Avoiding Estate Disputes In Eight Easy Steps

An individual's wealth may grow throughout their lifetime, and planning how it will be dealt with before and after death merits careful consideration. Tax evasion is a crime; tax avoidance is not. It is easy for the latter to become the former as the ethical and practical lines can blur. 

Regular advice from an accountant or specialist tax adviser will enable proper planning during a lifetime and on death help minimise inheritance tax liability and reduce the risk of a dispute with HMRC.

Step 2 – Make a will

The easiest way to avoid a family argument is to make a will. A valid will is a legally binding declaration that sets out how a testator wishes their estate to be dealt with after death. Having a will helps to prevent later challenges to the will and the estate's distribution.

However, a will may not prevent a claim under the Inheritance (Provision for Family and Dependant's) Act 1975, such as a claim of undue influence or promissory estoppel.

Without a valid will, the deceased dies intestate. The statutory rules of intestacy may not provide the intended outcome.

Step 3 – Testamentary capacity

Before making a will, and to avoid a potential dispute about capacity, the individual may want to consider the benefits of their GP carrying out a testamentary capacity assessment. The need for such an assessment is heightened if the testator is vulnerable, elderly or unwell. If the testator's capacity is later called into question, the assessment report can be used as evidence in support of capacity at the time the will is made.

Following the rule in Banks v Goodfellow 1870, the instructions to the GP must explain why the assessment is required.

Step 4 – Appoint executors wisely

Executors are appointed in the will to administer the testator's estate after death.

There must be at least two executors if the estate contains any real property.

An executor’s role is pivotal to the estate's administration and distribution, so the choice merits careful thought.

A close family member makes a good choice to represent the testator's wishes in a decision that falls outside the scope of the will. Balancing them, an executor who is a professional adviser would help to assist, guide and deal with probate applications, inheritance tax and other aspects of the estate's administration that a lay person may find daunting.

Step 5 – Think about dependents

Financial dependents can challenge the terms of a testator's will if they have not been adequately provided for by the will or under the intestacy rules.

The testator may have inadvertently established a dependency relationship by establishing a regular income provision. It is more difficult to challenge the will if one-off lump sum payments replace regular payments.

Step 6 – Ensure the will is valid

The will must be executed properly with at least two witnesses present to fulfil the requirements of s 9 of the Wills Act 1837.

Failure to comply with this stipulation voids the will.

Meeting these requirements will also help to reduce the risk of claims of undue influence.

Step 7 – Tell someone 

It will be helpful for executors to know that they have been appointed and where they can find the original will. This could be with professional advisers, the bank or at the testator's home in a safe place.

Some individuals may require further protection from future disputes by having their spouse confirm acceptance of their will by a postnuptial agreement, making it more difficult for the spouse to challenge its terms in the future.

If the testator has unusual plans for the distribution of their estate, it's wise to give family members advance notification of their intentions, record that notification, and place it with the original will. This reduces the possibility of a challenge to the will terms.

Step 8 – Different jurisdictions

It is a small world, and a testator may have assets abroad. 

Different wills in each jurisdiction work best if they only deal with the assets in their area. Trying to combine jurisdictions can end in costly cross-border litigation. 

If it is necessary to have different wills in different jurisdictions, check that they complement each other.