Cut out of £300,000 estate, could it have been avoided?
‘I was cut out of £300,000 estate by Dad’s second wife’
Stuart Herd was cut out of £300,000 estate by his dad’s second wife when she decided to rewrite her will after her husbands death, leaving everything to her own child.
You can read the full article here on the Telegraph website.
Unfortunately disputes like this are not uncommon and its something that we are asked about relatively frequently. Once someone has passed away it can be very hard to reach agreements and amend a will to reflect verbal wishes or agreements. This leaves only the option of making a claim against the estate known as contentious probate. There are ways you can protect your estate, loved ones and your wishes in order to prevent situations like this from happening. In this post we are going to break down what went wrong and how it could have been avoided.
Stuart had a conversation with his father about his Will and how he intended to distribute his estate just before his father passed away. His father’s intentions were to leave his estate to his second wife of nine years and on her death for everything to be split between Stuart and her own son. Both his father and wife wrote mirror wills leaving their assets to each other, so when his father passed his wife inherited all of his estate.
The decision to leave his estate to his wife could have been with the intention of protecting his nil-rate band therefore providing his and his wife’s combined estate with a higher inheritance tax allowance. Although this is an effective way of distributing the estate that would otherwise be subject to inheritance tax, it is reliant on his second wife honoring a verbal agreement.
Once a person has inherited assets they become the owner and can do with them as they wish, this means they can write a new will and re-distribute the assets they have inherited. A person is not legally bound by a verbal agreement to distribute the assets in a certain way. Unfortunately for Stuart his father’s wife re-wrote her will leaving her estate to her own son, rendering the mirror will she had with his father invalid.
Even worse for Stuart is that he did not find out about the change until after she had passed away and her family had already inherited the estate, leaving him with no way of reclaiming his father’s estate.
Now we have established how he was cut out of his inheritance, let’s look at some ways in which it could have been avoided, the first option being the distribution of the estate under his fathers Will.
Stuarts father had the best intentions when writing a mirror will in order to provide for his wife, however in order to provide for his children as well it would have been a better option to keep his assets separate from his wife’s and split his estate between her and his son.
He could have left Stuart a specific amount of liquid assets (cash money) as a legacy in the will and the remainder to his wife. This would have used some of his nil-rate band but the remaining amount could still have been used on the second death.
Assuming there was a property as part of the estate, an effective way of protecting his children’s interest would have been to change the ownership of the property from his sole name, or if him and his wife were joint owners, to tenants in common and leaving his share to his son in his will.
There is also the option of a trust to protect from future disputes between his wife and son. For example a Flexible lifetime trust would have been an effective way of protecting his wife’s share of the property while still providing for his child. In this case a flexible lifetime trust could have been used to allow for his wife to continue living in the property until her death or until she chooses to sell it at which point his share of the property will be distributed to his children according to the wishes in his will. It also allows her to leave her share of the property to whomever she chooses under the terms of her will, eliminating any grey area of who owns what assets.
The final option would have been for Stuarts father and his wife to have written mutual wills, which are similar to mirror wills as they reflect the same wishes but they are unable to be changed without both participants permission therefore it could not have been changed after his fathers death. The draw back to these types of wills is that they would not be able to be changed for legitimate reason for example new tax regimes or new family member like grandchildren. For those reasons it important to make sure you have taken that into consideration when writing wills in this way.
When there are complicated family dynamics involved it can be difficult to write a will that will satisfy everyone. However in most cases there are options available when planning your estate that will suit everyone’s best wishes, in these cases it is advisable to seek the help of a professional who can advise you on how to get the best outcome from your will.