Why more fam­i­lies than ever are fall­ing out over in­her­i­tance

Once, the el­dest son in­her­ited and that was it. Now, other rel­a­tives are de­mand­ing their share in court, says Harry Bren­nan

The Sunday Telegraph - Money & Business - - Front page -

Fam­i­lies are be­ing torn apart by in­her­i­tance and suc­ces­sion dis­putes about fam­ily busi­nesses. Highly pub­li­cised cases, of­ten in­volv­ing farms, have raised aware­ness of the le­gal ar­gu­ments that can over­turn some­one’s fi­nal wishes and have led to a spate of claims in the courts. One dis­pute cur­rently go­ing through the High Court in­volves Clive Shaw, 55, a dairy farmer who re­port­edly does not like cows. He is mak­ing a claim for the fam­ily farm af­ter a dis­agree­ment with his par­ents, who have writ­ten him out of their wills.

It is the lat­est in a se­ries of sim­i­lar le­gal claims made this year. Lucy Hab­ber­field brought a claim in the High Court against her mother in Jan­uary. Af­ter the death of her fa­ther, her mother be­came the sole owner of the fam­ily farm in Som­er­set, de­spite re­peated prom­ises over the years that Ms Hab­ber­field would in­herit when her fa­ther died. On the ba­sis that she had de­voted much of her life to the farm, work­ing long hours for lit­tle pay and tak­ing lit­tle hol­i­day, she was awarded a lump sum of just un­der £1.2m to set up her own farm­ing busi­ness.

John Gee made a sim­i­lar claim in the High Court in April. Mr Gee, 60, had worked on the farm that had been in the fam­ily for gen­er­a­tions un­til his re­la­tion­ship with his fa­ther broke down in the years be­fore his death.

His fa­ther, de­spite al­leged prom­ises to leave the farm to John, his el­dest son, left his share of the busi­ness to his other son, who did not work on the farm. John’s mother later gave him her share of the busi­ness, see­ing her late hus­band’s ac­tions as un­just. John Gee won his claim against his brother’s in­ter­est for the lion’s share of the farm on the ba­sis of the prom­ises he was re­port­edly made.

Thomas Du­mont, a bar­ris­ter of Rad­cliffe Cham­bers, said the re­cent in­crease in claims was driven by me­dia cov­er­age of land­mark cases such as the “Cow­shed Cin­derella” case. As we re­ported in 2015, a farmer’s daugh­ter won a £1.3m claim af­ter her par­ents went back on prom­ises that she would in­herit. “We are see­ing more cases like this,” Mr Du­mont said. “More and more fam­ily busi­nesses are be­ing af­fected. There was a time when the will was thought to be sacro­sanct, but peo­ple are be­com­ing aware that that may not al­ways be the case.”

Such claims are known as “pro­pri­etary estop­pel” – a dis­pute in the trans­fer of own­er­ship of an as­set.

Con­stance Mcdon­nell, of Serle Court, an­other bar­ris­ters’ cham­bers, said there were three com­mon ar­eas of dis­pute: chal­lenges against wills that were not deemed valid, chal­lenges to in­her­i­tances where not enough pro­vi­sion had been made, and fam­ily busi­ness claims.

Dis­putes are be­com­ing more com­mon, she said, and can in­volve any fam­ily busi­ness or as­set: a house, shares, even a yacht.

“Peo­ple read the news­pa­per and re­alise they have the op­por­tu­nity to bring these cases,” Miss Mcdon­nell said, adding that they could now eas­ily af­ford le­gal rep­re­sen­ta­tion through “no win, no fee” ar­range­ments or through lit­i­ga­tion fi­nanc­ing, where pools of in­vestors back your claim and take a share of the pay­out if you win.

Mr Du­mont said times were chang­ing for older gen­er­a­tions’ ar­guably out­dated ideas of suc­ces­sion, where ev­ery­thing was handed down to the el­dest son.

“The tough old farmer or tough old busi­ness­man, as he gets older, starts to lose con­trol as oth­ers try to mus­cle in,” he said. For ex­am­ple, a wife might want the busi­ness to be passed to all the chil­dren, not just the el­dest, and younger sib­lings could feel ag­grieved at be­ing left out.

Luke Wat­son, a part­ner at law firm Mogers Drewett, said: “Years ago there was a much more gen­dered ap­proach, where the ma­jor­ity of the fam­ily busi­ness or farm went to the el­dest son. Now wives and oth­ers are chal­leng­ing this and caus­ing rifts be­tween sib­lings, as well as be­tween the par­ents and the chil­dren.”

Your fi­nal wishes may not be as wa­ter­tight as you first thought. For ex­am­ple, if you do not make

‘At one time the will was thought to be sacro­sanct. Not any more’

a rea­son­able pro­vi­sion in your will for some­one who is a sig­nif­i­cant part of your life and who re­lies on you fi­nan­cially, your last wishes can be con­tested.

Sim­i­larly, Miss Mcdon­nell said if you in­duced some­one to be­lieve over the years that they would in­herit or have a stake in a busi­ness, and they had de­voted much of their life to the busi­ness on that ba­sis, you would be un­der an obli­ga­tion to ful­fil that prom­ise.

Even if you have all the le­gal doc­u­ments in place to de­fend your change of heart, Mr Du­mont said, if you have made a prom­ise con­sis­tently there is not much you can do.

“Some­times these dis­putes oc­cur be­fore some­one has ac­tu­ally died, forc­ing the busi­ness owner to es­sen­tially give up his in­ter­est,” he added.

Mr Wat­son said fam­i­lies should sit down and have a frank dis­cus­sion about plans for suc­ces­sion to avoid dis­putes later on.

Talk­ing to your fam­ily is the best thing you can do, Miss Mcdon­nell said, adding that in a lot of cases peo­ple com­pli­cated things by mak­ing dif­fer­ent prom­ises to dif­fer­ent peo­ple in an at­tempt to main­tain “fam­ily peace”, for ex­am­ple.

“In ex­treme cir­cum­stances, where some­one has done you se­ri­ous wrong or harm, or com­mit­ted a se­ri­ous crime that makes them un­suit­able as a ben­e­fi­ciary, you can write them out of your will. You will need to make a strong case for the ex­clu­sion in writ­ing – you can even make a video to sup­port your case.”

If a claim was later taken to court, she added, this could help to sway a judge’s de­ci­sion. “It re­mains to be seen how judges will con­tinue to ap­proach these cases,” she said.

As long as you un­der­stand that a claim could be made against your last wishes and you have made a doc­u­mented ef­fort to stave off that claim, there is not much more you can do, she con­cluded.

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