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Why relying on an inheritance does not make financial sense

14 minute read

Banking on the death of your parents or other family members for future financial security is a strategy fraught with risk. Five legal experts explain why you shouldn’t just wait for the will reading.

As far as long-term financial security strategies go, waiting for an inheritance might be better than hoping for a lottery win or for a wealthy buyer to pay you silly money for that world-changing invention you thought of in the shower.

However, regardless of how stable you think your family relationships are, there are big risks involved with pinning all your financial hopes on an inheritance. Did it ever occur to you that it might not land in your lap?

Jason Oliver, a partner at Paris Smith solicitors, specialising in personal disputes, says that “unlike in other jurisdictions, there is no rule of forced heirship in English law, so a person notionally has the freedom to leave their assets to whoever they wish.”

Can a will be changed?

Disinheriting relatives, particularly children of any age, may sound like the stuff of soap operas, but it is not uncommon.

“Any person can change their will at any time, so long as they have the mental capacity to do so,” says Claire Cox, Head of Inheritance Disputes at Hedges. “Sometimes when we are investigating the validity of a will, there can be a dozen or so earlier wills.”

“Beneficiaries in a will do not have any say in this – and it cannot be legally challenged during the person’s lifetime,” adds Scott Walker, consultant solicitor in the wills and probate team at Richard Nelson LLP.

On what grounds can a will be contested?

Cox says the most common grounds for challenging a will include “lack of knowledge and approval, lack of testamentary capacity, lack of due execution, undue influence or, less commonly, fraud or forgery.”

If you feel that a will does not make ‘reasonable financial provision’, “then you can make a claim under the Inheritance (Provision for Family and Dependants) Act (IPFDA),” says Emily Robertson, a wills, trusts and probate specialist at Burgess Mee Family Law.

“Reasonable financial provision is judged against different standards depending on who is claiming against the estate and only certain categories of people can claim,” explains Walker. “Cases of this nature are complex and the court will consider a set of guidelines and use their discretion.”

How easy is it to contest a will?

“In most circumstances, contesting a will is very difficult!” says Walker.

“You must have what is known as vested interest, meaning that you must inherit under a previous will or be expressly mentioned in the current will,” says Laura Pang, senior associate solicitor at Irwin Mitchell.

“In theory, anyone could contest a will based on a perceived financial dependence on the deceased,” Robertson elaborates. “However, the court will look at a variety of factors that will largely impact a claim.”

She gives the example of an adult child making a reasonable financial provision claim, explaining that if “they are a financially independent adult, the court will look at these claims with circumspection.”

However, before anyone has their day in court, the process leading up to this is long and can be complex. Cox says that contesting a will is “not easy and involves a lot of digging around for evidence.”

“For example, if we have concerns that an elderly person did not have capacity to make the will, and perhaps was unduly influenced by a family member, we would seek that person's medical records, social services records, care home records, if applicable, and evidence from friends and family,” she continues.

Cox says that she would want to see the will file to check if it was professionally prepared: “This can involve reviewing hundreds of pages of documents and it can take several months to collate them all.”

If it is thought that there is sufficient evidence, Cox says the next steps would be to produce a letter of claim, followed by court proceedings, which she describes as “a rarity and a last resort.”

“My experience is that the vast majority of cases settle through mediation or offers being made,” says Cox.

“As a beneficiary, your rights are to have the estate distributed as per the terms of the will,” says Walker. “However, a will can be challenged, or somebody can bring an IPFDA claim, which would be decided by the court.”

“In the event of a challenge, the beneficiaries may be surprised to be told that they will need to fund the defence of the claim from their own resources initially, as they may have expected that their costs would be paid from the estate,” cautions Oliver. “For example, if a legitimate question concerning the construction of the will is raised, then the costs of all of the parties may be ordered to be paid from the estate regardless of the outcome – in that scenario, the beneficiaries will end up suffering a loss even though their argument succeeded.”

Unlike criminal cases, where the standard of proof is beyond reasonable doubt, the civil standard of proof is used when a will dispute goes to court, says Pang: “The process of challenging a will can be long and complicated and requires persuasive and convincing evidence to prove that on the balance of probabilities the will is invalid.”

If you want to contest a will, what are your rights?

“There are no rights as such – it is a case of being somebody who has the ability to claim under the IPFDA and meeting set criteria,” explains Walker. “Alternatively, there would need to be evidence of a lack of mental capacity, knowledge and approval of the will or undue influence.”

Cox says that if you want to contest a will, you should seek independent legal advice, but warns that this is no guarantee of a windfall: “If you intend to defend the probate claim, there is a risk that you will have to pay the other party’s costs if they are successful.”

“The general rule is that the loser pays the winner’s costs, and these could run to tens of thousands of pounds,” she continues. “It is crucial to receive legal advice from a solicitor with experience of these types of disputes – it is a niche area of law and incredibly unpredictable.”

“There is a presumption against intestacy (not having a will) and the courts will prefer to give effect to the testator’s wishes, if at all possible,” adds Oliver. “Contesting a will all the way to trial could easily cost well over £100,000 per party.”

Time is of the essence when it comes to contesting a will, as you only have six months from the grant of probate (the process of confirming a will is valid and who has the authority to administer the estate) to make a claim. However, you can buy yourself some extra time.

“If you have concerns about the validity of a will – for example, you think it is a forgery or the person lacked capacity – then it might be worth obtaining a caveat to prevent a grant of probate being issued,” says Cox. “This will give you time to investigate the challenge and seek legal advice.”

Why is relying on an inheritance not a great long-term financial plan?

All our experts agree that waiting for a relative to die and leave you a windfall does not constitute smart financial planning, especially as anyone can change their will at any time. This can result in complex and dramatic family legal battles, according to Cox.

“I have seen so many cases where relatives were shocked by a later will, which they only found out about when the loved one died,” recalls Cox. “Equally, I have seen cases where a person has married, the marriage revokes an earlier will, meaning that the estate passes to their spouse.”

“Essentially, there are no guarantees of benefitting from an inheritance, even in a straightforward, uncontested matter,” says Oliver.

Other issues that might not occur to those who are hoping for an inheritance include a property held under a joint tenancy passing to someone outside the family, such as a co-owner.

“Another possibility is the estate being depleted by unexpected care fees, or even lifetime gifts – there is simply no certainty,” says Cox.

“Another scenario could be if a parent took out an equity release mortgage to fund their retirement – this could significantly reduce the amount of equity in the family home, which the children may have assumed that they would inherit unencumbered,” warns Oliver.

Inheritance is not guaranteed – at any point, your relationship with someone can change and they can remove you from their will,” says Robertson. “I have seen children cut out from wills many times during my time in practice. In my experience, this is often due to the perceived influence of a child’s spouse.”

“The UK has the concept of testamentary freedom and the ability to leave our assets, money and property to whoever we wish,” says Walker. “Financial circumstances can change significantly during your life which may mean that there is no money left to inherit.”

Walker says it is important not to forget about the prospect of HMRC taking its share: “You need to consider the impact of inheritance tax if an estate is large enough, as this needs to be paid first and will have an impact on the amount you receive.”

“Wealth is increasingly not passing through generations as it used to and you should not rely on an inheritance to make ends meet, either before or after retirement,” advises Pang. “Life expectancy is increasing, and you may not receive your inheritance until you are in your 70s or 80s, by which time it is too late to make a difference to your retirement.”

Talk to your family

If you are concerned that you will not receive your fair share of an estate, Oliver says that there is “no reason why an attempt should not be made to discuss the matter and persuade them to change their minds, although this would be an intensely awkward conversation that could easily make things worse rather than better.”

Cox says she always encourages open conversations within families when it comes to estate planning: “This avoids the shock – and potential legal fees – that come from learning, at a time of immense grief, that a family member has changed their will.”

“I urge people to make wills, so that their intentions are clear and they know their assets are going to those they want to receive them,” Cox advises. “The very absence of a will can cause a dispute, as that in itself leaves uncertainty around intentions, and can lead to claims against the estate.”

An honest conversation with your family can make all the difference when the time comes to administer an estate. Frame it as a positive discussion about ensuring everyone's wishes are respected and remember, there really is no substitute for proper planning, ideally with the guidance of a professional financial adviser.

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