Beneficiary Disputes

What happens if one beneficiary wants to challenge the terms of the will?

If one beneficiary considers a will invalid, they may wish to contest it. They may argue that a previous will should be followed instead or that the rules of intestacy should apply if there is no previous will.

However, the person making the claim may not consider the will invalid but may think it contains a mistake. This may be due to the professional who drafted the will misunderstanding the deceased's instructions or the will not stating precisely what was intended. This can result in disagreements between the beneficiaries if, for example, one beneficiary would "lose out" if the claim was successful.

If a beneficiary wishes to challenge the terms of a will, they will need first to investigate the circumstances in which the will was made. This will usually involve requesting a copy of the file of the firm that prepared the will (if there is one). They may also need to request copies of medical records and obtain witness evidence from the deceased's friends, family or carers. It will depend on the basis of their claim. The beneficiary defending the claim must then consider the evidence and prepare a defence.

Ultimately, if an agreement cannot be reached, the person challenging the validity of the will must issue a court claim seeking an order that the latest will be declared invalid. The court will then need to decide whether the will is valid. If it is, the estate can be distributed on that basis. If not, the previous will must be followed, or if there is no previous will, the intestacy rules will apply.

If the beneficiary challenging the validity of the will delays in making their claim, the beneficiary defending the will (or the executors) can issue a claim for an order to declare the will valid.

What happens if one beneficiary is unhappy with the executors but the others are not?

Sometimes, a beneficiary may feel that the executors favour another beneficiary over them. This can not only lead to hostility between the beneficiary and the executors but also between the beneficiaries themselves if one beneficiary is happy with the executors and another is not.

The unhappy beneficiary may consider that a court application is necessary to decide a point they are unhappy about. For example, they may think that the estate accounts are incorrect. If other beneficiaries are satisfied with the accounts, they can become frustrated by the inevitable delay that this can cause. There is also the possibility that the court will order that the estate pay the executors' costs. This can mean a reduction in the value of the estate, which will impact the value of any residuary beneficiary's share. Understandably, a beneficiary may take issue with such a court application.

If a beneficiary is particularly unhappy with an executor, they may apply to the court to remove the executor. Again, this can cause delay and cost, personally impacting the beneficiaries. If a beneficiary is happy with the conduct of the executor, they may also not be happy about the prospect of them being removed from the role. There may also be a dispute about who the replacement executor should be.

What happens if a beneficiary feels they should be entitled to a greater share of the estate?

Sometimes, there may be no issue with the validity of the will, but a beneficiary may feel that they should receive a greater share of the estate anyway. Or someone who would not otherwise benefit from the estate may think that they should. The claim that someone would make in these circumstances is a claim for greater provision from the estate under the Inheritance (Provision for Family and Dependants) Act 1975.

Whilst the executors would be named as defendants initially, the estate's beneficiaries should also be included as parties as they are personally affected by the claim. The executors should remain neutral, whereas the beneficiaries will be entitled to defend the claim.

Such claims can be costly as they involve a lot of disclosure. The person making a claim, for example, will most likely need to provide evidence as to:

• why they are entitled to make a claim, and
• why they need more significant provisions from the estate.

This will usually involve disclosing their financial position (including bank statements, income, outgoings, assets, and liabilities). It may also involve disclosing their medical records, employment status, and where they have lived for the past two years. The defendant will then need to scrutinise such evidence. The defendant may also wish to make a needs-based defence, meaning that they may defend the claim on the basis that they need their inheritance. If so, they, too, will have to disclose evidence of their needs.

Such claims can become very hostile, as there are often very differing views as to what is "fair" and "what the deceased would want". Such claims can be made by people who the deceased had not enjoyed a good relationship with, which can lead to anger and frustration on the part of those named in the will.

Ultimately, if an agreement cannot be reached, the person claiming a greater interest in the estate will need to issue a court claim. The other beneficiaries will then need to decide whether to defend it.

What happens if one beneficiary considers an asset should form part of the estate and another does not?

Sometimes, beneficiaries disagree on whether a property, a personal item, or cash in a bank account forms part of the estate. The executors may have limited personal knowledge of the deceased's individual situation, which may differ from what the documents show.

For example, whilst a property may be held in the name of 'Person A', a declaration of trust may have been signed that meant that 'Person A' actually held the property for the benefit of 'Person B'. Or there may be a joint account in the name of the deceased and someone else. The starting point is that jointly held assets pass to the survivor regardless of the terms of the deceased's will. However, it is not uncommon for older people to open a joint account with a child of theirs to make it easier for that child to give them practical support. If only the deceased contributed towards the joint account, it may be that the monies form part of the estate. A personal item, such as a family heirloom, may have been gifted by the deceased to one of their children whilst they were alive, leading to a disagreement on whether it forms part of their estate.

Such disputes can be very contentious as the claim tends to be that the reality is different to what the documents would suggest. This can be challenging, but not impossible, for a beneficiary to prove.

If agreement cannot be reached, one of the beneficiaries will need to issue a court claim, either for an order that the asset forms part of the estate, or that it does not.

What happens if a beneficiary is concerned that another beneficiary financially abused the deceased whilst they were alive?

Often, those named in the deceased's will were also named as their attorneys while the deceased was alive. A Lasting Power of Attorney ("LPA") is essentially a document that any adult with capacity can make. It appoints one or more people to look after the deceased's affairs while they are alive. There are two types: a Health and Welfare LPA and a Property and Finances LPA.

Whoever is named as attorney in a Property and Finance LPA may be able to use it to deal with the donor's (the person who made the LPA's) finances. Usually, this is done with the very best intentions. Perhaps the donor has lost the capacity to deal with their finances, or an older parent may rely on their adult children to assist them with online banking. However, there is a risk that the power can be abused, and the attorney may stray into the realms of financial abuse.

Of course, it is not only an attorney who may be accused of financial abuse. Someone may have assisted the deceased and had access to their debit or credit cards or online banking.

However, sometimes the concerning transactions are not discovered until after the donor has died. If so, the executors and beneficiaries will deal with any dispute. The executor will have a role to play, as the executor will need to investigate any suggestion that monies are owed to the estate. However, those personally affected, being the beneficiaries, will have a key role to play in the dispute.

The person alleging financial abuse will need to provide evidence. This is usually in the form of bank statements that highlight the concerning transactions and explain what is concerning about them. The defendant will then need to provide evidence that they were acting on the deceased's authority or, if the deceased lacked capacity, that the transactions were in the deceased's best interests and authorised by the LPA.

Again, such disputes can be very hostile because the allegations being made are often very personal. However, the feeling that someone may have taken advantage of the deceased can be very emotive. As with many disputes involving estates, the person who could offer the best account of what happened, the deceased, is not around to do so.

If agreement as to the outcome cannot be reached, the beneficiary arguing that there has been financial abuse will need to issue a court claim for an order as to whether the monies they consider have been taken need to be returned to the estate.

What happens if the beneficiaries disagree as to whether the deceased's property should be sold?

Sometimes the terms of a will are clear that a property must be sold, and the proceeds of sale gifted to certain people. Even if this is not stipulated in the will, it may be that the property has to be sold in order for the estate's liabilities to be paid. In such circumstances there will be very little chance of arguing that the property should not be sold.

However, sometimes there may be more flexibility. For example, if the property falls into the residuary estate and there is no need to sell it, one beneficiary says they would prefer to inherit the property rather than cash. In theory this is fine, but disputes can arise if there is disagreement about the value attributed to the property. If all beneficiaries are to receive cash, there can be no doubt that they have all received the same share. But where one is to inherit a property and the other cash, there is always the possibility that the property will be more or less valuable than initially thought, and therefore, the beneficiary who receives it may inherit more or less than the beneficiary who inherited cash.

The sorts of things that the beneficiaries may disagree on are:

• Whether the property should pass to one beneficiary at all.
• The value of the property.
• Whether the beneficiary receiving the property should also receive the content of the property.

Emotions tend to be very high following the death of a loved one, and if there is a disagreement as to what happens to the "family home", this can lead to hostility.

Ultimately, if the beneficiaries cannot agree, one of them, or the executors, may need to apply to the court for an order directing how the estate should be dealt with.

What happens if the beneficiaries agree that the deceased's will should be varied, but they cannot agree on the new terms?

The beneficiaries of an estate can agree to vary the terms of the deceased's will. There are different reasons why they may do so, including:

• To ensure that the estate passes in a more tax advantageous way.
• To ensure that someone who has been excluded from the will is included.
• To ensure that a particular asset passes to a specific person.

However, just because the beneficiaries agree that a will should be varied, they may have differing views on the variations.

For example, the beneficiaries may agree that it would be more tax advantageous for the deceased's property to pass to their children, as this may mean that a tax exemption applies that would not if it passed to the original intended beneficiary. But unless the original intended beneficiary is particularly generous, they will likely want to ensure that they receive a gift of equivalent value from the estate. This could be cash or an interest in the deceased's business.

Agreeing on precisely what they will receive can be challenging. To add to the pressure, if the variation is for tax reasons, it must be done within two years of the deceased's death. Otherwise, the tax advantages will not apply. This can lead to disagreements if one beneficiary feels another is causing unreasonable delay.

The challenge will be that if no beneficiary has a particular "claim," that means the will should be varied; it may be that the only real bargaining power is the potential cost to the estate if the estate is not varied. The courts are not minded to vary a will just to make them more tax advantageous.

What can you do if a beneficiary refuses to negotiate?

In each of the above types of beneficiary dispute, it will always be in the best interests of all the beneficiaries to try and reach agreement without involving the court. This is due to the inherent costs (financial, emotional and time) and risks associated with court proceedings. However, one beneficiary cannot force another to negotiate, and sometimes, despite the best of intentions, negotiations do not result in an agreement.

If this is the case, it may prove necessary to issue a court claim. This should be seen as a last resort, but in some cases, it is necessary.