Trust and Estate disputes - where are we now?

The data speaks for itself – according to statistics (source: Royal Courts of Justice Annual Tables – 2020) a total of 192 claims were issued in the High Court in 2020 by individuals claiming a larger inheritance from an estate. This is the highest level recorded and is a significant increase compared to previous years (128 in 2018 and 188 in 2019).

Prior to the pandemic, based on our experience at Howard Kennedy, the increase in these types of claims could be attributed to a number of reasons, such as:

• There may be competing claims between family members. For example, this may arise where there is a second marriage and children from a previous marriage. The deceased may have wanted to ensure that reasonable financial provision was made for their surviving spouse whilst also providing for the children of an earlier relationship. However, when this is not achieved, it can lead to disputes between the surviving family members, each potentially claiming a larger share of the estate than what has been provided for them.  

• The size and nature of the deceased's assets. This may give rise to difficulties in achieving a balance between surviving family members. For example, the deceased may have been successful in business but the assets may not be readily realisable; tensions can also arise where some family members are involved in the day to day running of a family business and others are not.  

• Questions concerning capacity. In an ageing population, did the deceased have testamentary capacity to make a valid Will? In our experience, this is often a ground for challenging the validity of a Will by a disappointed beneficiary. There are measures a Will draftsman can take when preparing a Will for an elderly or infirm individual, such as arranging an assessment of their capacity, but other questions may be raised, such as whether the deceased was vulnerable and unduly influenced to make a Will.

Moving forward, the nature and type of claims we may see being made against estates could be influenced by the pandemic. Covid-19 inevitably resulted in people reconsidering their personal affairs, not least in relation to their Wills and the transfer of wealth, and whilst people were facing unprecedented difficulties, some decisions may have been made in haste. This may result in an increase in disputes around the following areas:

• During the pandemic and lockdown, people were urgently reviewing their Wills and may have even made homemade Wills. This could lead to an increase in claims against the validity of the Will, for example, was the Will correctly executed?  This was the subject of much debate at the beginning of lockdown where people were naturally concerned that their Will was correctly executed whilst also observing social distancing rules.

• An order allowing the remote witnessing of Wills came in to force in September 2020.  It remains in force until 31st January 2022 and the Ministry of Justice will soon consider whether to allow this beyond January 2022.  Law Society guidance at the time highlighted the need for practitioners to assess and manage the risks associated with remote witnessing and, for example, that it should only be undertaken as a last resort where the individual concerned may be in isolation.  It will be interesting to see whether there will be an increase in challenges to the validity of Wills that were executed in this way, rather than the traditional 'in person' execution in the presence of two independent witnesses.

• There may be an increase in disputes between executors and beneficiaries in the course of the administration of an estate. For example, there could be disagreements about the valuation of assets, particularly in relation to real estate or private company shares, and the timing for selling and realising those assets.

• The acts of trustees may be called in to question. Trustees have a duty to deal with trust assets properly – did trustees consider altering their investment position during the pandemic?  Trustees may have also found themselves receiving demands for distributions from beneficiaries who were faced with sudden financial hardship.  Trustees have a duty to act in the best interests of the beneficiaries and act impartially between them. In the face of growing pressure on trustees to make distributions, did they comply with their duties or could they be subject to criticism by other beneficiaries in the future?

It will be interesting to consult the data released for 2021 in due course which may reveal a further increase in these type of claims and we will look with interest at the cases that we work on in the future to see whether our predictions prove accurate.