A case reported in the Financial Times recently highlighted the importance of having a current and up-to-date will. The story was that of an elderly couple who were found dead in their home, leaving their two daughters (step-sisters) to debate which of them should inherit the house.
The situation was complicated by two factors: that the mother’s will made no provision for her step-daughter, and that the father had not left a will at all. Who inherited the estate would depend on which of the couple had died first. If the husband had died first, his share of the property would go to his wife. The wife’s daughter would then be the sole beneficiary of the estate when her mother died, as per her mother’s will.
If the wife had died first, the property would be passed on to her husband, whose death would result in his daughter inheriting the estate, and not his step-daughter, as under the rules of intestacy.
As it was impossible to determine which of the couple had died first, the Court had to find a way to settle the step-sisters’ dispute. In order to do so, the Law of Property Act 1925 was applied. This stated that the elder of the two, in this case the husband, was deemed to have died first. As this was the case, the property last belonged to the wife, and thus the wife’s daughter inherited the entire estate, to the exclusion of her step-sister. This may not have been what either of the parents intended and was a costly way of resolving the issue.
This case emphasises the importance of having an up-to-date will that leaves precise instruction for the division of assets. This helps both for inheritance tax planning purposes as well as to avoid the kinds of family disputes highlighted here.