And recent data obtained by Hugh James, the UK law firm, reveals that the decline in the value of family estates is contributing to a rise in the number of inheritance disputes finding their way to court, compared to the situation that existed before the recent global financial crisis, when there were more villas, chateaux, chalets, yachts, jets, jewellery, stocks and other assets to go around.
The Hugh James data shows the number of inheritance disputes issued out of the High Court in London jumped 19% in 2011 compared with the previous year, as family members went to court in an effort to gain a greater share of the downturn-hit family estate than they were in line to receive.
There were 663 High Court claims relating to trusts, wills and probate last year issued in London, up from 556 in 2010, the figures show.
What’s more, the number of such claims is currently running at twice the level as was the case before the credit crunch, with just 310 such claimes filed in 2006. (See bar graph, below.)
Given that many claims of this nature are settled out of court, Hugh James points out, these statistics “represent [just] the tip of the iceberg”.
Law has failed to keep up
Hugh James partner Matthew Evans says that in addition to the recent decline in many family fortunes, another factor in the apparently rising number of cases is the failure of intestacy law to keep pace with the changing face of modern families, making disputes over estates more likely, even across international borders.
“Court cases to challenge an inheritance usually take place in the jurisdiction in which the will was written, but the same dynamics that are increasing the number of claims in the UK are likely to be increasing the number of such claims elsewhere too," he notes.
Adding to the complexity of such cases, the assets of many high net worth individuals are often scattered across the globe, "such as prime property in London”, he says.
“A family that has seen a lot of marriages, divorces and children is more likely to be one with a disgruntled beneficiary, because the family dynamic is not necessarily reflected in the rules of intestacy.
“Modern families have all sorts of complicated connections that heighten the likelihood of dissatisfaction with the inheritance, such as second or third wives, step children, half siblings and long term relationships outside of marriage.
“The laws governing this area originally date from a time when families were very different.
“Whilst the law can be adapted to suit modern families by judges, that necessitates expenditure on legal fees and can potentially create acrimony. This suggests that they’re no longer fully fit for purpose.”
‘Exacerbated’ by lack of will
Complicated as matters can be when there is a will, the situation can be exacerbated when a wealthy individual dies without leaving one, Evans points out. In such a situation, he notes, modern, complex families “often tear themselves apart” over the deceased’s assets.
This, according to Evans, is no doubt why the Law Commission last year proposed reforms to the UK’s inheritance laws for people who die intestate that, he says, are aimed at bringing them up-to-date with modern family lives.
Trouble also can arise when the never-married partners of a deceased inidividual decide to proceed with a claim, if they feel that they can prove that they were being maintained in some way by this person immediately before his or her death.
As for children who may have acted as long-term carers to their ailing parents, Evans continues, “rightly or wrongly, [they] often feel entitled to a larger inheritance than their siblings, which can cause problems if the will does not reflect their wishes.”
‘More legally savvy’
Still another reason more family inheritance disputes are seen to be making their way to court is the fact that people are becoming “more legally savvy” about the options open to them if they are not happy with how the family estate has been distributed, Evans points out.
In addition to the Bettencourt case, other recent high profile inheritance disputes include:
- The case of Anna Nicole Smith, which went all the way to the US Supreme Court, where an earlier ruling that gave the former Playboy model nothing from the $1.6bn fortune she claimed had been left to her by her late husband, Texas oil tycoon J. Howard Marshall II, was upheld
- The battle between Luciano Pavarotti’s daughters, by his first wife, and his second wife, Nicoletta Mantovani, following the Italian tenor’s death in 2007, over an estate valued at between $226m and $250m
- A claim on Jimmy Saville’s estate from a woman claiming to be his daughter
- A battle in Hong Kong between two sons of the late, thrice-married tycoon Henry Fok Ying-tung, who was ranked 181st wealthiest person by Forbes when he died in 2006, leaving behind 13 children
- A case in which a fung shui practitioner in Hong Kong was found to have used a fake will in an effort to prove that he had been bequeathed the estate of the late Chinachem chairwoman Nina Wang Kung Yu-sum
