How to identify and minimise disputes around inheritance and the family home

We have seen an increasing trend of cases where one of the beneficiaries simply refuses to leave the family home and their siblings are left looking at legal action in order to be able to seek their share of the estate.

These cases can be difficult to resolve, so, if such circumstances are relevant to your clients, they are worth considering as part of the estate planning process.

Considering your beneficiaries

It is important to consider not only the reasons why a child may be living with your client, but also what options they may have upon the parent’s death. If the family home is of significant value, meaning that, upon a division of the estate, each child is likely to inherit a sum sufficient to enable them to purchase a modest home for themselves, there may be little concern for the “resident child”.

However, what might be the best option if the family home is not sufficiently valuable, or there are a number of children between whom the proceeds are to be split? If one child is likely to be left in financially straitened circumstances, they may potentially bring a claim for additional financial provision against the estate, particularly if they have been supported for a number of years with free accommodation at their parent’s home.

Financial provision disputes can be expensive and challenging to resolve. Depending upon the ages and financial circumstances of the other beneficiaries of the estate, consideration might be given to how the use of life interest trusts could help to support the resident child during their lifetime, with greater benefit to pass to other family members on that child’s death.

Making your wishes clear

Too often those making wills in these scenarios prefer the “easy life” and take the view that it will be “someone else’s problem” on their death. However, it is important to consider the financial and emotional strain that estate disputes place upon loved ones.

One way potentially to limit a dispute on death is openly to discuss the situation within the family, to help flesh out the various issues and options available. For example, does the resident child appreciate that they will need to leave the family home on death? Have they considered the options available to them at that time? Would tensions be eased if the resident child is given a set time frame time frame post death to make arrangements for leaving the property? What would need to be agreed as an interim measure in terms of upkeep, maintenance and any rental payments? Are there solutions, such as the use of life interest trusts, which the family might be happy to agree, to avoid a future dispute?

Managing the uncooperative lodger

Whilst the “cards on the table” approach during lifetime should be seen as the preferred method, we have seen cases involving difficult families where such discussions are simply not viable. Whilst parents may not wish to go to the extreme step of taking legal action to remove a child from their home, one step potentially to ease the burden for the other beneficiaries is to avoid appointing the resident child as one of the executors of the estate. With executors needing to act together; if one has a clear self-interest this increases the potential for the administration process to grind to halt. This can then lead to an additional dispute to seek the removal of the resident child as executor, before addressing the removal of the resident child from the family home. This results in increased expense for all and reduces the inheritance the family will receive.

Summary

The key advice during the estate planning process is to recognise that the presence of an adult child in the family home is potentially an area of future contention, particularly if that child will need to find a new home, as part of the administration of the estate. Whilst it may not be possible to prevent a dispute, it is certainly worthwhile to consider what options may be available to mitigate the prospect.