Some years ago, I had neighbours with a teenage son and daughter. The children’s principal objective on Christmas morning was to tot up the approximate value of their respective presents to ensure that the parents had spent exactly the same amount of money on each of them.
Sibling concern over equal treatment can linger well into middle age and beyond; it reveals itself after a parent’s death or during their old age through arguments over who has had what and who’s going to get what.
We’re not legally obliged to leave our estate to our children in equal shares, or indeed to leave them anything at all.
Provided we have mental capacity to make a will (and being mean spirited, spiteful or eccentric doesn’t necessarily suggest lack of capacity) and are free of 'undue influence' we can leave our estate to whoever we please. That doesn’t stop one of our children, in straightened financial circumstances, making a claim against the estate for 'reasonable financial provision' under the Inheritance (Provision for Family and Dependents) Act 1975.
But children expect to be treated equally. And where that’s not the client’s instruction, the solicitor preparing the will should both enquire as to the reason for the inequality and warn the client of the possible effect on a relationship among their children which might already be fragile or hostile.
In previous blogs, I’ve commented on a common modern tendency for adult children to see their prospective inheritance from their parents as a 'right' rather than a 'windfall'. Their further expectation is often that not only will they receive an equal share of the estate under the will, but that an allowance will be made in the division of the estate for all gifts their siblings might have received during the parents’ lifetimes.
There is no Hotchpot Rule…
Executors of a Will, directed to divide an estate equally among the deceased’s children, are not required to bring into account ('hotchpot') any sums received by individual children during the deceased’s lifetime.
If an allowance is to be made for lifetime gifts before dividing the estate, then:
- The person making the Will (the “Testator”) should include a specific 'hotchpot clause' in their Will (and, sensibly, keep a list of gifts with the will, updated from time to time as necessary); or
- Should leave specific sums of money to one or more of the children to compensate them for gifts made to the other children. Perhaps the parent has been helping each child with a deposit on their first house or flat purchase. The parent might want to ensure that those children yet to be helped on the property ladder receive an equivalent payment under the Will.
But there is a rule against 'Double Portions'
The law assumes that even if a Testator doesn’t leave his estate equally among his children by his Will, that he wouldn’t want any division upset unfairly by reason of a substantial gift after the Will was made.
The law states that any gift sufficiently large to be sensibly assumed to be on account of the child’s share in the estate on death, will be treated as a 'portion' and brought into account on the division of the estate.
It’s for the child that received the substantial gift to produce evidence that the gift was not intended to be on account of /a portion of their entitlement on the parent’s death.
To be a portion, the gift needs to be substantial, a financial 'leg up', rather than a gift that might have been expected to have been made in any event.
When I was at university in the late 1970s, most of the cases around the maxim “Equity leans against Double Portions” dated from the 19th Century. But a number of cases in very recent years are evidence that:
- The principle is legally alive and well;
- The estates of a large proportion of the modern older generation are sufficiently substantial for the issue to be argued;
- Sibling relationships still provoke the desire of one not to see another get a larger slice of the cake.
When planning to make a substantial gift to a child or children, we and our solicitors need to be alert to the Rule against Double Portions. Whether or not the gift is to be on account of a child’s share of the estate, make a note or write a letter as evidence of your intention either way. It mightn’t save your children’s shaky relationship – but it should knock on the head a costly legal argument