The Inheritance (Provision for Family and Dependants) Act

In recent weeks, various celebrities have revealed that they will not be leaving their fortunes to their children and instead intend to leave their millions to charities. Sting is one such celebrity. Worth an estimated £180 million, Sting has said that he wants his children to create their own wealth and not rely on him. Testamentary freedom allows individuals to leave their money to whomever they choose but there are certain caveats on this.

The Inheritance (Provision for Family and Dependants) Act is one such caveat. This Act allows certain categories of applicant to apply for reasonable financial provision from someone’s estate if they have been left nothing or an insufficient amount. Children, both minors and those over the age of 18, are one such category. To succeed, applicants have to prove that they have not been left reasonable financial provision. The court then decides what reasonable financial provision to order them to receive from the deceased’s estate.

Generally, adult children struggle with claims because there is an expectation that adults should be financially independent and not reliant on inherited wealth. Adult children of very wealthy parents are in a unique position. They will undoubtedly have received benefits from that wealth during their childhood and probably into adulthood in some way whether it be the purchase of a house, employment in the family company or monthly allowance.

If they did not benefit on their parents’ death, what is the court’s position likely to be? Is the court going to be sympathetic because the child has clearly been benefitting to some extent in their lifetime so was in some way reliant on them? Or is the court going to decide that the child has already benefitted and so is not entitled to any more? The answer, unfortunately, is that it will depend on all the circumstances of the case. The court will closely scrutinise, amongst other things, the relationship between parent and child, the financial position of the beneficiaries of the estate and the financial position of the child. It will not lightly interfere with the deceased’s wishes but will step in to ensure that those that should have benefited because of the way the deceased lived their life do so.

For anyone that is thinking of disinheriting their children, they should be aware of this caveat on testamentary freedom and take professional advice on their position and the options available to them to avoid a sting in the tail!

 

Meet the authors: Mark Abrol, Partner and Mark Terrar, Partner from our Disputes team.

 

This information does not represent legal or tax advice. Seek appropriate legal or tax advice about the topics covered, specific to individual circumstances, before taking or refraining from any action.