What is a Pre-Death Agreement?

INTRODUCTION

In estate planning, it can often be challenging to comprehend the nuances of asset distribution, especially when Pre-Death Arrangements are involved. Therefore, we aim to demystify these estate planning components so that you can confidently handle any potential conflicts and better grasp your rights and obligations.

Since these agreements are often verbal, implementing them between the future deceased and another person can become contentious, giving rise to court battles. Essentially, they raise important questions about the nature of legal obligations and certain rights in relation to an individual's estate.

In this section, we delve into the nature of Pre-Death Agreements, explain why they can sometimes cause problems, and outline where and how they are legally enforceable. We'll also cover critical legal issues frequently related to these types of agreements, such as Constructive Trusts and Proprietary Estoppel. We'll also go over who is eligible to file a claim for proprietary estoppel based on a Pre-Death Agreement, the deadlines for doing so, and how long a Pre-Death Agreement dispute typically lasts.

Finally, we'll discuss the potential costs of these disagreements and whether court appearances are essential.

WHAT IS A PRE-DEATH AGREEMENT?

A Pre-Death Agreement is a verbal promise made by a person to leave specific assets or property to another person before they pass away. This could be a promise to leave something behind after their death or, in rare cases, to transfer or give away property before they pass away.

These agreements can often be informal and may lack formal written documentation. This informality can make them potentially controversial under English law due to the difficulties in providing clear evidence of their existence and terms. We therefore recommend that you record Pre-Death Agreements in writing whenever possible to minimise potential disputes.

Making a promise in a Pre-Death Agreement that is later broken, withheld, or not included in the deceased individual's Will can lead to disputes. The absence of formal written evidence can make such disputes particularly challenging to resolve.

WHY ARE PRE-DEATH AGREEMENTS SO CONTENTIOUS?

Pre-death arrangements can lead to disagreements, such as when the Testator made no provision for the promise in the actual Will. Or there could be concerns about the Testator's mental capacity at the time the Will was drawn up. Or allegations about undue influence could have been made.

If the Testator dies without leaving a Will, the estate is typically distributed according to the laws of intestacy. In these cases, a dispute can arise if a Pre-Death Agreement conflicts with these laws. However, it's important to remember that any successful claim based on proprietary estoppel or constructive trusts may override the rules of intestacy under English law.

Disputes can also occur due to mistakes made by the Testator, such as when the Will writer fails to include the Pre-Death Agreement in the Will. In such circumstances, the Will writer may be liable for professional negligence.

In addition, it's essential to consider the Inheritance (Provision for Family and Dependants) Act of 1975 in this context. This legislation allows individuals who depended on the deceased financially but weren't adequately taken care of by their inheritance to receive support from the estate.

CAN A PRE-DEATH AGREEMENT BE ENFORCED?

Yes. There are certain circumstances under which a Pre-Death Agreement can be enforced.

Typically, it depends on whether an individual relied on any promise made under a Pre-Death Agreement which is now to their detriment.

As such, certain components need to be evident:

1. An assurance component: was a promise made to the claimant that led to a certain expectation?

2. A reliance component: when making certain decisions, did the claimant rely upon the assurance or promise made in the Pre-Death Agreement?

3. The detriment component: is the claimant financially worse off as a result of relying upon the Testator's assurance or promise?

4. The unconscionable component: is it deemed unjust or unconscionable for the assurance or promise not to be enforced?

WHAT IS THE DEFINITION OF ‘PROPRIETARY ESTOPPEL’ AND WHAT DOES IT HAVE TO DO WITH A PRE-DEATH AGREEMENT?

A person may be qualified to legally enforce a promise of property ownership if they base certain decisions on it, but the formal transfer doesn't take place, leaving them worse off.

This type of circumstance frequently occurs when an individual is promised that they will inherit a business or a plot of land (typically in farming) and thus commits many years of work, often for little or no pay.

If, in the end, the individual does not end up inheriting that business or piece of land, then they can make a proprietary estoppel claim. 

WHAT IS A CONSTRUCTIVE TRUST AND HOW DOES IT RELATE TO A PRE-DEATH AGREEMENT?

A constructive trust relates to a Pre-Death Agreement when a legal property owner promises an interest in that property to another individual, who then relies on that assurance, often to their detriment. This relationship typically becomes relevant when the property owner passes away without formally transferring the promised share.

These situations often arise when individuals cohabit a property owned by one of the individuals. An understanding might exist whereby one individual has been promised a share of the property based on their financial or non-financial contributions to the owner, making it a contentious point if the promise is later not fulfilled.

In this case, a resulting trust could be considered relevant since an individual who is not the legal owner of a property is deemed to hold a share in it due to their financial contribution towards it.

IS THERE A TIME WINDOW FOR FILING A PRIMARY ESTOPPEL CLAIM BASED ON A PRE-DEATH AGREEMENT?

Although there isn't a set period of time in which to assert a proprietary estoppel claim, swift action is crucial when filing a claim based on a Pre-Death Agreement. This will help you avoid all the complications that arise once an estate has already been distributed and protect any evidence you have that supports your claim. 

CAN ANYBODY FILE A CLAIM BASED ON A PRE-DEATH AGREEMENT?

Claims are not limited to family members or friends. In fact, any party may have the right to file a claim due to a Pre-Death Agreement if they have suffered a loss as a consequence of an unfulfilled promise, including business partners or employees.

HOW LONG DOES IT TAKE TO RESOLVE A PRE-DEATH AGREEMENT DISPUTE?

It all depends. Sometimes, claims can be settled relatively quickly. Other claims can end up being long and drawn-out affairs.

AM I REQUIRED TO APPEAR IN COURT DURING A DISPUTE?

Not always. Many disputes can be settled out of court, most often due to successful mediation that can lead to an early settlement.

Parties frequently resolve disputes, even after legal action has commenced.

HOW EXPENSIVE IS IT TO RAISE SUCH A DISPUTE?

The costs of inheritance and will-related disputes can vary widely. This will depend on several factors, such as:

• the complexity of the case;
• whether expert witnesses are required;
• the length of time the dispute takes to resolve.

We always advocate swift action under any circumstance to minimise the potential of costs spiralling out of control. In certain circumstances, if all parties agree to a dispute, they may also agree on how the costs can be allocated between them. However, in the event of no agreement, then the court will decide who pays the fees.

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