Posted on Oct 10, 2016 in Private Client by Graeme Dickson
The content of a Will can sometimes cause disputes between families, particularly if family members are disinherited, as was the case with the Will of Sir George Martin.
Yesterday, a Telegraph article reported that the Will of Sir George Martin (often referred to as the 5th Beatle) has led to a family dispute because of its terms. Martin appears to have left a set sum of money (£325,000) to be shared among various former employees, three grandchildren, a niece and one of his children from his first marriage. His eldest son (who Mr Martin seems to have considered to be a bad boy) is not mentioned under the Will and has been left nothing.
The rest of Mr Martin’s allegedly large estate (and if you have produced many of the Beatles’ hits, it seems likely that your assets will be significant) has been left to his second wife, Judy, to whom he was married for the last 50 years. The Will also provided that should Judy have died before Martin, his children from his second marriage would have inherited’ their mother’s share. Even then the children of his first marriage would not have received more.
Cue much reported bitterness from Martin’s first two children, especially one would have thought from the disinherited son. Whether they will seek help from lawyers is yet to be ascertained.
So what five lessons do we learn?
It was George’s money and provided he had mental capacity and it cannot be established that he was under undue influence or manipulation, he could do whatever he wanted with it. The terms of a Will, assuming it was properly worded and signed, are usually respected by the Courts. A decision (by an unhappy family member) to let it be challenged can be very expensive and if they are unsuccessful, the costs incurred can be significant. The judiciary are very reluctant to allow the terms of a valid Will to be overturned without proof that there is something untoward. Just because you don’t like what the Will says and believe you should have been left something, isn’t enough!
It would have been different in Scotland, because of a concept called “Legal Rights”. In essence under Scots’ Law, you cannot disinherit your wife or your children. They are always entitled to at least a specific share of what you leave. These Rights (which are enforceable for up to 20 years after a person’s death) exist whether you leave a Will or not. So the overarching law can defeat the provisions of your Will. Even “black sheep” children will get something. There are very limited ways (including spending or giving it all away before you die) to avoid the effect of Legal Rights but these often have significant adverse tax effects on your estate and those you gave your assets to on your deathbed.
Modern relationships, especially second marriages and subsequent new brothers and sisters are a recipe for problems when it comes to who gets what after someone dies. Former wives and children from previous relationships can find themselves receiving less than they expected. There are however legal mechanisms that can be used to ensure that a surviving spouse can be provided for during their lifetime, but underlying assets will then definitely go to the children from the earlier relationship. This can be particularly useful where an individual wants to ensure that an inheritance stays within one part of the family rather than be inherited by step children. It avoids depending on the terms of the Will of a surviving spouse, which can of course be changed at any time after the first spouse passes away.
It looks like Martin had designed his Will with minimising inheritance tax (IHT), at least on his death, in mind. Without getting into the complications that making gifts in the immediate years before death can cause to the calculations, UK domiciled individuals have a tax free allowance of up to £325,000 which they can give away on death without anything (in terms of IHT) going to the taxman. Anything given to a spouse (irrespective of amount) does not trigger IHT either. So Martin seems to have used up his so called Nil Rate Band and given away as much as he could (to people other than his wife) without attracting a tax hit on his estate. That may not bring much comfort to his oldest children!
Wills can cause controversy, but are still vital. The absence of a Will can cause much distress, cost and difficulty for those left behind. It can also result in a deceased’s assets being inherited by people the deceased had never envisaged receiving anything. This can include teenage children and family members who are financially independent anyway, while a widow is left with much less than envisaged which can cause unintended misery.
So in conclusion, having a Will is important. What it actually says can be (to those left behind) even more critical. Everyone should consider what they want to leave behind and to whom. As The Telegraph article says, while all things must pass, that can be more or less than just money.
If you would like to discuss what you would want to happen to your assets when you die and want to make sure your wishes are carried out, please contact Graeme Dickson with the details below.