Identifying assets in an increasingly contentious world

Contentious probate cases are increasing. As early as 2019, a consumer survey from insurer Direct Line found that one in four people would seek to dispute the wishes of a loved one by going to court to challenge the bequests in their will if they disagreed with the division of their estate. More recently according to the IRN Research report, ‘UK Wills, Probate & Trusts Market 2022: Market Trends’, the number of firms in England and Wales offering advice on contentious wills, probate and trusts more than doubled between 2018 and 2022. JMW Law reported a 45 per cent rise in contentious probate cases in 2022.

As an organisation supporting private client practitioners, we are also seeing increasing cases of non-contentious solicitors who have taken on contentious cases. There are a combination of reasons contributing to the rise in contentious probate cases. Firstly, the ‘traditional’ nuclear family unit no longer really exists. Second and third marriages and stepchildren are commonplace and have led to more complex family relations. Acrimonious divorces and extended family connections have added fuel to the fire.

In January 2022, IBB Law asked 1,000 UK citizens who had been involved in a will, inheritance, or probate dispute over the past 10 years various questions about their experience. According to the respondents, three in four people are likely to experience a will, inheritance, or probate dispute in their lifetime, with quarrels among siblings cited as the most common form of dispute.

The pandemic has also hit the pockets of many and the cost-of-living crisis has put further pressure on society. Home ownership and the dramatic rise in property prices in recent years has had an influence too. It means more is at stake and so, even if there is an up-to-date will, it could be contested. Same sex couples may also run into challenges if they find out too late that they are not protected by common law marriage unless they have a civil partnership or there is a will including provision.

High profile media coverage of cases such as those involving Amy Winehouse, Lisa Marie Presley, Michael Jackson, George Michael and James Brown have also increased awareness about disputing inheritance. Increasingly, people are fighting for what they believe is rightfully theirs.

Reasons for contention

There are multiple reasons for contentious probate including: missing assets, appropriate disposal of assets, conflicts of interest, challenges concerning the validity of a will, and intestate succession disputes being some of the most common.

Missing assets

Missing assets are one of the top reasons for contentious probate. Therefore, for law firms to untangle contentious probate cases, it is essential to identify all assets and liabilities in the administration of an estate with a robust and reliable method to mitigate against risk, avoid liability of the executor and beneficiary and avoid contention over assets, valuation, and distribution.

However, the move towards online banking has made it more challenging to identify assets. Studies show that 88 per cent of professionals believe it is getting more difficult to find estate accounts. Estatesearch carried out a survey of 2,000 UK residents in 2023 and found that 38 per cent of people don’t know the whereabouts of all their loved ones’ accounts. The survey revealed that 30 per cent of people can’t easily locate or don’t know the whereabouts of their personal pensions for example, the same applied to 32 per cent of respondents when questioned about other policies such as life insurance.

When legal firms place Section 27 notices, they do not always elicit a response in relation to liabilities and so conducting a financial asset and liability search can be helpful, especially in contentious cases. A financial asset and liability search supports due diligence, demonstrating that all reasonable efforts have been made to identify the full extent of the estate. Such searches can show up surprising results. In one recent contentious probate matter, Estatesearch ran a financial asset search as instructed by a legal firm on behalf of a client and discovered an unknown bank account containing £125,000. The search ensured the beneficiaries eventually received what was rightfully theirs.

Appropriate disposal of assets

The correct identification of assets and liabilities ensures the appropriate distribution of the estate. However, occasionally executors may be looking for personal gain and may try to muddy the water. In one case, it became apparent that the reluctant executor was being less than transparent, refusing to grant permission for an asset and liability search to be conducted. We worked with the law firm to produce wording to supply to the court, resulting in a court order compelling the executor to agree to the search, which we then conducted. Subsequently, a more accurate picture of the estate was established and, therefore, distributed.

Challenges concerning the validity of a will

The validity of a will can also be contested for numerous reasons. For example, if the deceased did not have the required mental capacity to create a will, a claimant can raise suspicion about a lack of capacity. The burden is passed back to those seeking to prove the will. A medical opinion and records are important to establish mental capacity. 

If the deceased did not have capacity to understand or approve the content of the will properly it can also be disputed. The deceased may have been vulnerable, may have had a disability, or the will may have been overly complex or signed by another person.

Another common reason we see for contention is where one of the beneficiaries believes there is a later version of the will. Here, best practice would be to obtain permission to authorise a will search. In situations where adequate provision for dependents has not been provided, cases have resulted in successful claims under the Inheritance Act.

In some cultures, wealth has traditionally been passed down the male line, but increasingly women are successfully disputing this. As reported by the BBC, Karnal Singh left his estate to his two sons, leaving nothing to his wife of 66 years or his four daughters. Lawyer, Jessika Bhatti represented Karnail Singh’s wife Harbans Kaur, with the court ruling she should get 50 per cent of the estate's net value, estimated to be worth between £1.2m and £1.9m.

Propriety estoppel

Propriety estoppel comes into play where dependents or other claimants believe and can prove they were promised an asset even though they have been excluded from a will, and claims have been successful in this regard. One instance reported by Farmer’s Weekly detailed how, in 2018, a Lincolnshire farmer’s son – Michael Spencer – won his claim to the family farm when his dad passed away on the basis that he had been promised he would inherit it and had lived accordingly, even though under the terms of a new will it was passed into a trust.

Forgery, fraud or error

Undue influence, forgery, fraud or rectification – clerical error which may mean the will does not reflect the testator’s intentions – can also result in disputes.

The high-profile case where Lisa Marie Presley’s will was called into question by her mother Priscilla Presley, the former wife of Elvis Presley, is one example. It was alleged that a 2016 amendment to Lisa Marie's will removed her mother as the estate trustee. The document misspelled her name and had a signature that appeared inconsistent. The parties reached a settlement earlier in 2023.

Intestate succession disputes

Intestacy rules come into effect when the deceased does not leave a will.

In July 2023, the intestacy rules in England and Wales were changed to increase the statutory legacy from £270,000 to £322,000. The result is that the statutory legacy or the amount of money that a surviving spouse or civil partner is entitled to receive under the intestacy rules has increased by £52,000 if the deceased passes away without leaving a will.

A surprising amount of people don’t have a will. Estatesearch’s 2023 consumer survey of 2,000 UK residents discovered less than half the respondents had a will (47 per cent) and of these, less than a third said that it was up to date (28 per cent). More than half (52 per cent) of respondents hadn’t or didn’t know if their will had been registered with a will registry service. Moreover, 14 per cent of respondents used an off-the-shelf kit or wrote their own will and, of those, 22 per cent either had not had it signed and witnessed by two independent witnesses or did not know if they had.

Do-it-yourself wills can present challenges as they may be invalid and, then, the case may need to be treated as if the deceased had passed away without a will. While there are clear rules about intestacy in England and Wales, there can still be contention and, of course, the rules do not always reflect the wishes of the deceased person.

Singer Amy Winehouse did not leave a will when she died in 2011, leaving behind an estate estimated to be worth £3m. Under the rules on intestacy, Amy’s fortune was to be split between her parents. However, this did not stop recently divorced ex-husband Blake Fielder-Civil making an unsuccessful claim on the estate.

Risk of missing assets and liabilities in contentious cases

The risk of not correctly identifying all the assets and liabilities within an estate is that subsequent discovery can result in negligence claims between the executor and the beneficiaries. While a Section 27 notice will protect the executor against debtors, it will not protect beneficiaries against future claims for missed liabilities.

Assets and liabilities discovered after estate administration will also result in further time spent on the reopened estate file and additional fees. If the amount uncovered later on takes the estate over the inheritance tax threshold, HM Revenue and Customs could implement penalties too.

Developing best practice

An executor is responsible in perpetuity for the estate. Should a case need to be reopened if assets come to light at a later date, the executor is responsible for any costs. Therefore, executors have a duty to locate all the assets in an estate in order that they do not disadvantage the beneficiaries. Failure to do this can give rise to contention.

As a firm it is recommended that a policy is formulated around asset and liability searches in both contentious and non-contentious cases to ensure due diligence. This will help prevent contention around the identification of assets, failure to locate them all, and improper administration of the estate.

Updating client terms and conditions or care letters to reflect the policy on asset and liability searching is good practice. If necessary, conduct a will search. Regular reviews of policy will ensure compliance.

Conclusion

There is an estimated £200bn+ unclaimed in the UK, which is exponentially increasing due to changes in behaviour, inadequate personal and corporate administration, and the failure to fully identify the extent of a deceased estate. A best practice approach is to formulate a policy as a firm around identifying assets and liabilities through the appropriate searches in both contentious and non-contentious cases, in addition to instructing a will search if necessary. In this way, firms can mitigate against improper administration of an estate by the executor leading to contention by using a demonstrable method of due diligence.

An asset and liability search helps ensure the executor has discharged their duty to search for all the assets in an estate and demonstrates this to help prevent contention around the identification of assets, while failure to locate them all can lead to the improper administration of the estate. An asset and liability search will also avoid missed assets and the additional administration costs after distribution and possible HM Revenue and Customs issues. In relation to missed liabilities, it will avoid personal liability and, subsequent, recovery of distributed funds from the executor and/or beneficiary.

Formulating a policy as a firm around assets and liabilities and will searches is the first step to resolving both contentious and non-contentious probate cases and is, therefore, a small price to pay for peace of mind in an increasingly contentious world.

Emma Baddaley is the strategic relationship director at Estatesearch
estatesearch.co.uk

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