A summary of key legal updates for the Private Client sector over the past week is as follows.
Tax rises and Autumn Budget
At the Conservative Party Conference this week, Rishi Sunak did not dismiss the possibility that further tax increases may be imposed in this Parliament. As to whether there will be any such announcements in the Budget on 27 October, recent commentary highlights that the Chancellor may be reluctant to introduce further reforms having already announced two major tax hikes in the past eighteen months - the increase in corporation tax from 19% to 25% and the Health and Social Care Levy proposals. However, an increase to capital gains tax rates remains possible. Changes to inheritance tax are thought less likely due to the political risk. Rishi Sunak refuses to rule out further tax rises (telegraph.co.uk); EPrivateClient - article (paminsight.com)
1975 Act and joint property
Beg v Beg (2021) EWHC 2598 Ch involves a claim under the Inheritance (Provision for Family and Dependants) Act 1975 ("1975 Act") and is a reminder of how succession to jointly owned property can become contentious if an intended tenancy in common is not declared at the outset. In this case, the deceased jointly owned a property in Southampton with his brother and he resided there with his wife and child immediately before death. Under the terms of the deceased's Will, the whole of the estate passed to his wife; however, there was doubt as to whether the house was held under a joint tenancy or tenancy in common. If a joint tenancy, the house would pass to the brother, leaving the wife and child without a home. The wife's claim was that there was a tenancy in common (allowing her to inherit a half-share under the terms of the Will) and, in the alternative, she claimed under the 1975 Act for reasonable financial provision from the estate. The High Court found that there was a joint tenancy but granted the 1975 Act claim, ordering that the brother return £80,000 worth of equity from the house to the estate to allow the wife to pay off the mortgage on the deceased's rented-out second home and live there mortgage-free. EWHC awards widow money from brother-in-law's inheritance to pay off mortgage on home | STEP
Contentious probate statistics
The number of inheritance disputes heard in the England and Wales High Court continues to rise. There were 192 cases in 2020, up from the previous high of 188 in 2019 and 50% higher than in 2018. The main reason cited in the short-term is the financial pressures of the pandemic. Over the longer term, the gradual rise in cases is attributable to factors such as the impact of the Ilott v Blue Cross case; the prevalence of cohabitation and second marriages; increasing longevity and its link to mental capacity issues; and the proliferation of proprietary estoppel challenges. The number of cases could continue to rise in future as the effects of the pandemic continue to feed through to cases, as well as possible claims connected to the controversial remote witnessing rules for Wills introduced last year. Pandemic prompts record number of estate disputes in England and Wales 2020 | STEP
The latest statistics for family court hearings in England and Wales show that there were 160,431 registrations of LPAs in the April-June 2021 quarter, 61% higher than the same quarter of 2020. This may reflect a greater resolve for individuals to get their affairs in order following the pandemic, made easier by the easing of restrictions over the period. Family Court Statistics Quarterly: April to June 2021 - GOV.UK (www.gov.uk)