Prince's estate

Prince’s estate: the long legal battle

The iconic musician, Prince, died at his home in April 2016 without having made a Will. The singer was twice divorced and had no children or surviving parents. It took 12 months to determine his legal heirs. These being his sister and five half-siblings, as declared by a District Judge in Minnesota.

His assets included properties and the rights to his music. Court filings estimate the estate to be worth approximately $200m (£153m), however half of that value is expected to be absorbed by taxes.

Following his death, more than 45 people filed claims to the estate. In July 2016, a judge rejected claims by 29 people who argued that they were related to the musician and ordered genetic tests to be carried out on others. Similar tests had already been carried out to rule out the claim of a man in jail in Colorado who said he was Prince’s son.

It was then ruled that Prince’s siblings would inherit his estate, however, the judge also stated that the people who were denied the status of heirs must have time to appeal against the ruling. This meant Prince’s sister and half-siblings had another year to wait in order to receive their share of the millions.

Even though not all estates will reach into the high millions as in Prince’s case, it is still hugely important that people understand the benefits of being prepared, regardless of age or welfare. It is also important to think about how you want your estate to be distributed should the worse happen as it could be the difference between it being shared amongst your loved ones in line with your wishes, or a potentially divisive and unpleasant family dispute.

It is so important to make a Will or if you already have a Will to check that it is “up to date”. Casey & Associates offers a “free” home visit Will checking service for home owning couples who live within the areas we cover.

If you would like to meet with one of our Consultants to discuss any of the issues raised in this article or any other Estate Planning topic please telephone 01732 868190 or click here.

Estate money

Estate decimated by legal fees

Did you read the report in The Times regarding a couple who were faced with an exorbitant legal bill of £115,000 which was ‘removed’ from a modest £300,000 estate. The deceased, the father of Paul Cutler, 47, had appointed a solicitor as the executor of his estate in his Will. Mr Cutler was alarmed to discover that the costs for administering his late father’s estate were spiralling out of control. When Mr Cutler complained, he was informed that only the ‘client’ of the solicitors i.e. the executor, in this case, the solicitor themselves, could complain, despite the obvious conflict of interest.

Acting as an executor of a Will has been referred to as ‘the role you didn’t want’ and can be a huge responsibility at an especially emotional time. Naturally, we want our loved ones to have as little to do as possible and we want our affairs dealt with efficiently. Appointing a professional can help to remove this burden from those left behind. Where there are complex family dynamics or perhaps a lack of family ties altogether, it is an especially sensible decision.

Problems can arise when a) a secure fixed fee is not obtained in advance of work starting and b) when the client is unable to complain effectively at the service being provided. Many people assume that probate and Estate Administration work should be carried out by a Solicitor who will charge by the hour. There are other options. Our advice, usually, is to appoint family as executors and ask the family to contact us, Casey & Associates, at the time of need. Our Consultant (usually the same person that has been advising the deceased for many years prior to their passing) will meet with the family executors and give “free of charge” initial advice. If the estate is uncomplicated then often the family executors can carry out the Grant of Probate and Estate Administration work themselves. We work with three affiliates who are regulated to process Grant of Probate and Estate Administration work. Our Consultant can give the family executors a fixed fee quotation to carry out the necessary work and then the family executors can instruct the work to be done by a regulated professional if they wish.

The regulated professional affiliates we work with have administered tens of thousands of estates on a fixed-fee basis.

If you would like to meet with one of our Consultants to discuss any of the issues raised in this article or any other Estate Planning topic please telephone 01732 868190 or click here.

Second marriage

Are you in a second marriage?

All names are changed to protect client identity.

One of our consultants met Mr & Mrs Green recently. Both are in their second marriage and both first marriages ended in divorce. Mr Green has two children (Andrew and Belinda) from his first marriage. They are in their late twenties and had “left home” when Mr & Mrs Green met. Mrs Green has two children from her first marriage (Christopher and Donna). They are in their late teens. They both live at home with Mr & Mrs Green. Mr Green has been very much part of their life as they have grown up. Mr & Mrs Green have a child (Evelyn) together who is now eight years old.

Mr & Mrs Green jointly own a house worth £500,000 with a mortgage that is covered by life insurance. They have almost no savings.

Talking about the distribution of their estate has been very difficult for Mr & Mrs Green because they can never agree on how much each child should receive.

Our consultant set the scene for Mr & Mrs Green by explaining what would happen if they did not make Wills. If Mr Green died first then when Mrs Green died the entire estate would be split between Christopher, Donna and Evelyn. Andrew and Belinda would receive nothing. If Mrs Green died first then when Mr Green died the entire estate would be split between Andrew, Belinda and Evelyn. Christopher and Donna would receive nothing. Mr & Mrs Green both agreed that this was unacceptable and realised that whatever they agreed to for their Wills was better than passing away without Wills.

Quite quickly, Mr & Mrs Green agreed that Evelyn should receive 50%, Christopher and Donna should receive 30% between them and Andrew and Belinda should receive 20% between them. They both realised that this was not a perfect solution but it was much better than what would happen if they did not have Wills.

We have created a special Will for homeowners. When the first of Mr & Mrs Green passes away, “their” half of the family home goes into a trust. The trustees are the surviving spouse and Andrew and Christopher. The trust is flexible so the surviving spouse can move home if needed. However, that 50% of the house is held in trust so that when the surviving spouse passes away, that half can only go to the children as agreed when both Mr & Mrs Green were alive. In other words, it means the surviving spouse cannot change their Will, making that 50% of the family home pass to “their” children.

This solution is extremely popular with our clients who are in second marriages.

If you would like to meet with one of our Consultants to discuss any of the issues raised in this article or any other Estate Planning topic please telephone 01732 868190 or click here.

Law court

The importance of updating your Will

The following case highlights just how important it is to keep a Will up to date – particularly if your personal or financial circumstances change.

In this case, the Will was challenged. A claim was brought on behalf of infant children by their litigation friend and mother under Section 2 of the Inheritance Act (Provision for Family and Dependants) Act 1975 (“the Act”).

Family background

Malkiat Ubbi (“Malkiat”) was a pharmacist by trade. In 1987 he met Susan and they married in September 2000. The couple had one child, Jarnail born in June 1994. Susan already had a daughter, Jesse, from a previous relationship.

In 2007 Malkiat met Bianca, an Italian pharmacist who had moved to the United Kingdom and began to work in the Ubbis’ pharmacy. The couple had an affair. After a brief separation in late 2008 when Bianca returned to Italy, the couple resurrected their affair and went on to have two children, Mattia born in March 2012 and Gabriele in July 2014.

On 8 February 2015 Malkiat died unexpectedly. By his last Will and testament (dated 6 August 2010) he left all his real and personal property to Susan. He made no provision for any of the children, including his two children with Bianca, in the event that Susan should not survive him for a period of 28 days he left his estate on trust to Jarnail.

The Court proceedings

On the 19th of April 2016, Bianca challenged the Will and issued a claim under the Act, seeking an order for reasonable financial provision for her two children. In order to bring a successful claim under the Act the children had to prove (a) that they fell within the category of applicants under Section 1 of the Act, (b) that the disposition under Malkiat’s estate did not make reasonable financial provision for them and (c) having regard to the matters set out in section 3(1) and 3(2) of the Act that an order should be made in their favour.

As children of the deceased, the children fell into the category of persons entitled to bring a claim under the Act. As such, they were entitled to seek such financial provision as it would be reasonable in all the circumstances of the case for them to receive for his maintenance. The question for the court then to decide was whether it should exercise its powers and make an order and if so, the level at which such an order should be made.

When considering the children’s challenge of the Will the court was required to have regard to various matters including:

  • The financial resources and needs which the applicant and/or beneficiary of the deceased’s estate have or are likely to have in the foreseeable future;
  • Any obligations and responsibilities which the deceased had towards any applicant or any beneficiary of the estate for an order under Section 2;
  • The size and nature of the deceased’s net estate;
  • Any physical or mental disability of any applicant or beneficiary of the estate;
  • Any other matter, including the conduct of the applicant or any other person, which in the circumstances of the case the court may consider relevant; and
  • As a claim brought by infant children, have regard to the manner in which the applicant was being or in which he might be expected to be educated or trained.

In addition, the court shall take into account the facts as known at the date of the hearing and, in considering the financial resources of any person, his earning capacity and financial obligations and responsibilities.

Lastly, the court also accepted that it must have regard to two other factors, namely the importance of testamentary freedom and discretion to award “reasonable” financial provision for “maintenance”.

Testamentary freedom

In August 2010, when Malkiat executed his Will, he was living with Susan whilst continuing to conduct an affair with Bianca. Mattia was not born until 2012 and Gabriele in 2014. The court found that at the time of execution of the Will, Mattia and Gabriele had not been a consideration and concluded that the significance of the provisions of the Will had limited bearing on the case. The court did not consider that Malkiat had deliberately chosen to disregard the children’s needs.

Reasonable financial provision for maintenance

When considering reasonable financial provision and maintenance for the children, the court took into account the standard of living enjoyed by both Susan and her family and Bianca and the children whilst Malkiat was alive – which was of a high standard, considering the size of the estate (said to be some £4,500,000 gross) and resources available to Susan.

The court then considered the children’s reasonable financial requirements for maintenance. In this regard, the court found that these fell into four categories – housing costs, school fees, professional childcare fees and other outgoings.

So far as housing costs were concerned, the court found the children required a four bedroomed property so that each of them could have their own bedrooms and Bianca could employ a live-in professional nanny to assist with childcare until such time as the children were both at secondary school when a three bedroomed property would then suffice. Based on documentary evidence provided as regards monthly rental costs for each of these two scenarios, the court calculated a lump sum up until Gabriele was nearly 20 years of age.

On the question of school fees, the court found there was no expectation that the children would be privately educated and refused to make any award for the financial provision of the same. The court considered that any expectation in this regard was a sole desire on the part of Bianca with there being no evidence that this was a wish held by Malkiat as well.

As to the child care arrangements, the court agreed that Bianca, by necessity following Malkiat’s death, now worked very long hours and it was reasonable for her, therefore, to employ outside private assistance with childcare. Again, the court calculated a lump sum figure for this based on evidence provided by Bianca as regards the cost thereof. This sum reduced following the children’s attendance at secondary school.

Lastly, the court awarded an additional sum by way of capitalised lump sum payment for maintenance to cover other outgoings such as utilities, council tax and university fees.

When calculating the total lump sum, the court then applied a reduction to the same, being a sum representing a 65% contribution based on Bianca’s own income towards the costs of the children’s maintenance. As a result, the court ordered that the children be awarded a lump sum payment of £386,290.60.

Conclusion

The provisions of the Act are such that it is specifically designed to ensure that any applicant can challenge a Will if the deceased’s Will does not make adequate provision for them, assuming that they fall into one of the classes of categories of applicants entitled to bring such a claim.

In this case, had Malkiat updated his Will to make provision for his children with Bianca (and indeed Jarnail) it is less likely that the Will would have been challenged; saving all parties from having to endure the considerable emotional distress of the proceedings, not to mention substantial sums which were spent on legal fees.

This case highlights the need to ensure that a Will is treated as a living document and updated whenever there is a significant change in circumstances, whether that be financial or personal.

If you would like to meet with one of our Consultants to discuss any of the issues raised in this article or any other Estate Planning topic please telephone 01732 868190 or click here.

husband wife will

I don’t need a Will because everything will go to my husband/wife. True or False?

Jack and Jill are in their late sixties and are happily married with two children: Bill and Ben. Bill is happily married but the business he owns is under some financial pressure and he is rather worried because the bank are talking about calling in the loan of £150,000. Ben is married but his marriage to Rose is a bit rocky. Jack and Jill have intended on keeping their finances separate and they own their two properties as “tenants in common”. The “buy to let” provides roughly half of the family’s annual income. Jack and Jill have considered writing a Will but under the (incorrect) impression that everything would “go to each other”, have never “got around to it”.

The family home is worth £800,000 and the “buy to let” is worth £600,000. Jack has ISAs to the value of £200,000 as does Jill.

Jack is taken ill and dies. The family assumes that all Jack’s assets will go to Jill. Rose starts to take great interest in the estate finances (soon you will see why) and brings the “Laws of Intestacy” to the attention of the family.

Jack’s assets are half of the family home (£400,000) and half of the “buy to let” (£300,000) plus his ISAs at £200,000. So his estate is worth £900,000. Rose starts taking control and advises the family that Jill is entitled to the first £250,000 and then half of the balance with the other half being shared between Bill and Ben.

So Jill receives £250,000 and half of £650,000 which is a total of £575,000. Bill receives £162,500 and Ben receives £162,500. There is not enough cash to pay Bill and Ben so the “buy to let” has to be sold. This means that about half of the family’s annual income is lost. The bank becomes aware that Bill has just inherited £162,500 and calls in their loan in the sum of £150,000. Now that Ben has just received £162,500 Rose thinks this is a good time to divorce Ben. As part of the divorce settlement Rose receives 50% of the £162,500.

Because assets went directly from Jack to Bill and Ben his entire Inheritance Tax allowance of £325,000 has been used up and is not available to be transferred to Jill.

All of the above could have been avoided if Jack had contacted Casey & Associates and made a Will.

If you would like to meet with one of our Consultants to discuss any of the issues raised in this article or any other Estate Planning topic please telephone 01732 868190 or click here.

currency

Businessman dies with no access to his cryptocurrency wealth

On the 9th of December 2018, Gerald Cotten died unexpectedly at the age of 30. Gerald was the Chief Executive Officer of QuadrigaCX; a Canadian cryptocurrency exchange platform which allowed the trading of Bitcoin, Litecoin and Ethereum. According to court documents, Gerald Cotten had sole access to the digital wallets containing more than 180million Canadian dollars (£105million) belonging to the company’s 115,000 customers. This has resulted in QuadrigaCX being unable to pay their subscribers.

It has been reported that the company’s operation was run from one main computer, owned by Gerald Cotton, and nobody else was aware of the computer password or recovery key. Gerald Cotton’s widow, Jennifer Roberston, claims that she did not have any involvement in the business whilst her husband was alive.

On February 5th 2019, the Supreme Court of Nova Scotia issued the Order and appointed accountancy firm Ernst & Young Inc. to oversee the search for the missing funds. QuadrigaCX said: “The Court has appointed a monitor, Ernst & Young Inc., an independent third party to oversee these proceedings as we make every effort to address our customer obligations. Filing for creditor protection allows us to work diligently through the process, and to try to ensure the viability of our company.

This case highlights the extreme consequences of not leaving suitable arrangements for the recovery of cryptocurrency. Writing a Will and keeping it updated can ensure that your estate, including any cryptocurrency, are distributed as per your wishes.

If you would like to meet with one of our Consultants to discuss any of the issues raised in this article or any other Estate Planning topic please telephone 01732 868190 or click here. Don’t delay ~ Act today!

If your circumstances change you may need to consider updating your Will

The case of Martin v Williams concerned the right of a cohabitee to make a claim for financial provision from her partner’s estate. It serves as a useful reminder of the problems that can arise when a testator fails to update his or her Will following a change in circumstances.

Background

For cohabitees bringing a claim under the Inheritance (Provision for Family and Dependants) Act 1975, they must show that they were living in the same household as the deceased for at least two years prior to the deceased’s death and were living together as husband and wife.

For same-sex couples bringing a claim under the 1975 Act, they must show that they were living in the same household as the deceased for at least two years prior to the deceased’s death and were living together as civil partners.

In respect of both claims, the court will look for evidence of mutual interdependence, love, sharing of lives and lifetime commitment.

In contrast to married couples and civil partners, claims for reasonable financial provision brought by cohabitees are limited to provision for maintenance (the reasonable cost of everyday living).

The facts

Mr Norman Martin made a Will in 1986 in which he left his residuary estate to his wife, Mrs Martin. By the time of his death in 2014, they had been separated for many years.

Since June 2009, he had been living with his partner Mrs Joy Williams in a property in Dorchester which they owned in equal shares as Tenants in Common. Mrs Williams also owned 50% of a mortgage-free property in Bristol which she had inherited on her father’s death in 2008. Mrs Williams’ sister owned the other 50% of the Bristol property and lived in the property.

Mr Martin failed to update his Will or make a new Will after separating from his wife. On his death, his residuary estate, which included his 50% share in the Dorchester property, passed under the Will to Mrs Martin.

Mrs Williams brought a claim under the Act for reasonable financial provision from Mr Martin’s estate.

The trial

At trial, the judge found that Mrs Williams had standing to bring the claim because she had been living in the same household as Mr Martin for at least two years prior to his death and as husband and wife.

The judge ruled that the Will did not make reasonable financial provision for Mrs Williams’ maintenance because it made no provision for her at all.

After considering Mrs Williams’ financial needs and resources, amongst other matters, the judge decided to award Mrs Williams 50% share in the Dorchester property. In reaching this decision, the judge discounted her 50% interest in the Bristol property because ‘her sister lives there and she is of very limited resources so cannot really even afford to pay any rent’ and she ‘would be loathe, in fact would not, be prepared to evict her’. Mrs Martin appealed the judgment.

The appeal

On appeal, the judge agreed that Mrs Williams had standing to bring the claim and that the Will did not make reasonable financial provision for her. The judge also held that as a matter of law, the trial judge was entitled to disregard an asset because of the human cost of enforcing a right in the asset.

However, the judge disagreed with the decision to disregard Mrs Williams’ 50% interest in the Bristol property because it was a material asset (Mrs Williams’ 50% share was worth approximately £135,000) and Mrs Williams admitted in cross-examination that her sister could easily downsize if she wanted to.

The judge also disagreed with the trial judge’s dismissal of Mrs Martin’s financial needs.

The judge held that reasonable financial provision to Mrs Williams required, guaranteeing her a home but an absolute interest in property was excessive. The judge decided to award Mrs Williams a life interest in Mr Martin’s 50% share in the Dorchester property and Mrs Martin the reversionary interest.

This case highlights the vital importance of reviewing your will periodically and after a significant change in circumstances to ensure that the terms reflect your current wishes.

It also demonstrates the court’s preference to award a life interest in property rather than a capital sum where provision is limited to maintenance.

To help minimise the risk of a problem caused by a change in circumstances Casey & Associates offer a complimentary Will review for prospective new clients and a complimentary Will review every three years for existing clients.

If you would like to meet with one of our Consultants to discuss any of the issues raised in this article or any other Estate Planning topic please telephone 01732 868190 or click here. Don’t delay ~ Act today!

IT HAS HAPPENED AGAIN

Your Will tells everyone what should happen to your money, possessions and property after you die – all of these assets are collectively known as your estate. If you do not leave a Will, the law decides how your estate is passed on, which may not be in line with your wishes. Regardless of your age or health it is important to plan ahead, particularly if you own a property or have savings, investments, insurance policies or you own a business. There are also numerous benefits to having a Will, from ensuring you leave an inheritance to family and friends to potentially reducing the amount of Inheritance Tax that may be payable on your estate.

We all take care of things that we treasure so it makes perfect sense to store your Will in a secure and safe location as well.

Your Will is vitally important in enabling you to leave clear instructions on how your estate is to be distributed. If anything happens to your Will or if your Executor doesn’t know where to find it, you may as well not have written one.

The original Will is the only document that will be legally accepted and it should be in pristine condition to ensure that there are no complications when following the wishes set out in it. It is vital that your documents are stored appropriately so that it meets the specific requirements of the Probate Court when it is presented by your Executor(s). Many people will understandably assume that the safest place to store their Will is within their house, but research shows that the majority of family members (67%) wouldn’t know where their relative’s Will is stored at home.

There are further risks associated with “self-storage” such as a house fire or losing the Will during a “tidy up” or house move.

We have always offered our clients the options of “self-storage” or professional storage in our fire resistant safes. Unfortunately, we have had another distressing example of a client, who selected “self-storage” losing their Will. They passed away at the beginning of December and the family cannot find the Will. Our client’s estate will be distributed according to the rules of intestacy which were created by the Government. Often the rules do not give a result that the deceased would have wanted and that is the situation in this case.

This incident has caused us to review our services and with effect from 01 January 2019 our default option will be to offer professional storage whilst giving clients the option to “opt out” of this service. As part of our professional storage offering we will scan the Will before it goes into storage and we will email the scanned copy to our client.

If you would like to meet with one of our Consultants to discuss any of the issues raised in this article or any other Estate Planning topic please telephone 01732 868190 or click here. Don’t delay ~ Act today!

Do you have a discretionary trust in your Will?

A discretionary trust is used to hold assets after you have passed away. A discretionary trust will name multiple possible beneficiaries that could inherit. The aim of the discretionary trust is to have control over who shall inherit from the trust and when.

Reasons you may wish to create a discretionary trust

If you have vulnerable beneficiaries, you may not wish for them to be given a lump sum of cash but instead you may wish to give them a steady income to suit their needs. Similarly you may have a beneficiary who does not have the ability to look after large finances, who may not be able to save, and you do not wish for them to spend all their inheritance at once. Alternatively, you may wish to leave inheritance to an individual who has previously had alcohol or drug addiction and you are worried your inheritance will get spent on fuelling said addictions. A discretionary trust can be used to provide an income for an individual for the remainder of their life, but can protect the resultant fund for other beneficiaries.

What can be put into a discretionary trust?

Most commonly, cash or liquid assets will be placed into a discretionary trust. However property can also be placed into the trust. There is no limit on the value which can be placed into a discretionary trust, but specialist advice should be taken to ensure there are no adverse tax consequences.

Who are your trustees? What do they do?

You have the freedom to choose your trustees and they will be named in the Will. They will be responsible for maintaining the trust fund and ensuring the assets are being invested in the best way possible. They will be responsible for distributing funds out of the trust when necessary.

Have you written a letter to your trustees?

As the discretionary trust will not denote when a beneficiary should inherit from the trust, nor does it state the percentages that each beneficiary should receive, the trustees must therefore use their discretion to release funds when they feel it is appropriate. This can be a daunting task as your trustees may not know your exact wishes, and they may not know if you wish for the beneficiaries to have an annual limit or if the funds should be used for educational purposes only until they reach a particular age. This is why we strongly recommend you write a letter to your trustees.

The letter will be used by your trustees to guide them in the distribution of the assets held in trust. Such letters can make the role of being a trustee easier as they will have additional knowledge as to how you would want the assets given out and when. The letter should outline your personal wishes and the detail that you provide in the letter is your choice. You may expressly state when the trust fund should not be used or when it should. For example, you may state that the funds cannot be used for holidays or lavish spending trips. You may state that each beneficiary may only receive a certain amount of money per month or per year. You can note that an individual beneficiary should receive more than the others and that discretion may be used to ensure this individual beneficiary has everything they need to maintain a particular level of lifestyle.

If you would like to meet with one of our Consultants to discuss any of the issues raised in this article or any other Estate Planning topic please telephone 01732 868190 or click here.

Child

Could your Will be challenged by a child?

Yes. Recent case law suggests your estate could be challenged by a minor and their representative if no provision is made for them. This case law highlights the importance of reviewing your Will when you have a change in circumstances.

In Ubbi v Ubbi (2018) the testator had left his estate in its entirety to his wife in a Will he had executed on 06 August 2010. His estate upon death was valued to be worth £3.5 million.

However this testator had an affair during his marriage which resulted in the birth of two children, whom were aged 3 years and 6 months at the testator’s death. The testator was in the process of divorcing his wife, but had passed away before completion. He had also not updated his Will to reflect his circumstances.

The mother of the two young children contested the Will on their behalf under Section 2 of the Inheritance (Provision for Family and Dependants) Act 1975. The mother, acting on behalf of the young claimants, needed to prove they were entitled to financial provision from the estate of the deceased, as the Will made no provision for them.

The claimants were successful in this case and they were awarded a lump sum of £386,000. Although it is highly unusual for an infant to contest a Will, here it was deemed necessary to provide for their futures.

The case highlights the consequences of continuing to be married to someone, even when the relationship has broken down. It is even more important to consider the consequences when there is a second family.

Although it may be costly and time consuming to change your Will, it is very important to review it on a regular basis especially when your circumstances have changed. For examples of when to update your Will, you may wish to read the following article:

Here are more examples of when to update your Will

If you would like to meet with one of our Consultants to discuss any of the issues raised in this article or any other Estate Planning topic please telephone 01732 868190 or click here.