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Typically, when an inheritance is paid to beneficiaries from an estate or Trust following someone’s death, such payments are made only after the personal representative or Trustee (“fiduciary”) is certain the people receiving distributions are, in fact, entitled to receive them. That’s because once funds have been disbursed to beneficiaries, it’s difficult (if not impossible) to recover such payments. If it is later determined that the Trustee or personal representative erred or if the payments are contested and found to be invalid, the fiduciary could find themselves financially responsible.
However, in a recent appellate court case ruling from the U.K., the judge decided that a woman who inherited funds from the sale of a former romantic partner’s home must return the funds to a Trust intended to be split between the deceased man’s children.
The couple was not married but raised twin sons together. Ultimately though, their relationship ended and the man moved to Germany. Shortly before his death, the man was apparently in negotiations with a development company to purchase the home the couple had lived in together. After his death, the woman claimed she’d entered into an agreement with the man’s two daughters from a previous relationship, whereby she would receive one-half of the sales proceeds and the four children would divide the remainder.
Perhaps not unsurprisingly, the man’s daughters have contested this distribution plan. The original court that heard the case sided with the woman, believing her assertion that she was entitled to one-half of the proceeds. However, the appellate court has overturned that ruling, ordering her to return the funds.
In addition to facing the prospect of having to repay 2.2 million British Pounds, she is also facing requirements to pay an additional 500,000 Pounds in court fees — representing one-half of the fees incurred to date. The case is headed to the Supreme Court for an ultimate ruling.
Have you legally documented your wishes for what will happen to your assets when you die? The Estate Planning & Legacy Law Center can help. Contact us today!