Paul Fursman
Legal
When inheritance plans start leaking
With increasing rates of re-marriage and the resulting blended families, parents need to take action if they wish to protect inheritance for children from a previous relationship.
Any fans of the mega-hit TV series Succession, which follows the fortunes of the Roy siblings, will know how fraught inheritance issues can be when there’s no clear inheritance plan in place, especially when multiple spouses and step-families are involved.
But it’s a story that’s not restricted to the super rich like the Roys, as rising numbers of re-marriages are creating more blended families and are leading to inheritance disputes.
In one recent case to reach the High Court, three siblings found themselves cut out of their inheritance when their stepmother changed her Will in favour of their stepbrother, after their father died.
The McLean couple had made what are known as ‘mirror Wills’ in 2017, where each reflects the other, so no matter who dies first the outcome should be the same. Those Wills shared the couple’s estate equally between four children, three from Mr McLean’s first marriage and the younger son born during their marriage. When the older siblings found themselves cut out of the later Will, they went to Court, claiming that their father had trusted his second wife “implicitly” over the terms of the inheritance.
The Court has to decide whether the doctrine of mutual Wills applied to their stepmother’s original 2017 will, which would mean there was an agreement between the couple to make Wills with substantially the same terms and conferring reciprocal benefits, and to not revoke them without the consent of the other.
According to latest figures from the Office for National Statistics, almost 30% of marriage are now second or subsequent marriages. Behind the figure is a growing complexity in family structure, with step-mothers, step-fathers, step-children and step-siblings.
Manzurul Islam, Head of Wills & Probate at Mullis & Peake LLP, said:
“In general, a person is free to update and amend their Will whenever they choose. This is the case even if a couple prepare mirror Wills. An exception to this rule is for ‘mutual’ Wills. A mutual Will has similarities to a mirror Will, but the key difference is that the two parties contract and agree not to independently amend or revoke their Wills. Such an agreement is usually recorded within the Will itself. Without an explicit agreement not to revoke the Will, any surviving partner may make a new Will with very different outcomes, and that’s why it’s important to be clear from the outset.
“Unfortunately for the McLean children, their father and step-mother had mirror Wills. They are now reliant on the Courts to decide whether those mirror Wills meet the necessary test to also make them mutual Wills. It is a hard standard to meet but if successful, it would mean the original mirror Wills could not be changed so all children would inherit. The later, updated Will where the three older children were left out would be invalid.”
“Whilst a clearly worded mutual Will might have avoided the McLean case going to Court, they do have significant risks and are being used less and less.
“Another option is to create a trust within a Will. This can be a more flexible and effective way to make sure that the surviving partner has all they need while alive, but at the same time making sure that children from an earlier relationship do not miss out. It require specialist help to get things right, but it means you can be sure things will play out as you intend.”