Many parents make substantial gifts for their children during their lifetime to set them up in life, such as the deposit for their first house. It is, however, important to many parents that their children are treated equally, especially as it may be that only one child is ready to purchase a property at the time of the gift. Although there is a presumption under common law that a parent would not intend to benefit one child twice – what can be done to ensure the inheritance is equal?

Hotchpot clause in a Will

The best way to ensure that beneficiaries are treated equally when considering lifetime gifts, is to include a clause in the Will. This is known as a hotchpot clause and can be adapted to meet the testator’s requirements. Such a clause will ensure fairness to the beneficiaries by considering amounts already received by the testator during their lifetime when calculating the final amount due.

Double Portions

If testator’s do not include such a clause, then, there is a presumption in common law against double portions.

A double portion is where a parent prepares a Will benefiting their child and then, after signing the Will, makes a gift to that child of a substantial sum. There is no definition of “substantial”, however, caselaw states that the sum of £20,000 is substantial. This gift would then be treated as an advance on the testamentary gift, unless there is evidence to the contrary.

Evidence of contrary intention could be the inclusion of a clause in the Will, email or even a letter stating that no subsequent gifts should be considered when distributing the estate.

Conclusion

It is important that parents think carefully when preparing their Wills as to whether any future gifts are considered as part of their child’s inheritance.

If a parent already has a Will in place and then decides that they would like to make a substantial lifetime gift of money to a child, it is important that their intentions are clearly documented when doing so. This should confirm whether the gift to the child is to be treated as a “bonus” gift (i.e., in addition to the child’s inheritance under their Will), or whether it should instead be treated as an advancement of their inheritance under the Will. Failing to do this may cause disagreements between the children, which could ultimately lead to legal disputes and additional costs following the parent’s death when their estate is being administered.

How we can help

If you have any queries relating to this topic or want to explore your options relating to Wills and inheritance, our expert team is here to help. Contact us today to discuss your circumstances and find the best approach for your situation.