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By Nick Hood
Inheritance disputes have fascinated public opinion from the moment that the farcical Jarndyce v Jarndyce case flowed from the pen of Charles Dickens onto the pages of Bleak House. This was believed to be based on a real life case which had been running then for 55 years, having commenced in 1798. It was only abandoned in 1915 when the funds in the disputed estate were exhausted by legal costs.
Judging by a minor Twitterstorm of vitriolic criticism unleashed recently by some very bland comments about a breakfast seminar focused on certain recurrent issues dealt with by the Court of Protection, the accretion of personal wealth by a rapidly ageing UK population is creating great anxiety for those who feel they have a claim on it. These concerns seem to be generating as much if not more heat and certainly less light than Dickens’ fictional courtroom protagonists.
Statistics suggest that demographic and financial trends are driving up activity in the Court of Protection. The number of property and affairs applications to the Court in 2012 was 26% higher than in 2009 and, critically, the number of deputies appointed by the Court to supervise the estates of the vulnerable also rose by 26% over the same brief period.
The causes are obvious. A substantial number of these cases arise from the financial affairs of the elderly. The Office for National Statistics is predicting that the UK population aged over 65 will increase from 10.8m in 2012 to 13.8m in just 10 years’ time, a rise of 28%. But even more strikingly, those over 75 will rise by 41% by 2024 and those over 80 will increase by 38% to 4.1m people by then.
Britain is ageing inexorably, but the baby boomer generation now reaching retirement age is far wealthier than any previous generation and getting richer as house prices are bubbling higher once again after a pause during the recession. This is pushing up Inheritance Tax proceeds, which rose to £3.1bn for 2012/13 from £2.4bn in 2008/9 and is predicted by HMRC to reach £5.5bn by 2018.
Families are far less stable than in the past, a sure-fire recipe for problems when mixed with money. The ONS has estimated that 42% of marriages end in divorce, while opposite sex cohabiting couples have risen by 32% to 2.9m in the last ten years. Modern family units can be complex, with children from several different marriages, sometimes without a birth parent present any longer. Post-recession financial problems are forcing more young people to stay in the family home; 26% of 20-34 year olds now live with one or more parents. Over 3 million adults are now dependent on family wealth not only for housing, but often just to survive. A further concern is the trend in delayed parenting, meaning that people will in future be far older as their children come to maturity.
Many are concerned at the social implications of this lack of cohesion, but there are serious financial considerations too. This melting pot syndrome may be the way of the modern world, but it is bound to be a source of serious strife when it comes to money. Everyone knows what happens within families when a senior member dies. Decades of sibling love can be transformed into visceral feuds over a cheap ornament, never mind substantial wealth.
But as the population ages and becomes more infirm overall, the problem will not so much be about bequests, as the squabbling over assets while parents and grandparents are still alive. As people get older, they develop a fundamental concern about the adequacy of their financial resources and an irrational worry about the cost of care in their old age. Years of ultra-low savings interest rates, falling annuity rates and the ending of the final salary pipedream is exacerbating this, as is the prospect of having to depend on retirement income for 25 years or even longer.
This is creating a hoarding imperative, which meets head on the instincts of younger generations with genuine or sometimes pretended financial needs driven by “I want it and I want it now” attitudes. The pressure to demand a share of parental income and capital starts early with student debt problems, is sustained through housing cost crises and will escalate further now that entire pension pots will soon become available in cash. It eventually peaks with festering and barely-disguised envy at seeing the family wealth continue to be tied up unproductively in the original family home or low yielding savings accounts.
The one certainty of these trends is that the workload of the Court of Protection will increase exponentially; its judges will be faced with ever more intractable moral and ethical issues. Resolving these dilemmas is likely to need all of the wisdom of Solomon and more patience than any saint.
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