Family provisions and post-death variations Flashcards
Ways of claiming part of a deceased’s estate (if you’re not happy with the amount of lack thereof that you have received)
1) Make a family provision claim
2) Challenge the validity of the will
Inheritance (provisions for family and dependants) act (Family Provision) - What it’s used for
The act allows certain categories of people who may be aggrieved because they have been left out of a will or didn’t receive as much as they wanted are not inheriting on an intestacy to apply to the court for a benefit from the estate following the testator’s or intestate’s death.
Family Provision - What you need to find out
1) Did the deceased die domiciled in England and Wales
2) Does the applicant fall within a category of applicant ? - What do they have to prove?
3) Did they bring the applicant within the time limit?
4) Has the will/intestacy made reasonable provision for the applicant?
5) Guidelines (common and special)
6) Court’s Powers
Family Provision - Who can make a claim?
- Spouse/civil partner
- A former spouse/civil partner who has not remarried
- A child of the deceased
- Any person treated by the deceased as a child
- Any person who immediately before the death of the deceased was being maintained by the deceased either wholly or in part
- Any person who during the whole of the period of two years ending immediately before the death was living:
In the same household as the deceased, as the husband, wife or civil partner
Family Provision - Former Spouse - What they have to prove
1) That they haven’t remarried
2) That on the final order for divorce or dissolution that the court did not make an order barring them from making a claim
Family Provision - Someone being maintained by the deceased - What they have to prove
1) Maintained = the deceased was making substantial contributions in money or money’s worth towards the reasonable needs of that person
2) Maintenance must not be part of a commercial arrangement
3) Financial dependency on the deceased
4) Was it a one-off payment or constant flow? - more likely to find it with a constant flow
Family Provision - Adult Child - What they have to prove
If the adult child is in employment and likely to have earning capacity for the foreseeable future it is unlikely that their application will succeed without some special circumstances such as:
- A moral obligation owed by the deceased
- The adult child having a disability
- The adult child working for the deceased for many years for a low wage
- The child making sacrifices in order to care for the deceased
Family Provision - Cohabitants - What they have to prove
1) They must have been living in the same household as the deceased
2) As the husband, wife or civil partner
3) This must have been for the whole of the two years immediately preceeding the deceased’s death
Family Provision - Time limit
Applications must be made within 6 months from the date of the grant of representation. Court has a discretion to extend this if there is good reason for the delay
Family Provision - Grounds for a claim
The only ground for a claim is:
That the disposition of the deceased’s estate effected by his will or the law relating to intestacy is not such as to make REASONABLE FINANCIAL provision for the applicant.
Family Provision - Grounds for judging reasonable financial provision - Surviving spouse standard
The surviving spouse standard allows a surviving spouse or civil partner such financial provision as is reasonable in all the circumstances WHETHER OR NOT that provision is required for his or her maintenance. A relevant factor is how much the spouse or civil partner might have expected on divorce
Family Provision - Grounds for judging reasonable financial provision - The ordinary standard (for all other applicants)
The standard for judging reasonable financial provision is such as is reasonable for the applicant to receive for their maintenance. In deciding whether reasonable financial provision has been made and what orders, if any, should be made in the applicant’s favour the court takes a number of common and special guidelines into account
Family Provision - Grounds for judging reasonable financial provision - Guidelines to assist the court - Common guidelines (every applicant)
1) Financial resources and needs of the applicant - court balances the needs of applicant against needs of other beneficiaries
2) The deceased’s obligations towards any applicant or beneficiary
3) Size and nature of the estate - easier to make a claim against a large estate
4) The physical or mental disability of any applicant or beneficiary
5) Anything else which may be relevant - if testator leaves written reasons for excluding the applicant or a prolonged period of estrangement
Family Provision - Grounds for judging reasonable financial provision - Guidelines to assist the court - Special guidelines - Surviving Spouse
Court takes into account:
1) Applicant’s age
2) Applicant’s contribution to the welfare of the family (looking after family home or caring for family)
3) Duration of marriage
4) Likely financial settlement if the marriage or civil partnership had ended in divorce
Family Provision - Grounds for judging reasonable financial provision - Guidelines to assist the court - Special guidelines - Child
Court will take into consideration:
1) Applicant’s education or training requirements
Family Provision - Grounds for judging reasonable financial provision - Guidelines to assist the court - Special guidelines - Cohabitant
Court will take into account:
1) Applicant’s age
2) Length of the period of cohabitation
3) Contribution made by the cohabitant to the welfare of the family
Family provision - Minor child
Claims by minor children are generally uncontroversial, so there is a very good chance of being awarded something from the estate
Family Provisions - Courts powers
The court has wide powers to make orders against the ‘net estate’ of the deceased including: 1) orders for periodical payments
2) lump sum payments 3) the transfer of specific property to the applicant.
The ‘net estate’ against which an order can be made includes not only property which the deceased has, or could have, disposed of by will, but also the deceased’s share of joint property passing by survivorship if the court so orders
Post death variations and disclaimers - Definition
Despite the terms of the will or the operation of the intestacy rules after a person dies it is possible for the beneficiaries to alter what happens to the estate.
Post death variations and disclaimers - Situations in which this might happen
1) A beneficiary may feel that a member of the family has been unfairly excluded or needs a larger legacy.
2) Adult beneficiaries may decide that they would prefer their legacy to go to their children.
3) They want to pay less IHT or CGT
Post death variations and disclaimers - How can property be re-directed?
1) Lifetime gift by the beneficiary
2) Post-death disclaimer
3) Post-death variations
Post death variations and disclaimers - How can property be re-directed? - Lifetime gift
A lifetime gift by the beneficiary of an inheritance under a will or under an intestacy to someone else
Post death variations and disclaimers - How can property be re-directed? - Post-death disclaimers
Disclaimers amount to a rejection of the assets inherited under the will or the intestacy law or by survivorship. The disclaimed assets then pass as though the original beneficiary has predeceased. Disclaimers are only appropriate if following rejection the property passes to the person whom the original beneficiary intends to benefit. You CAN’T disclaim if you’ve already received any benefits
Post death variations and disclaimers - How can property be re-directed? - Post-death variations
The restrictions on disclaimers don’t apply. A beneficiary can direct where the benefit is to go and on what terms. The original beneficiary re-writes the deceased’s will or intestacy rules. They can also be used to redirect the deceased’s interest in joint property which passes by survivorship. Must be 18.
Post death variations and disclaimers - Post-death variations - Read Back - Definition
To overcome the taxation problem variations are allowed to be ‘read back’ into the will - treated as though the deceased gave the property direct to the new beneficiary. Certain conditions must be met.
Post death variations and disclaimers - Post-death variations - Read back - Conditions
The conditions are that the disclaimer/variation: 1) Is in writing and signed by the original beneficiary
2) Is within 2 years of the deceased’s death
3) Is not made for a consideration in money or money’s worth
