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Legal Rights are (1) the right of a spouse or civil partner to inherit from their deceased partner or (2) the right of children, legitimate or illegitimate, to inherit from their parent. They apply irrespective of the terms of a Will. It is not possible to exclude a spouse/civil partner or children entirely by making a Will which bequeaths nothing to them. A spouse/civil partner can claim one-third of the deceased’s moveable estate (ie. other than land and/or buildings) or one-half if there are no surviving children. Similarly, children share one-third of the moveable estate of their parent (or one-half if there is no surviving spouse). So, in the most extreme case, the deceased can only freely bequeath his land and buildings and one-third of the rest.
Legal Rights must be claimed. But claimants have 20 years to do so. This can cause problems.
George and Dorothy are married. They have no children. However, George has two adult children from a previous marriage. George dies leaving a Will under which he bequeaths his whole estate to Dorothy and appoints her as his executor. On the face of it, Dorothy will take everything, but George’s children have Legal Rights. Unless she approaches the children and gets them to sign a Discharge of their Legal Rights, she has to wait for up to 20 years to see if a claim by the children is made. She has the funds from George’s estate, so it is she who has to pay if a claim is made. Also, if George left an estate which had moveable property in it of £1m, the children’s Legal Rights fund would be one-third (£333,333). There would be inheritance tax (IHT) to pay, despite the fact that the whole estate goes to Dorothy (an exempt person). The reason for this is that, for IHT purposes, Legal Rights are deemed to be claimed unless they are specifically discharged. So in this example, George’s estate (for IHT purposes) is £333,333 to his children (who are not exempt) and the rest to Dorothy (who is exempt). IHT is charged on £333,333 at:
Legal Position of Executors
In Example A, Dorothy was sole executor and beneficiary of George’s estate. If there were a claim for Legal Rights by George’s children, Dorothy would have to pay it.
Strictly, it is the executors to whom the claim would be made. So, if other persons are executors in addition to or in substitution of Dorothy, they would be concerned to have the question of a claim resolved within a short period after the death, rather than have it hanging over them for up to 20 years.
Same as before, except that George’s Will appoints the solicitor who drew up the Will as an executor along with Dorothy. The solicitor would not wish to have a possible claim for Legal Rights hanging in suspension for up to 20 years unless funds to cover the claim were set aside. Asking George’s children to discharge their Legal Rights would draw to their attention the fact that they had Legal Rights. Dorothy may not want that. The solicitor may not be prepared to allow the claim to lie for up to 20 years, even if Dorothy agreed to put the Legal Rights fund aside out of her sole control. Impasse! For Dorothy’s view to prevail, the solicitor would have to resign as an executor, letting Dorothy make the decision herself. But the solicitor may feel that he cannot morally resign since this situation is exactly the situation George may have considered as justifying the appointment of a ‘professional’ as executor.
Choice : Legacy or Legal Rights
In the situation where a spouse or child is to receive a legacy from or a share of an estate, but does not like the value of it, a claim for Legal Rights may give that person a bigger share of the estate. However, the claimant cannot take both. It’s an either/or situation. Sometimes the Will emphasises this point by making the legacy/share mentioned in the Will conditional upon there being no claim for Legal Rights. That is not necessary where the beneficiary and the person having Legal Rights is the same person. But where a Will made a bequest to a grandchild, perhaps because the child told his parent to bypass him/her in favour of the grandchild, the Will could provide that the bequest to the grandchild was conditional upon the grandchild’s parent not making a claim for Legal Rights.
This refers to the situation where a son/daughter claims Legal Rights but has received an advance from his/her parent during the parent’s lifetime. Not all payments by the parent to the son/daughter are counted. Parents have a duty to support their children during childhood. So maintenance payments are not counted. Nor are loans or payments for services rendered. Typically, a sum gifted to buy a house or set up in business are counted.
George dies leaving a widow, Dorothy, and two sons. He bequeaths his whole estate to Dorothy. His estate is a house in his sole name valued at £200,000, contents worth £24,000 and a bank account in his sole name showing a balance of £100,000. The sons claim Legal Rights (£41,333 between them). If Son A received a gift of £5,000 from his father to start him up in business, the sons’ Legal Rights fund becomes £46,333, of which Son B receives £23,166 and Son A receives £18,166 (+ £5,000 already received).
Nothing on this website constitutes legal advice and EBS Trustees accepts no liability for any actions taken by any individual in reliance of what is written here.
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