When inheritance plans begin to unravel

With increasing rates of re-marriage and the resulting blended families, parents need to consider taking action to ensure their children inherit as intended. 

Any fans of the mega-hit TV series Succession, which follows the fortunes of the Roy siblings, will know how fraught inheritance issues can be when no clear inheritance plan is in place, especially when multiple spouses and stepfamilies are involved.

But it's a story that's not just restricted to the super-rich like the Roys. The rising number of re-marriages creates more blended families, often leading to inheritance disputes.

In one recent case that reached the High Court, three siblings found they were left with nothing when their stepmother changed a previous Will leaving her entire estate to her son (their stepbrother) after their father died. They had expected to have inherited three-quarters of their stepmother's estate on her death as their father and stepmother had made what is known as 'Mirror Wills' in 2017, where each reflects the other. The Wills instructed that the estate would pass to the surviving spouse on the first death and be divided between the couple's children so that the outcome would be the same no matter who died first. 

When the contents of the siblings' stepmother's later Will were revealed, they went to Court, claiming that their father had trusted their stepmother "implicitly" over the terms of their inheritance. The task of the Court was to decide whether the doctrine of mutual Wills applied to their stepmother's original Will in 2017. The stakes were high - if the Court decided it did, it would mean there was an agreement between the couple to make Wills with substantially the same terms and confer reciprocal benefits, and they could not revoke them without the consent of the other. If not, their stepmother could make a new Will in such terms as she saw fit.

Private Client, Trust and Inheritance Law Expert Kevin Horn at Warner Goodman shared his thoughts on this case: "For the doctrine of mutual Wills to apply, there needs to be a contract between the two testators that both Wills will be irrevocable and remain unaltered, and this agreement should be incorporated into the Will, or through some other form of evidence. It's not enough to make a mirror or reciprocal Will that shows some general intention."

"Without an explicit agreement not to revoke the Will, any surviving partner can choose to make a new Will, which could include very different outcomes. That's why it's important to be clear from the outset."

The Court, at first instance, held that the two wills executed by the siblings' father and stepmother in 2017 were not mutual wills, and consequently, the Court refused to grant the declaration that the deceased's estate was to be held on trust for the siblings.

The Court of Appeal handed down judgment in July 2023. The decision of the judge at first instance was upheld, the Court re-affirming that."What is required to establish mutual wills is a clear agreement……Expectation, or trust, is not enough. The evidence in this case established only trust".

The siblings, therefore, were not entitled to what they expected to inherit.

By contrast, another inheritance challenge was upheld in similar, but not identical, circumstances. After their divorce, two parents covenanted to pass any shares they still held in their jointly-owned company to their two children when they died. Both promised to make Wills to support this agreement, but the husband remarried and later made a new Will leaving his shares to his second wife, not telling his ex-wife or the children what he had done. When he died unexpectedly shortly after, the validity of his later Will was challenged on the basis that he was not free to leave his shares in his Will to his wife. The challenge was successful, the Court ruling that the Deed of Covenant contained a binding obligation on both parents, preventing either of them from making other arrangements to dispose of their shares on death. 

According to the latest Office for National Statistics figures, almost 30% of marriages are now second or subsequent marriages. Behind the figure is a growing complexity in family structure, with stepmothers, stepfathers, stepchildren, and step siblings.  

Kevin Horn added: "Proper planning can help satisfy everyone, and decisions will depend on individual circumstances. This could be through mutual Wills containing an explicit declaration that neither side can revoke or change the agreed terms without the consent of the other. However, the inflexibility of mutual Wills means that this may not be the answer. Another option might be to create a Trust within a Will. This can be a simple and effective way to ensure the surviving partner have all they need while alive and that children from an earlier relationship do not miss out. It does require specialist help to get things right, but it means you can be sure things will play out as you intend." 

A Trust can allow each spouse or partner to leave their estate, or the bulk of it, in trust to the survivor (and their children) after the first death. This allows for the use of assets (such as a house or investment income) to support the survivor for the rest of their life, but with the assets held in trust, passing to the trust's beneficiaries, be they children from an earlier marriage or a charity or anyone else on the survivor's death.  

You can learn more about these topics by visiting our Inheritance planning or Trust pages on our website. Alternatively, you can call our Private Client team on 01329 288121 or email enquiries@warnergoodman.co.uk.

McLean & ors v McLean [2023] WTLR 267
Colicci v Grinberg, 2023 EWHC 1177 Ch