Inheritance disputes are a common occurrence within families. Disputes can arise for a variety of reasons, including disagreements over the distribution of assets, challenges to the validity of a will or trust, and accusations of undue influence or fraud. These disputes can be emotionally charged and have the potential to tear families apart. This article will explore the different types of family inheritance disputes and how they can be resolved.
Following the passing of a loved one, the division of their estate comes into question and even though their will provides a split of assets, sometimes it is not as simple as hoped. The UK Inheritance Disputes Report 2022 states that three in four people are likely to experience an inheritance dispute in their lifetime and they can be sensitive topics, to say the least.
To avoid conflicts at a vulnerable time, you should always take steps to prevent inheritance disputes from arising but sometimes it’s unavoidable. Here is everything you need to know about avoiding and resolving inheritance disputes:
What is inheritance?
Inheritance is a financial term that is assigned to the assets legally left to individuals after someone dies. It can consist of anything from cash and property to material goods like stocks, cars, jewellery, vehicles, art, and antiques. Know how to minimising Inheritance Tax guide as well.
An individual usually divides their assets in their final will and identifies who receives what. There is also the possibility of paying inheritance tax on these assets, depending on whether the value of the estate meets the threshold.
What if there is no will?
It is always advised that a will should be prepared well in advance as this can help all family members get comfortable with any financial decisions. Of course, sometimes this is not always possible and if there is no will, the value of the estate will be transferred to the deceased’s surviving partner or children. If there are two or more children, the estate will be divided equally between them.
What if you want to dispute the will?
Circumstances leading up to a loved one’s death may mean that you are in your rights to dispute the inheritance stated in the will. Maybe an elderly relative was persuaded to disinherit you or perhaps you feel that you weren’t left what you deserve. In either case, you can contest the will based on the fact that it is invalid or that it fails to make a ‘reasonable financial provision’.
What is inheritance tax?
Depending on the value of the estate, your inheritance may be liable to inheritance tax. The standard rate is 40% but it won’t be applied if the value of your estate is below £325,000 or if everything above this amount is left to a spouse, partner, charity, or community sports club.
How to appoint assets?
Often, it is the little things that cause upset during inheritance disputes so a good way to avoid conflicts is to go through it one item at a time. From oldest to youngest, family members can select items, or a lucky dip system can be used to assign valuables at random until there are none left.
Types of Inheritance Disputes
1. Disagreements over the Distribution of Assets
One of the most common types of inheritance disputes is disagreement over how assets should be distributed among family members. This can occur when a will or trust is not clear about who should receive what or when there are multiple interpretations of the deceased’s wishes. For example, a parent may leave a family business to one child and cash to another, causing disagreements over what constitutes an equal distribution.
2. Challenges to the Validity of a Will or Trust
In some cases, family members may challenge the validity of a will or trust, claiming that it was not executed properly, the deceased lacked capacity to make a will, or was unduly influenced by another party. These challenges can be difficult to prove and can prolong the distribution of assets.
3. Accusations of Undue Influence or Fraud
Family members may also accuse one another of undue influence or fraud in relation to the estate planning process. This can occur when one family member manipulates the deceased into changing their will or trust to benefit them, or when one family member takes advantage of an elderly or vulnerable relative.
4. Family Estrangement
In some cases, inheritance disputes can arise because of pre-existing family tension or estrangement. Family members may feel resentful if they believe they have been left out of the will or received a smaller share than other family members. This can be exacerbated if there are underlying issues in the family dynamic.
Resolving Inheritance Disputes
Mediation
Mediation is a voluntary process in which a neutral third party helps family members reach a mutually agreeable solution. This can be a more cost-effective and less time-consuming alternative to litigation.
Litigation
Litigation is the process of resolving disputes through the court system. This can be a lengthy and costly process, but may be necessary if family members are unable to reach an agreement through other means.
Alternative Dispute Resolution
Alternative dispute resolution (ADR) refers to methods of resolving disputes outside of the court system, such as arbitration or collaborative law. ADR can be less formal and less expensive than litigation, but still requires the parties to work together to reach a resolution.
Conclusion
Inheritance disputes can be emotionally charged and have the potential to tear families apart. It is important for family members to communicate openly and seek professional advice to ensure that the deceased’s wishes are respected and that assets are distributed fairly. By understanding the different types of inheritance disputes and the various methods for resolving them, families can work together to minimize conflict and preserve relationships.
