Where a testator wishes to exclude a person who is a potential applicant under the Inheritance (Provision for Family and Dependants) Act 1975 (the 1975 Act), or perhaps make a gift to them but not a substantial one, one of the most common questions you might receive is what can be done to minimise the chance of that person bringing an application under the 1975 Act. Bar making reasonable provision for that person, there is little that can be done to stop them attempting an application. There are however steps that could be taken by clients to stop an application being successful.
Letter of Wishes
The most common step to take when making an exclusion or making potentially unreasonable provision would be for the client to write a letter of wishes detailing their reasons for their decision. Including the reasons why other beneficiaries are inheriting in their place is also advisable. A separate letter of wishes is recommended, rather than detailing these in the will itself, as the will becomes a public document whereas the letter of wishes will not.
If an application under the 1975 Act is made, the act does not require the courts to have regard to the deceased’s reasons for their decision, however the courts can consider these relevant if the reasons are good and based on truth. The letter of wishes is not sufficient to prevent an application being made entirely but will help explain why the deceased acted as they did, why they think they are acting reasonably and show they are not acting under any delusions.
A specific clause could be included in the will to state that the testator has specifically excluded or made lesser provision for that particular person. Doing so makes it clear from the face of the will that this person has not been excluded in error and that the testator has done this intentionally.
Where the testator is leaving a potential claimant something, but likely not enough to be considered as reasonable provision, they may wish to consider a forfeiture clause in the will. This clause would state that if any beneficiary under the will brings a 1975 Act application or any other proceedings to contest the validity or provisions of the will, the gift to that person would fail.
This clause does not prevent a claim being made, but it gives the potential applicant the risk that if they do attempt proceedings against the estate and they fail that they will lose any entitlement under the will.
There are a number of situations where trusts may be advisable as a way to mitigate the risks of a 1975 Act application. A number of examples are provided below.
A common example of this could be where a person wishes to exclude a disabled/vulnerable child, passing assets instead to another child wishing that the benefitting child ‘looks after’ their sibling. This could leave open the risk of a 1975 Act claim, whereas passing a share of the estate to a disabled person’s trust would mitigate this risk.
Where a surviving spouse or civil partner is in care, a life interest trust could be considered rather than excluding them outright.
There may be times where a discretionary trust could be considered where a beneficiary has requested to the testator that they be removed. We considered this in more detail in a previous article.
We would advise against the use of a discretionary trust as a way to mask or hide the exclusion. As an example if the testator is excluding their son and wishes their estate to go to their daughter or her descendants we would advise against the use of a discretionary trust with daughter, her descendants and the son as potential beneficiaries, with the letter of wishes detailing the wish that the trustees distribute everything to the daughter. Whilst this may mitigate the chances of a 1975 Act application, as on the face of the will the son is a potential beneficiary, the likely effect of this would be the son bringing actions against the trustees instead.