude Stepchildren from their Will

The Inheritance (Provision for Family and Dependants) Act 1975 states that it is

“An act to make fresh provision for empowering the court to make orders for the making out of the estate of a deceased person of provision for the spouse, former spouse, child, child of the family or dependant of that person; and for matters connected therewith.”

Put simply, this act ensures that when a person passes away, every beneficiary receives part of their estate. A beneficiary is anyone who receives anything in a Will.

Certain people, if a Will does not include them, and they believe it should, may be able to make an Inheritance Act claim. These people include stepchildren. So if they believe that they were wrongly left out of a Will, they may be able to make a claim.

Who Can Claim Under The Inheritance Act?

Under The Inheritance Act, certain people can make a claim. these people are:

  • A spouse/civil partner
  • A former spouse/civil partner
  • Children, including stepchildren and adopted children. They can either be an adult or a minor
  • Financial dependants
  • Cohabitees. However, a cohabitee must live in the same house as the late party for a minimum of two years. Furthermore, they must be living as husband or wife of the deceased

Under these rules, stepchildren are able to make claims under The Inheritance Act.

Is there a time limit to claim under The Inheritance Act?

Yes, there is a time limit to make a claim under The Inheritance Act. This time limit is within six months of the date of the Grant of Probate. The Grant of Probate (aka Grant of Representation) is a legal document that clarifies the true Executor of a Will. In essence, it confirms that the executor has the authority to deal with the estate’s financial resources.

If that time limit passes, it may still be possible to make a claim under The Inheritance Act. However, you must contact the court so they can grant permission that the claim can be given authority.

How We Can Help if Stepparents Exclude Stepchildren from their Will

Here at The Inheritance Experts we work with solicitors who have years of experience dealing with Inheritance claims. This includes claims under The Inheritance Act. Contact us today by filling in our contact form. Or call us on 01614138763 to speak to one of our friendly knowledgeable advisors.

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