Reporting on Powers of Attorney and claims against Estates

December 12, 2017

There were several responses online to a Daily Telegraph article published last year with the headline ‘Financial abuse rockets as more powers of attorney challenged by courts’. The debate on whether Lasting Powers of Attorneys or Enduring Powers of Attorneys were subject to financial abuse was furthered following remarks by retired Senior Judge Denzil Lush in a BBC Radio 4 interview. Mr Lush vowed to never sign one himself.

The conclusion drawn from further investigation into the statistics has revealed that the media does not perhaps reflect the reality of these cases. The statistics on abuse of powers of attorney published in the Office of the Public Guardian’s annual report shows the investigation rate is approximately 0.05% of registered powers. Mr Lush had speculated a rate of 1 in 8 cases which is substantially higher than the published rate.

A similar area which has caused media speculation is claims made under the Inheritance (Provision for Family and Dependants) Act 1975. This Act, and its Northern Ireland equivalent, Inheritance (Provision for Family and Dependants) (Northern Ireland) Order 1979, allows certain claimants to make claims post-death to allow provision to be made for them financially from the estate of someone who has died.

A Financial Times article published earlier this year claimed that ‘Family disputes over inheritance surges 36% in 2016’. Research into the figures reveals that this figure still represents a small amount of the estates being administered each year. In 2016, the Office for National Statistics recorded over 525,000 deaths in England and Wales and therefore the 158 cases brought through the High Courts referred to in the Financial Times articles represents only 0.03% of all deaths. Further, based on statistics published by HMRC in 2017, just under 50% of all estates had a grant of representation issued and only 23,250 of those estates were IHT liable. The 158 claims made through the courts therefore only account for less than 1% of all estates with an inheritance tax liability.

The Financial times had claimed that experts said a ‘‘High-profile court ruling in 2015 contributed to rise in claims”. The 2015 Ilott v Mitson case had ran for a significant period of time and the Supreme Court gave their judgment in March 2017. It reversed the earlier award made to an estranged daughter of a deceased who had left money to various charities rather than to the daughter. The Financial Times article had claimed the earlier decision encouraged adult children to appeal a decision where they were not provided for in an Estate, however the conclusion of the Supreme Court should provide some comfort to the principle of testamentary freedom.

It is difficult for statistics to give a definitive number of claims made under the 1975 Act/1979 Order and the reason behind any purported increase as they do not take into account how additional classes of people can now also make claims. Civil partners and cohabitees are eligible for certain claims as a result of changes in legislation. Varying factors over the years have perhaps not been accounted for and may well have been misrepresented in media reports.

This article has been produced for general information purposes and further advice should be sought from a professional advisor.

Cleaver Fulton Rankin is a multi-service law firm based in Belfast. We have dedicated and highly experienced private client law solicitors who can advise on all legal matters relating to the wills, trusts and inheritance tax planning.  For more information, please call our office on 028 9024 3141.

Judith Jones, Associate Solicitor, Private Client Team, Cleaver Fulton Rankin, Solicitors.