Case study - wills & inheritance
Mrs Davies (a widow) was 70 years old when she died in 2003. She had two children Jim 28 and Emma 25. Jim had left home and lived and worked in Scotland. Emma was still living at home. Having left university she had been caring for her mother for the last three years after she had been diagnosed with a terminal illness.
In her will, Mrs Davies left the family home to Jim and Emma in equal shares. She had no other savings. The house was valued at £200,000 and was in a bad state of repair. After expenses including legal fees for administering the estate it was estimated that there would be capital remaining of about £180,000.
Emma was advised that as a dependant she had a claim under the Inheritance Act. After a year of correspondence between solicitors neither party had been prepared to back down and Emma issued court proceedings. She continued to claim that the house should be transferred to her and Jim should get nothing. The court invited the parties to put the proceedings on hold to refer the matter to mediation. They agreed.
At the mediation, Emma told the mediator in her private meetings that she was furious that Jim implied that she had been freeloading. He had no idea how difficult it had been to care for their mother; her life had been on hold since she left university. Jim was well off any way and didn’t need the money. But Emma also revealed that she couldn’t afford the upkeep of the house with no job. She really wanted a much smaller property and had envisaged investing the money in this and having a small mortgage, as and when she got a job. Emma was upset that having had a good relationship with her brother until their mother had died they were now in this position. She missed seeing her two young nephews.
Jim told the mediator during his private sessions that he wasn’t so bothered about the money, but was very cross with Emma for suggesting that he hadn’t really bothered about his mother. He also thought Emma was being greedy. He had from time to time given money to his mother to help with essential repairs to the property and funded a couple of holidays. Emma used to visit him and his family for holidays in Scotland and his two young children were very fond of their auntie. They were upset that she hadn’t seen them for over a year, by this stage.
Both parties were advised that the legal costs of the court proceedings were likely to come from the estate. To go to trial it was estimated that the total legal costs would be around £40,000. These would reduce the money available from the house, to £140,000.
During the mediation both parties agreed that going to court would mean that any advantage either of them gained would be lost in legal costs. Jim conceded that Emma had done a lot for their mother. Emma conceded that it wasn’t easy for Jim to get to see their mother and he had helped out from time to time. Both of them were very anxious that Emma’s relationship with her nephews should not suffer.
Jim and Emma finally agreed through mediation that the house should be sold and Emma should receive 70% of the proceeds of the sale. At trial she might have received 75%. But she would have waited at least another year; the legal costs would have escalated and come out of the estate and she would in fact have received less. By then relations between Emma, her brother and nephews would undoubtedly have deteriorated.