2023: What does the future hold for contentious probate?

By Sarah Bolt, Managing Associate in the Private Client Dispute Resolution Team at Freeths LLP

For a number of years, there has been a marked and upward trend in the level of disputes arising from Wills, estates, probate, and Trusts. Lockdown, due to the COVID-19 pandemic, brought with it new challenges, but in turn has led to a further increase in demand for instructions across the sector. 2022 has been a year full of high-profile and landmark decisions.

Should we expect this going forward into 2023 and beyond?

What are the trends?

1. Overall market trends: The overall market value of the Wills, Trusts, and probate sector increased by 4.3% in 2021, and is forecast to increase by 5.2% in 2022. Growth is set to continue by an average of 4% year on year. It is expected that probate work, and in turn disputes involving probate, will continue to increase as time goes on.

2. Value of estates: In 2021, the average estate was worth around £167,000. This number decreased by nearly £13,000 in 2022 and sits at around £154,000, showing a year-on-year trend in the value of probated estates decreasing. To add to this, around 45% of estates are now worth less than £50,000 — a figure that has increased by 5% since 2021.

3. Death rates: 2020 saw the second highest number of deaths since 1838. This affected all groups in the population. Around one in eight deaths were due to COVID-19. COVID-19 was the leading cause of death in 2020 and 2021, exceeding other common ‘killers’ such as heart disease, stroke, lung cancer, and age-related diseases. Deaths are still around 10% higher than during pre-pandemic years.

4. Executor wellbeing: There are a lot of costs left behind for Executors to deal with, such as organising and paying for a funeral, paying off any debts the Deceased may have had, and paying for general estate administration — often with the help of paid professionals. Decreasing values of estates are pushing a financial burden onto the Executors, with 2% of estates left in debt after they have been
administered.

5. Increase in technology: The Wills and probate sector has, until quite recently, been quite slow to change. However, during the pandemic, technology was, and continues to be, utilised to solve practical challenges. Law firms have started to embrace technology and the use of digital communication to deliver services, rather than face to face appointments. Good examples of these changes include video Wills, the ability to sign Deeds electronically, the new online Lasting Power of Attorney service, and centralisation of the probate service.

6. Diversity of estate assets: Legal professionals largely rely on the Executor to track and verify assets and liabilities of a Deceased. Some of these assets are difficult to recall. Digital assets, such as online bank accounts, social media profiles, non-fungible tokens, domain names, electronically stored photographs, bitcoin, or other cryptocurrencies, are making this exercise more difficult. This is in addition to physical commodities such as cars, shares, and property.

7. Ageing population: The number of people over the age of 65 in the UK is increasing rapidly. Nearly one in five people in the UK are now 65 years old or older, up from one in six in 1999. This largely consists of the Baby Boomer generation.

8. Increased competition: With the move of legal services online, such as Will Writers, the sector has seen a number of new law firms, Solicitors, and non-regulated professionals working in Wills, probate, and Trusts. For example, the number of law firms in England and Wales specialising in contentious Wills, probate, and Trusts has more than doubled between 2018 and 2022. The Wills and probate market topped £2 billion in contentious work for the first time in the past year.

9. Probate wait times: With the move to a centralised probate service and increased Grant applications, the Ministry of Justice has reported that Grants are taking much longer to progress. Probate used to take a few weeks, but now it can take many months, if not years to progress. This is due to applications being stopped, the number of applications being progressed, and staff shortages in law firms to complete the work.

10. Increase in challenges, disputes, and claims: There has been a year-on-year increase in the number of inheritance disputes. There have been more high-profile and reported cases, including claims under the Inheritance (Provisions for Family and Dependants) Act
1975. This does not include the numerous claims intimated and settled before proceedings were issued:

• Reeves v Drew [2022] EWHC 159;

• Guest v Guest [2022] UKSC 27;

• Hughes v Prichard [2022] EWCA Civ 386; and

• Whittle v Whittle [2022] EWHC 925.
  
  
  

Influencing factors to the rise in disputes

1. Cost of living crisis: The UK is struggling through damage created by the pandemic, the war in Ukraine, an unstable government, and increasing costs to consumers amidst rising inflation and interest rates. Many people are struggling financially and mentally, leading to more disputes occurring to secure payments for people to survive.

2. Reliance or expectation of inheritance: With the cost-of-living crisis, people are looking at their inheritance to pay the bills and help
them live, rather than treat it as an extra financial resource. For many, an inheritance can be a way to pay off immediate debts and is becoming essential for puchasing a place to live.

3. Increase in homemade or DIY Wills: Making a Will is a complicated process. If the strict requirements of the Wills Act 1837 are not followed, it could lead to a Will being declared invalid. Common mistakes in making a homemade Will include asking beneficiaries to witness the Will, the Will being signed incorrectly, and uncertainty due to unclear intentions. Wills cannot be made on a ‘one-size-fits-all’ basis.

4. Blended families: There has been a change of family dynamics, with an increase of step-families and cohabiting families. The order of priority under the rules of intestacy does not take into account step-children or cohabiting couples. Unfortunately, there is no such thing as a ‘common law’ husband and wife. There is little provision within the laws in England and Wales for cohabiting couples.

5. Ageing population and increasing number of deaths: With advances in medical science and health, we are all living longer. Life expectancy is now 83 for women and 79 for men. The number of people over the age of 85 is predicted to double in the next 20 years. 1 in 5 people alive today are expected to reach their 100th birthday.

6. Increase in ageing diseases and care costs: Living longer brings a risk of dementia, which is now more likely to affect people in later life than some cancers, cardiovascular disease, or stroke. There is an estimated 850,000 people living with dementia. This is expected to rise to 1.14 million by 2025. The social care system is increasingly under pressure, with more complex arrangements being put in place for leaving the estate and planning for the future.

7. Financial dependence: Some children have found it difficult to become independent from their parents. It is not unusual for parents to have adult children living with them, or for their adult children to assist with their care needs. This may lead to changes in the parents’ Will or challenges based on the care and provision provided in later years.

8. Increasing use of Lasting Power of Attorney: The Court of Protection is responsible for people who lack capacity to make decisions for themselves and is vastly over-stretched. Applications to the Court of Protection are up year on year, as are the registration of Lasting Power of Attorneys. The vast majority of disputes involve property and financial affairs, and where these are not resolved during a person’s lifetime they continue into death.

9. Generational wealth: Individuals born between 1946 and 1964 are known as the Baby Boomers. Baby Boomers make up around 14.4 million of the UK’s population, which consists of around 67 million people. It is estimated that there are around £5.5 trillion worth of assets that will pass from the Baby Boomer generation in inheritance between now and 2050.

10. Property prices: The value of property has increased considerably over the years. For example, average house prices in London have risen from around £25,000 in 1980 to £520,000 in December 2021. More than 300,000 homes in London are now valued at £1 million or more. This is just in London. Other areas have also increased in value, particularly as a result of the pandemic, resulting in more people willing to challenge estates.

11. Increasing gifts to charity: Charities are expected to receive a record £4 billion of income through legacies left in Wills by the end of 2022. This is a year-on-year increase of 14% on 2021. It is expected to reach £4.4 billion by 2027. With an expectation by family members to inheritance, and a number of high-profile cases involving charities, there has also been an increase to the challenges made to charity donations.

12. Greater awareness: There is greater exposure to probate and inheritance disputes, as they are now featuring in TV shows and films. There are also more cases reaching and being decided upon in the High Court, Court of Appeal, and Supreme Court. Historically, people assumed that if a Will was in place and you were left out of it, that was the end of the matter. However, more and more disappointed beneficiaries are becoming aware of their ability to bring a claim and to take legal advice. This is also helped by a cultural shift towards people becoming more litigious in general. Celebrities and the media are also making comments on their legacies and inheritance.

13. Different funding methods: There is a growing array of litigation funding options available to prospective claimants, making the economics of bringing a claim more viable.

14. More accessible: An increase in alternative dispute resolution, such as mediation, has put more pressure on the parties to settle before
trial; some people think that it is worth bringing a claim in the hope that they will be able to settle for something. The fallback option is that people are much more willing to litigate, as they hope the claim will not make it before a judge.

COVID-19 and the pandemic brought with it an increased number of unexpected deaths. Due to the unprecedented issues faced, but also the number of lockdowns and restrictions, this left a lot of people with time on their hands, in close proximity to family members, and with time to follow up their concerns.

In summary, growth in the last year is set to continue through 2023 and into the foreseeable future, with an average yearly growth of 4%. Increased demand arising from the pandemic, expected continued demand from Will challenges, and greater client awareness of later life planning have all contributed to this. As the number of charitable bequests is also set to increase and the wealth transfer from the Baby Boomers is set to happen as years move on, growth is expected to continue in the sector for the foreseeable future.

This article is featured in the winter 2023 edition of the quarterly news digest, Entitlement. Click the image below to download your free copy of Entitlement for more informative articles.

Topics: Probate, covid-19, Contentious Probate