Claims that can be brought against an estate article banner image

Whether you run your business as a limited company, a formal partnership or more informally, you need to consider what would happen to your business if you or another one of its owners die.

Planning ahead will not only help your business but also your family and could well mean that the types of claim referred to below will be avoided. It’s a basic principle of English law that a person may leave their property to whoever they wish. In the absence of a Will, property owned by the person who has died, which is known as their estate, will be distributed in accordance with the Intestacy Rules.

The gifts made in a Will or the division of an estate further to the Intestacy Rules may not serve your business well, or may cause a member of your family or a joint owner of your business, to be disappointed.

Why would someone wish to challenge the provision of a Will or the distributions made under the Intestacy Rules?

In this article we concentrate on one particular type of claim. That claim arises because one or more individuals believe that either a Will or the Intestacy Rules, do not make reasonable financial provision for them. This might well be because the person who has died has tried to safeguard their business but in so doing failed to provide for those who are dependant upon them or for whom they have an obligation to provide for.

What type of claims can be made against an estate?

There are three main types of claim which can be made:-

• The Will is invalid because, for example, the deceased lacked capacity when the Will was made and so it should be struck out

• The Will or the intestacy rules do not make reasonable financial provision for you or another family member

• The Will or the intestacy rules do not reflect a promise or an agreed arrangement made by the person who has died

This article will consider the second type of claim detailed above.

What happens if reasonable financial provision is not made? 

A person who believes that reasonable financial provision has not been made for them, whether in a Will or under the Intestacy Rules, can bring a claim against an estate for financial provision. These claims are brought under an act of Parliament known as the  Inheritance (Provision for Family and Dependants) Act 1975.

Who can make a claim for reasonable financial provision?

You can only make a claim for reasonable financial provision if you are:

• A spouse or civil partner of the deceased

• A former spouse or civil partner of the deceased who has not remarried or entered into a new civil partnership

• An unmarried partner of the deceased

• A child of the deceased or a person treated as a child

• Someone who was dependant on the deceased

What kind of order can the Court make?

The Court has a wide discretion and can even bring into account property which does not form part of it, such as jointly owned property or property that has been gifted before the person passed away.

The wide discretion makes it very difficult  to predict the outcome of a claim or claims of this type. Whilst a Court would be reluctant to prejudice the carrying on of a business, if a Judge feels that the person who has brought the claim has not received reasonable financial provision and there is no other way financial provision can be provided, then this could mean that a business or a part of it would have to be sold.

We have the expertise here at  Stephens Scown to advise you how to plan ahead and also how to deal with any claims that might be brought against you.