When taking Will instructions from clients, most of them have already thought about who they would like to inherit their wealth on their death; this usually being the immediate family, their partners perhaps in the first instance with substitute provisions in favour of children or grandchildren. It may be that they have in mind wider family from the outset if they do not have any children or perhaps friends or charities.
As part of taking Will instructions a client will be asked to consider what we call the “worst case scenario” whereby something has happened to themselves and also the immediate people they would normally wish to benefit. It is quite normal that the clients have not even contemplated this scenario and it often brings about much head scratching and debate, particularly if taking instructions from a couple as they may have differing views for this situation. Some clients do not even wish to consider it as obviously it can be very uncomfortable and emotional thinking about the fact that close family may not survive them.
During these discussions clients may be prompted them to consider what wider family they have, although they may not wish to benefit them, for example if they feel they are financially independent or they have very little contact with them. They may wish instead to consider friends or in some cases charities where they already have some connection or where they would see that the money would be put to good use.
If this worst case scenario is not covered in their Will, often known as a “tragedy clause” or “ultimate default”, then if the worst did happen an intestacy would arise. This could result in the wealth passing to family members that the client would not have wished to benefit, either because they are not on good terms with them or perhaps did not even know them. In addition costs may be incurred to locate the next of kin and there could be uncertainty and delay as to the distribution of the estate. When this is explained to clients then they would usually prefer to have more certainty and identify beneficiaries who they are more closely connected with.
Usually these conversations are in respect of a client’s residuary estate but it should also be raised in respect of specific gifts of assets as unless drafted carefully, if the beneficiary of such a gift had died before them then the gift may not automatically fall into residue and it could result in a partial intestacy bringing with it the consequences above.
The implications when speaking to couples have to be carefully considered as it will be unknown under which Will the provisions will take effect. Usually they should therefore include the same “tragedy clause” and it may be that couples will identify half of the estate to pass in favour of one couple’s wishes and the other half in favour of the other couple’s wishes. This could be 50/50 between the two sides of wider family or it might be to specify charities they have each chosen.
A worst case scenario may potentially benefit charities as it can often be that a client will specify charities to inherit in this situation.
One such case was the catering millionaire Richard Cousins who died on New Years Eve in 2017 in a helicopter crash with his fiancée, his daughter and his two sons in Australia. As all his close family had been killed in the accident, his Will provided that the majority of his estate would pass to the charity Oxfam and they received in the region of £41 million. Such a provision in his Will ensured certainty in the administration of his estate and provided a welcome benefit to the charity.
Fortunately such tragedies are rare in practice but we would recommend that clients do consider the worst case scenario to ensure their wishes would be fulfilled in these circumstances. Tragedy clauses help to provide certainty and could ensure some good comes from what would be a terrible family tragedy.