How to protect your estate against potential inheritance disputes

Death should be a time for loved ones to come together, mourn, and remember a life well lived.

But sadly, many families find themselves entangled in bitter inheritance disputes after a loss, with disagreements over wills becoming increasingly common.

A study reported in the Guardian found that approximately 10,000 people in England and Wales challenge wills each year, more than ever before. And since most disputes are settled out of court, this figure likely represents only a fraction of the actual conflicts occurring over estates.

The increasing number of disputes highlights the importance of clear estate planning and effective communication among family members. This can help to prevent potential disagreements during an already challenging time.

Read on to discover why inheritance disputes are on the rise and how you can help protect your estate against one.

There are several factors behind the surge in inheritance disputes

The report in the Guardian found that there were 195 inheritance disputes taken to court in 2021/22, up by 50 from 2017.

This rise is likely due to a combination of economic pressures, changing cultural norms, and health-related challenges.

For instance, as baby boomers reach old age, the value of the properties they purchased decades ago has surged, resulting in larger estates and record-breaking Inheritance Tax (IHT) receipts. Statista reports HMRC collected £7.5 billion last year, with projections set to exceed that again.

With greater amounts of wealth at stake, more people are likely to contest wills in hopes of securing a larger share of the inheritance.

Additionally, as life expectancy rises, so do dementia diagnoses. Dementia is now the UK’s leading cause of death, and the Alzheimer’s Society estimates the number of people living with dementia will grow to 1.4 million by 2040. This has led to an increase in disputes over wills regarding the cognitive capacity of the person when they wrote it.

Moreover, higher divorce rates and more second marriages have left many children disinherited, leading some to challenge wills if they feel entitled to a share of the estate.

You can take proactive steps to help safeguard your estate from future inheritance disputes

There are several proactive steps you can take to protect your estate from potential inheritance conflicts. These measures can help ensure your wishes are respected and reduce the likelihood of legal challenges after you pass away.

Write your will early and keep it updated

It can be a good idea to write your will early to avoid complications for your family in the event of an unexpected passing.

Dying intestate (without a will) means your estate will be divided by default legal rules, which will most likely not reflect your wishes and could lead to conflict.

Your will is a live document, so it is wise to update it after every significant life event, such as the birth or death of a family member or a divorce.

Writing your will early and regularly updating it ensures your intentions are clear and legally binding, which can help to make sure your wishes are met, and your loved ones supported and protected from potential conflicts.

Consider establishing trusts

Trusts can offer advantages over wills for avoiding disputes because they provide clearer guidance on asset distribution and management.

Unlike wills, which can be contested, trusts operate outside the court system, reducing the likelihood of legal challenges. They also allow for more detailed instructions on when and how beneficiaries receive their inheritance.

Additionally, trusts can protect assets from claims by disinherited family members, which can help to ensure a more harmonious environment for your loved ones during a difficult time.

Write a letter of wishes

A letter of wishes differs from a will in that it is not a legally binding document. Instead, it serves as a personal note that outlines your preferences to your trustees, passes on information, and explains the rationale behind your decisions for dividing your estate.

A letter of wishes can provide clarity and address any questions your family may have about your estate plan after your passing, helping to ease potential uncertainties.

Be open with your family about your intentions

Engaging in open and honest conversations with your family about your intentions allows you to explain your decisions face-to-face, reducing the likelihood of unanswered questions in the future.

These discussions also create a space for family members to voice their thoughts, which may include perspectives or ideas you haven’t considered and might want to incorporate into your will.

Speak to a professional

A legal professional can ensure that your will is properly validated and witnessed. This can help to minimise the risk of future claims regarding external influence or questions about your mental capacity at the time of writing.

Additionally, working with a financial planner can be beneficial as they can help you create an estate plan tailored to your needs, optimise your asset distribution, and ensure you limit your IHT liabilities – all of which can help reduce the potential for conflicts and disputes regarding your estate.

Get in touch

To speak to a financial planner about how to organise your estate plan to ensure your beneficiaries are best supported and to minimise the chance of a dispute, get in touch.

Email [email protected] or call us on 01625 466360.

Please note

This blog 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.