If you were promised assets by a loved one and these promises were subsequently left out of their will or pass to someone else on intestacy, or perhaps you are a beneficiary facing a claim against your inheritance based on such a promise to someone else, our guide explains the relevant issues.
What is a pre-death agreement?
During their lifetime, a person may make agreements with family members or friends about what will happen to their assets after they die. Such promises, known as pre-death agreements, are often made verbally without any formal documentation. Even where documents exist, they may not have the legal effect intended.
Why can they cause disputes?
If these agreements aren’t reflected in the person’s will, it may lead to disputes between potential beneficiaries about those assets, and even cause the validity of the will to be questioned. See also our guide to contesting a will in the UK. If the person who died didn’t have a will, causing their estate to pass in accordance with the rules of intestacy, a dispute could also ensue if these conflict with the pre-death agreement.
If the pre-death agreement was not included as a result of errors by the will writer, there may be grounds for a claim in professional negligence against them.
The Inheritance (Provision for Family and Dependants) Act 1975 also allows those who are financially dependent on another person who then dies without leaving them with a sufficient inheritance to bring a claim for financial provision from the estate. See also our guide to Inheritance Act claims in the UK.
Is a pre-death agreement enforceable?
A pre-death agreement claim can be enforceable under certain circumstances; it usually depends on whether the promise was relied upon to the detriment of the person bringing the claim (the claimant). In general, the elements needed are:
- Assurance – a promise has been made to the claimant leading to expectation
- Reliance – the claimant relied upon the assurance or promise when making decisions
- Detriment – the claimant is worse off as a result of relying upon the assurance given or promise made
- Unconscionable – it would be unjust for the promise or assurance not to be enforced
What is proprietary estoppel?
If an individual makes decisions based upon a promise to give them some form of property ownership which then isn’t formally transferred, and leaves them worse off, they may be able to claim to have the promise enforced. Such claims are often brought where someone is promised that they will inherit a business or land (often farming) and so as a result work for many years in that business for low or no wages. If that business or land then does not pass to them, they may be able to make a proprietary estoppel claim.
What is a constructive trust?
A constructive trust may arise where the legal owner of land promises an individual an interest in that property, which that individual then relies upon to their detriment. Such claims are often brought where people co-habit in a property owned by one of them, but there is an understanding that, based on the other’s financial contribution, the owner will give them a share in it. A resulting trust may arise where someone who is not the legal owner of a property is held to have a share in it because of their financial contribution towards its purchase.
How long do I have to make a proprietary estoppel claim based on a pre-death agreement?
It is imperative to act quickly when seeking to make a claim based on a pre-death agreement. Timely action will avoid the difficulties which will inevitably follow if the estate has already been distributed, and will also help to protect the existence of any evidence that the claim may rely upon. There is, however, no specific time limit to make a claim in proprietary estoppel.
Who can bring a claim based on a pre-death agreement?
Anyone who has suffered a loss due to a promise not being upheld may have grounds to make a claim. For example, as well as family members or friends, business partners or employees may have grounds to instigate a dispute due to a pre-death agreement.
How long can a pre-death agreement dispute take?
Such disputes can be long and drawn-out, especially if they cannot be settled prior to going to court. Some claims will be relatively simple and quick to deal with, whereas others may drag on for several years.
Do you have to go to court?
The simple answer is no. A large number of these claims are settled before court proceedings are even issued. The parties frequently use mediation effectively to reach a compromise at an early stage. Even if court proceedings have been issued, the parties often reach settlement before trial. However, if a settlement can’t be achieved, ultimately it will be for the court to decide whether the agreement should be upheld.
How much will such a dispute cost?
Due to the complexities involved, disputes involving wills and inheritance can be very costly. As such, the quicker a dispute is settled, the less it will cost.
If all parties can come to an agreement, a dispute can be settled at any time, and they can decide how the costs should be allocated. Where an agreement cannot be reached and the claim goes to court, the court will decide who is responsible for the parties’ costs.