Family provisions and post-death variations

Question 1

Inheritance (provisions for family and dependants) act - What it’s used for

Answer 1

The act allows certain categories of people who may be aggrieved because they have been left out of a will or are not inheriting on an intestacy to apply to the court for a benefit from the estate following the testator’s or intestate’s death. It can also be used by a person who has received some benefit under the will or intestacy but is dissatisfied with the amount.

Question 2

Inheritance (provisions for family and dependants) act - Who can make a claim?

Answer 2

• Spouse/civil partner
• A former spouse/civil partner who has not remarried
• A child of the deceased
• Any person treated by the deceased as a child of the family in relation to any marriage/civil partnership
• Any person who immediately before the death of the deceased was being maintained by the deceased either wholly or in part
• Any person who during the whole of the period of two years ending immediately before the death was living:
  In the same household as the deceased, as the husband, wife or civil partner

Question 3

Inheritance (provisions for family and dependants) act - Who can make a claim? - Definition of maintained

Answer 3

A person is maintained if the deceased was making a substantial contribution in money or money’s worth towards the reasonable needs of that person . Whether it was a one-off payment or whethere there is constant flow

Question 4

Inheritance (provisions for family and dependants) act - Who can make a claim? - Adult child

Answer 4

If the adult child is in employment and likely to have earning capacity for the foreseeable future it is unlikely that their application will succeed without some special circumstances such as:
- A moral obligation owed by the deceased
- The adult child having a disability
- The adult child working for the deceased for many years for a low wage
- The child making sacrifices in order to care for the deceased

Question 5

Inheritance (provisions for family and dependants) act - Who can make a claim? - Cohabitants who have not formalised their relationship

Answer 5

Cohabitants who have not formalised their relationship by marriage or the formation of a civil partnership can apply but only if they satisfy:
- They must have been living in the same household as the deceased
- As the husband, wife or civil partner
- This must have been for the whole of the two years immediately preceeding the deceased’s death

Question 6

Inheritance (provisions for family and dependants) act - Time limit

Answer 6

Applications must be made within 6 months from the date of the grant of representation

Question 7

Inheritance (provisions for family and dependants) act - Grounds for a claim

Answer 7

The only ground for a claim is that the disposition of the deceased’s estate effected by his will or the law relating to intestacy or a combination of his will and that law is not such as to make reasonable financial provision for the applicant.

Question 8

Inheritance (provisions for family and dependants) act - Grounds for a claim - Grounds for judging reasonable financial provision - Surviving spouse standard

Answer 8

The surviving spouse standard allows a surviving spouse or civil partner such financial provision as is reasonable in all the circumstances whether or not that provision is required for his or her maintenance. A relevant factor is how much the spouse or civil partner might have expected on divorce

Question 9

Inheritance (provisions for family and dependants) act - Grounds for a claim - Grounds for judging reasonable financial provision - The ordinary standard

Answer 9

The ordinary standard applies to all other categories of applicant and allows such financial provision as it would be reasonable in all the circumstances for the applicant to receive for his maintenance. Maintenance = payments which enable the applicant to discharge the cost of their daily living at whatever standard of living is appropriate to them.

Question 10

Inheritance (provisions for family and dependants) act - Grounds for a claim - Grounds for judging reasonable financial provision - Guidelines to assist the court

Answer 10

The act contains guidelines to assist the court in determining whether the will and/or intestacy makes reasonable financial provision for the applicant. The common guidelines should be considered for every applicant. There are also special guidelines for each category of applicant.

Question 11

Inheritance (provisions for family and dependants) act - Grounds for a claim - Grounds for judging reasonable financial provision - Guidelines to assist the court - Common guidelines

Answer 11

1) Financial resources and needs of the applicant, other applicants and beneficiaries of the estate now and in the foreseeable future
2) The deceased’s obligations towards any applicant or beneficiary
3) Size and nature of the estate
4) The physical or mental disability of any applicant or beneficiary
5) Anything else which may be relevant

Question 12

Inheritance (provisions for family and dependants) act - Grounds for a claim - Grounds for judging reasonable financial provision - Guidelines to assist the court - Special guidelines

Answer 12

The special guidelines set out in the act vary with the category of applicant. For example, where the applicant is the surviving spouse or civil partner, the court takes into account the applicant’s age and contribution to the welfare of the family (including looking after the home or caring for the family), the duration of the marriage or civil partnership and the likely financial settlement if the marriage or civil partnership had ended in divorce or dissolution rather than death

Question 13

Inheritance (provisions for family and dependants) act - Courts powers

Answer 13

The court has wide powers to make orders against the ‘net estate’ of the deceased, including orders for periodical payments, lump sum payments or the transfer of specific property to the applicant. The ‘net estate’ against which an order can be made includes not only property which the deceased has, or could have, disposed of by will, but also the deceased’s share of joint property passing by survivorship if the court so orders

Question 14

Post death variations and disclaimers - Definition

Answer 14

Despite the terms of the will or the operation of the intestacy rules after a person dies it is possible for the beneficiaries to alter what happens to the estate.

Question 15

Post death variations and disclaimers - Situations in which this might happen

Answer 15

A beneficiary may feel that a member of the family has been unfairly excluded or needs a larger legacy. Adult beneficiaries may decide that they would prefer their legacy to go to their children.

Question 16

Post death variations and disclaimers - How can property be directed? - Lifetime gift

Answer 16

A lifetime gift by the beneficiary of an inheritance under a will or under an intestacy

Question 17

Post death variations and disclaimers - How can property be directed? - Post-death disclaimers

Answer 17

Disclaimers amount to a rejection of the assets inherited under the will or the intestacy law or by survivorship. the disclaimed assets then pass as though the original beneficiary has predeceased. Disclaimers are only appropriate if following rejection the property passes to the person whom the original beneficiary intends to benefit. You CAN’T disclaim if you’ve already received any benefits

Question 18

Post death variations and disclaimers - How can property be directed? - Post-death variations

Answer 18

The restrictions on disclaimers don’t apply. A beneficiary can direct where the benefit is to go and on what terms. The original beneficiary re-writes the deceased’s will or intestacy rules. They can also be used to redirect the deceased’s interest in joint property which passes by survivorship. Must be 18.

Question 19

Post death variations and disclaimers - How can property be directed? - Post-death variations - Vary to elect - Definition

Answer 19

To overcome the taxation problem Inheritance tax act allows variations to be ‘read back’ into the will - treated as though the deceased gave the property direct to the new beneficiary.

Question 20

Post death variations and disclaimers - How can property be directed? - Post-death variations - Vary to elect - Conditions

Answer 20

The conditions are that the disclaimer/variation:
- Is in writing and signed by the original beneficiary
- Is within 2 years of the deceased’s death
- Is not made for a consideration in money or money’s worth

Question 21

Variation requirements

Answer 21

Must be in writing, made within 2 years of the deceased’s death, contain an election that is to be read back for IHT and CGT and must not be for consideration in money or moneys worth

Question 22

Where u are domiciled

Answer 22

If the person does not die domiciled in England and wales no one can make a claim