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Pensioner slapped by his 74-year-old sister over £2 million inheritance row

You would think that leaving an estate to children equally would keep things simple and avoid a dispute but the late Ted Townsend couldn’t have foreseen the years of anguish that followed his death…

Ted Townsend died in 2004 leaving a will gifting a portfolio of shares worth £1.1 million to his daughter Fay Crabbe. His son Edward Townsend inherited the family home, Bridge Villa, and the adjoining caravan park business.

At the time he made the will, it looked like a fairly equal division. However, by the time Ted Townsend died, the picture was very different. Mrs Crabbe was left with an inheritance tax bill of £396,000 and following the 2008 financial crash, her inheritance fell from a share portfolio of £1.1 million to one worth just £577,000 in September 2009. That gave Mrs Crabbe an inheritance of £181,000 in total.

While that would be a very handy sum for most people, what made it so controversial was the fact that her brother’s inheritance had a much smaller inheritance tax bill because there was tax relief available for the business – and the business did not crash in value in 2008. His inheritance was therefore worth nearly five times the amount his sister inherited.

Not surprisingly, this caused a lot of friction between the siblings and Mrs Crabbe sued the estate.

Mr Townsend explained to the court that they hadn’t been able to sit down and sort something out because he was scared of meeting with his sister in person. He told Judge John Martin QC: “The reason I don’t meet with my sister is because, on one occasion at Bridge Villa, she slapped my face and I vowed I’d never be put in that position again.”

The difficulty is, what could Ted Townsend have done to avoid the problem? The answer isn’t straightforward. Certainly he could have left everything to them both in equal shares, so they could have both received half of the business and half of the portfolio.

If it was important to Mr Townsend that his son inherited all of the business, he could have given his daughter a tax-free lump sum, with the rest going to his son to ensure that his daughter received a sufficient amount from the estate.

It might also have been a good idea for the executors to administer the estate more quickly so that more of the shares portfolio would have been available to Mrs Crabbe.

Hindsight is well known to have 20:20 vision, but the moral of the tale may well be to ensure you understand the tax consequences of making your will a certain way – and for executors, the importance of moving the administration of an estate forward if at all possible to ensure that they cannot be blamed if the value of investments fall.

 

For more information about inheritance tax and estate planning, please contact the Private Client team by emailing thasson@lyonsdavidson.co.uk.

 

Posted on Jul 4th, 2016 by Lyons Davidson