Millennials are about to inherit the biggest fortune ever to be reaped by a generation as their baby boomer parents die and they bank decades of house price growth.
However, these inheritors can expect not only lump sums and family homes, but lawsuits and relationship-ending fallouts.
Record numbers of wills are being contested, with some 10,000 people now disputing their inheritance every year. More than double the number of probate disputes were brought before the High Court in the first nine months of 2023 than the equivalent period of 2016. This is thought to be a fraction of the real figure, as most are settled out of court.
According to Kieran Osborne, managing director at estate planners Squiggle Consult, the reason for this significant jump in litigation is simple: “people are more entitled”.
He believes that “expecting inheritance is selfish” – yet the number of his clients who do and are willing to begin ruinously expensive court battles for it, has made things more volatile than ever.
Given the “seismic” windfall millennials are set to inherit – £71 trillion in assets in the UK alone, or more than £500,000 apiece for those inheriting from the wealthiest 10pc, according to Knight Frank – the future looks contentious.
Osborne finds these total family breakdowns over money “heartbreaking”. He is currently handling the case of a grandmother who left £250,000 to her 18-year-old grandson, cutting out her daughter, the executor of the will, altogether. (Osborne says skipping a generation is becoming more common, as the oldest worry about the fate of the youngest.)
Dismayed to have been left without a penny, “she just ran off with her son’s inheritance”. When her son began legal action, her argument was that paying for his upbringing up to that point in fact “weren’t gifts… I was lending him the money”.
Five years later the case is ongoing – but “the problem we’ve got is she has spent the money, or at least we can’t find the money”, Osborne says.
He has told his client, who hasn’t spoken to his mother since, that “we could try and fight for your grandmother’s inheritance, but we need to make sure that the money’s there, because otherwise you’re fighting just to make your mum bankrupt, and there’s an element of that which could be a pointless exercise”.
For now, there is an offer on the table of £70,000 – less than a third of the amount he was due, along with the irreparable hole where their relationship used to be.
Solicitor and Telegraph columnist Gary Rycroft says today’s avalanche of fallouts are due to the fact “there’s more of a culture of litigation” now. He adds that “millennials will be facing more disputes” than the record numbers currently entangled.
According to Savills, the percentage of first-time buyers obtaining financial help from family rose from 46pc in 2022 to 63pc last year. Younger generations’ inheritances have almost doubled in value every 20 years since 1979, according to a report from think tank Demos.
An average £372,000 awaits the top 20pc of millennials, the Institute for Fiscal Studies found. At the same time, the chasm between the haves and have-nots is rising ¬ while annual inheritance transfers will rise a third to £145bn by 2033, one in 10 millennials won’t receive a penny.
With so much more at stake, the number of people wanting a piece of the pie is growing. “It’s much more likely than the generation before that your parents may have divorced, that you might have step-siblings, half-siblings, blended families, and I think that will be a driver,” Rycroft says, of these “competing interests”.
At his practice “half the time is preparing wills and trusts…and the other half is dealing with disputes that arise when it goes wrong”.
That can happen in myriad ways. Osborne points to one case where a beneficiary asked his daughter to manage the inheritance from his father’s estate as he “wasn’t good with the internet”. When he then found a new partner, his daughter “disapproved and became difficult”.
By the time he asked for his inheritance, he was shocked to see it had “dwindled significantly” because his daughter had deducted costs every time he had asked for something.
“Years went by without any communication between them, their relationship broken by misunderstanding and resentment,” he says.
Breakdowns in sibling relationships are a common feature, too. Osborne recalls a case of three “who had always been close”, until one gave up her job so that she could care for their elderly mother. After she passed away, “the will revealed an unequal split of the inheritance, favouring the daughter for her sacrifices”.
This led to fierce arguments. The other two siblings felt betrayed and took the matter to court, spending thousands in legal fees. Ultimately, with legal advice indicating that continuing the fight would amount to more than what they were set to receive, they settled out of court, “but the damage was done; their relationships remain strained and distant”.
Experts add that many people do not realise the overall cost of protracted legal action, imagining they’ll quickly be able to secure a profit, rather than draining their imagined riches on years of legal back-and-forth.
This, on top of 40pc inheritance tax on assets above the £325,000 threshold may result in a financial black hole for those trying to get what they are “owed”. A record £7.5bn was paid in IHT last year, with forecasts suggesting another £2bn hike by the turn of the decade.
In England, individuals can leave their estate to whom they choose (by and large) via a principle known as “testamentary freedom”.
This is unusual compared to other countries, including Scotland and much of Europe, where there are stipulations about proportions being left to the likes of the next of kin –in France, an only child automatically receives half of their parent’s inheritance (split if there are multiple siblings), whether they are named in the will or not.
Common legal routes for those challenging wills in the UK include “fraudulent calumny”, where the mind of a testator is deemed to have been poisoned, and “want of knowledge and approval”, where the testator is considered unlikely to have known and approved of the contents.
Among the most common reasons given for wills being contested is that the deceased were not of sound mind when they committed their plan to paper. Lawyers have noted a significant jump in fights over finances in the Court of Protection (which can rule in affairs where people’s mental capacity is questionable).
This was the motivation behind Capacity Vault, a firm that allows people to record video evidence that they are compos mentis, should their will later become the subject of disagreement. Setup is free, followed by a £10 annual subscription fee (which includes unlimited changes and free provision of legally certified copies of your evidence for the courts).
“I think there’s going to be a lot of videos being done to help defend those things in the future,” says Osborne.
Both he and Rycroft say that advanced planning – and explaining what’s to come to beneficiaries ahead of time – is the only way to avoid potential brouhahas.
For some, that involves giving away their fortune long before they die – including broadcaster Anne Robinson, who has transferred her £50m pot to her family in order to legally avoid inheritance tax (provided she does not die within the next seven years).
Osborne notes that people are preparing wills earlier, which he says has in part been driven by Covid, and the vast swathes of information about inheritance online.
What is being passed down is shifting, too. “Cryptocurrency is forming more [of] a part of wills now, and also royalties” from Instagram and YouTube creators, Osborne has found. “We’ve had someone try to protect their OnlyFans income... It used to be your pension and your house or your investments.”
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