Death, taxes and family feuds: Why the UK’s courts are flooded with inheritance tax disputes
With the rising cost of living, more and more people are relying on inheritance for their financial stability – and much more willing to go to court over a will, says Scott Taylor
In an unsettling new trend, approximately 40 per cent of British adults are willing to consider challenging a will in court if they believed their inheritance allocation was inadequate, recent research from Level Group has found. This reflects a broader shift in how families view inheritance – not as a windfall, but as an essential financial safety net.
The survey of 2,000 respondents reveals that 18m UK adults are counting on inheritance to maintain financial stability, with more than 25 per cent stating they would face debt without it. This dependency is most pronounced among millennials and those aged 35-44, with over half of millennials acknowledging financial reliance on future inheritance.
As the financial landscape and basic cost of living continues to build, we can expect these numbers to rise. Property values have risen substantially as the previous generations pass assets to descendants, significantly increasing what’s at stake. Simultaneously, the prevalence of second marriages has created more complex family arrangements, often leaving stepchildren without provision in wills. These multifaceted pressures have shifted younger generations to viewing their inheritance as a necessity rather than a bonus or blessing.
Additionally, these circumstances are driving record numbers of inheritance disputes through the courts. Such litigation can be both financially devastating and emotionally destructive for families, yet the number of cases continues to rise as they deal with the fallout of inadequate wills.
The financial implications are also becoming more severe. Government projections indicate that inheritance tax will affect over 37,000 estates by 2027, generating nearly £9bn in revenue. Areas beyond London, including Manchester, Leeds, Sheffield and Edinburgh, are experiencing significant increases in affected estates and tax liabilities.
Outdated laws
The legal framework itself contributes to these problems. Current intestacy rules fail to accommodate modern family structures, offering no protection for cohabiting partners, stepchildren, or long-term caregivers, while potentially awarding everything to distant relatives. This outdated system requires comprehensive reform to reflect contemporary family arrangements.
However, legislative change alone will not solve this crisis. Many disputes stem from poorly constructed wills that fail to account for specific family dynamics. Generic, template-based wills often overlook the nuanced relationships within extended families, creating the ambiguity that leads to conflict.
How to avoid an inheritance dispute
From a practical perspective, several measures can help prevent inheritance disputes. Choosing the right lawyer, with relevant experience will help ensure all your specific needs are taken into account and a bespoke will is created. This investment in proper drafting often prevents far more expensive litigation later.
Where possible, discussing inheritance plans with family members ahead of time can prevent misunderstandings and unrealistic expectations. While these conversations may be uncomfortable and money is typically a taboo topic it’s important we break the stigma and encourage those discussions as they can provide clarity that reduces the likelihood of future disputes.
Lastly, the legal system could implement mandatory mediation before inheritance disputes reach court or at the early stage of proceedings. This could provide a less adversarial forum for resolving disagreements while preserving family relationships where possible and will inevitably help to keep costs down.
Professional standards for will-writing also require reform. Currently, anyone can draft a will regardless of legal training, leading to documents that may not withstand legal scrutiny or properly reflect the writer’s intentions.
The inheritance landscape is evolving quickly as a result of demographic changes, economic challenges, and increasingly complex family dynamics. However, unless proactive steps are taken, including legal reform, higher professional standards and clearer family communication, inheritance disputes are likely to become more frequent. The consequences of inaction reach beyond financial loss and often lead to lasting damage to family relationships.
Addressing this crisis requires coordinated effort from legislators, legal professionals and families themselves to ensure inheritance serves its intended purpose of providing security rather than creating conflict.
Scott Taylor is partner in the private wealth disputes team at Moore Barlow