As inheritance disputes hit a record high, here’s how you can make a watertight estate plan

When you pass on, it should hopefully be a time for your family to come together, mourn, and commemorate your life.

However, there has unfortunately been a recent increase in the number of inheritance disputes, and cases are at a record high. From rising property prices to a surge in dementia diagnoses, there are several factors behind this trend.

One of the best things you can do to limit the chance of your family descending into an inheritance dispute is to make a watertight estate plan. This can help answer questions your family may have regarding your decisions, alleviate any concerns you have about what will happen to your assets, and ensure your estate is not liable for more Inheritance Tax than necessary.

Read on to find out why inheritance disputes are on the rise and how making an estate plan can help ensure your family avoids one.

Inheritance disputes are at a record high

Inheritance solicitors estimate that up to 10,000 people in England and Wales dispute wills every year, and that number is rising.

The Guardian reports that, in 2021/2022, there were 195 inheritance disputes put before judges, which represents an increase of 50 compared with 2017.

However, with most disputes settled out of court, these figures are just the tip of the iceberg of a much wider trend.

The rise in inheritance disputes is due to several factors

The recent surge in inheritance disputes can be attributed to a multitude of factors, encompassing financial, cultural, and health-related issues.

As baby boomers reach old age, the properties they bought decades ago have significantly risen in value. The value of inherited estates reflects this, and HMRC is set to record the highest ever Inheritance Tax receipts of around £7.5 billion for the current financial year. As the value of estates rises, so too do the financial stakes for the descendants.

Moreover, as people live longer, the number of dementia diagnoses is rising. This has led to more disputes based on claims that a will was written after the disease took hold and the mental faculties of the deceased had already started to decline.

Finally, an increase in the divorce rate and second marriages has led to the disinheritance of many stepchildren. Some of the disinherited may feel entitled to part of an estate and they might have the right to challenge the will, depending on their relationship with the author.

Read more about the issue of “sideways disinheritance” in this useful article.

How to make a watertight estate plan

A watertight estate plan can help ensure your family avoids an inheritance dispute when you pass.

So, how do you make one?

Write your will early

Sadly, life can offer up some unfortunate surprises, and the worst thing for your family would be for you to pass “intestate”.

Dying intestate means you have not prepared a will before you die. In this instance, there are default legal beneficiaries between whom your estate will be divided. This could mean that your assets do not get passed on to the people you would have chosen, such as an unmarried partner. The earlier you write your will, the less chance there is of you dying intestate.

Another key advantage to writing your will early is that there can be little argument regarding your mental capacity. If you were to write your will relatively late, and you were later revealed to have a disease like dementia that went undiagnosed for several years, there could be an inheritance dispute based on the stability of your mental health when you wrote the will.

Write a letter of wishes

Unlike a will, a letter of wishes is not a legally binding document. Rather, it is a letter that details information such as how you might want your funeral arrangements managed, where you kept certain documents, or why you made the decisions you did regarding the division of your estate.

A letter of wishes can help clear up any uncertainty or answer questions your family may have regarding your estate plan when you have passed.

Talk to your family about your intentions

Having open and honest discussions with your family about your intentions allows you to explain your decisions to them in person. It also helps to avoid leaving any future questions they may have left unanswered.

Furthermore, an open conversation gives your family the opportunity to share their thoughts with you. Their insights could include ideas you hadn’t yet considered and that you may want to add to your will.

Update and reevaluate your will and estate plans for every significant life event

Your will and estate plans are live documents that you might consider changing and updating for every significant life event.

The 1975 Inheritance Act states that a will can be challenged by your current and former spouses and civil partners, your long-term cohabitees, your children, people you treated as a child of the family, and anyone you maintained financially.

With so many potential challenges, it is important to keep your will up to date as you progress through your life to help avoid an inheritance dispute further down the line.

Work with a legal professional

You may also want to work with a legal professional when writing your will.

A professional can ensure your will is properly validated and witnessed, so there can be no later claims that you were unduly influenced or were not sound of mind when you wrote it.

They can also help you to develop an estate plan that best serves you, your assets, and your beneficiaries, and ensures that you don’t pay more Inheritance Tax than necessary.

If you would like advice or assistance regarding your will or estate plan, get in touch. Email enquiries@blackswanfp.co.uk or contact your adviser on 020 3828 8100.

Please note

This article is for general information only and does not constitute advice. The information is aimed at retail clients only.

The Financial Conduct Authority does not regulate estate planning, tax planning or will writing.