Second Marriages And Inheritance: Potentially Rocky Seas Ahead
Posted on 15th March 2023 at 11:51
Continuing with our current theme of financial protection for cohabiting partners, this month we’re going to take a closer look at making a claim under the Inheritance (Provision for Family and Dependants) Act 1975.
Now, needing to make a claim under this Act is not a desirable outcome - it’s more of a last resort when all other possibilities have been exhausted. But let’s dive in.
What is the purpose of the Act?
The Inheritance Act 1975 is designed to grant financial relief to those who should perhaps have benefited from an estate, and are left in real need due to a lack of reasonable financial provision.
For example, let’s say that Gary is on his second marriage. His first wife, Nancy, passed away, leaving Gary with her family inheritance and their three now-adult children.
Gary met Stella and married her after a whirlwind romance (g’on Gary - good for you!). After five happy years together, Gary died peacefully in his sleep. However, he left something of a financial fiasco behind.
Gary had updated his will so that everything was left directly to his new wife, Stella. He made no reasonable provision for his three children from his first marriage. This meant that Stella not only inherited all of Gary’s money, but she also inherited the money that Nancy had left to Gary. And Stella’s will states that she wants to leave everything to her own children, including everything she’s inherited from Gary and Nancy, leaving nothing for Gary’s children. Wicked stepmother indeed.
But all is not lost! Gary’s children can make a claim against his estate under the Inheritance Act 1975.
How does it work?
While the UK doesn’t have laws providing for forced heirship (meaning that you can theoretically leave your money to whomever you choose), there is a backup plan.
According to gov.uk, the Inheritance (Provision for Family and Dependants) Act 1975 contains provisions enabling the courts to order financial provisions out of the estate of a deceased person for his or her family and dependants. The I(PFD)A 1975 applies only in England and Wales - there are no such provisions in Scotland.
This doesn’t mean that if you disagree with how Granny has divided her estate that you can automatically take it to court. UK courts have a limited power to make orders which interfere with the effect of a will (or the effect of the intestacy rules where there is no will) where there is judged to be a failure to make reasonable financial provision for a defined class of people connected to the deceased.
The Act can only be triggered if one or more of this defined class, if they can demonstrate that the provision actually made (which might be no provision at all), is not reasonable.
The power of the Court to grant relief under the I(PFD)A 1975 is limited to ordering only such provision as is reasonably necessary for the maintenance of the applicant. This standard means the applicant should be able to live ‘at neither a luxurious nor poverty-stricken level’.
A surviving spouse or civil partner is entitled to such financial provision as is reasonable in all the circumstances, whether or not it is required for their maintenance. This often means that a spouse or civil partner would be entitled to enjoy the same standard of life which they enjoyed before their partner’s death.
The burden of showing that reasonable provision has not been made falls on the applicant.
Who can claim under the Inheritance Act 1975?
The persons who may apply for an order under the I(PFD)A 1975 are the deceased’s
surviving spouse or civil partner (or former spouse who has not remarried or former civil partner who has not formed a new civil partnership)
child or person treated by the deceased as a child of their family
from 1 October 2014 onwards, following changes in the Inheritance and Trustees Powers Act 2014, a child in any family in which the deceased at any time stood in the role of parent
a cohabitee. A person will be in this category of claimant if, during the whole of the two-year period preceding the deceased’s death, they lived in the same household as the deceased and as the husband or wife of the deceased
any other person who was being wholly or partly maintained by the deceased immediately before their death. However, for deaths on or after 1 October 2014 this is amended so that a person is only treated as being maintained by the deceased if the deceased was making a substantial contribution in money, or money’s worth towards the reasonable needs of that person
So, that’s the Inheritance Act in a nutshell. As we said earlier, needing to make a claim under the Act is not the most desirable outcome. Better to speak to an expert and get your will and estate in order.
Had Gary, Nancy and Stella written their wills with the help and advice of an expert, there would have been no need to refer their case to the courts. Nancy and Gary could have used a combination of a Will and a Discretionary Trust to ensure their children would not be cut out from their potential inheritance. We’ll take a closer look at Discretionary Trusts in the next blog.
If you’re unsure about any of the matters raised here, then please do call - 01234 713021 - or drop me an email at email@example.com I’d welcome the chance to help.
Tagged as: second marriages
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