Inheritance and Trustees’ Powers Bill [HL]

Lord Beecham Excerpts

Tuesday 22nd October 2013 Grand Committee

[Lord Beecham (Lab)]

My Lords, I join other noble Lords in thanking the Minister for the clarity with which he went through this very technical Bill. He has made it comprehensible, I think, to all who have heard him address these issues today. Before we began today’s debate, the noble Lord, Lord Henley, inquired whether I had any more Dickensian quotations—we tend to bandy them across the Chamber at one another. I confess that I have not come up with anything, except perhaps to note that this is after all a Bill about expectations great and modest.

The noble Lord also said that he was pleased that the Bill did not interfere with the freedom of testation, which of course it does not. It is perhaps worth reminding your Lordships that the Inheritance (Provision for Family and Dependants) Act allows for applications to be made in respect of an estate where a dependant feels that his or her interests have not been adequately reflected in the will that has been made or, indeed, under an intestacy. However, this measure does not deal with that particular set of events.

The noble Lord inquired into the numbers involved. The impact analysis of the Bill refers to there being something like 1,045 estates valued at £450,000 or more; that was the figure he was looking at, which currently applies for cases where there is no surviving spouse. However, although there are 1,000 such estates or thereabouts, the estimate is that only 5% to 10% of those are intestate estates. We are therefore dealing with pretty modest numbers, although they are obviously significant to anyone involved with one of those estates.

I have to congratulate my noble friend Lord Wills again on the ingenuity with which he manages to bring into legislative debates matters about which he is particularly concerned. I am tempted to throw in a slightly Dickensian reference to King Charles’s head, but will not pursue that at any length because, of course, he raises a legitimate and interesting point, which we will no doubt have the opportunity of debating further. However, when it comes to exploitation of vulnerable people or misconduct by any adviser—be it a solicitor, bank or anyone else whose responsibility clearly ought to be to act in the interests of those to whom an estate has been left—the numbers are again pretty small. The noble Lord mentioned 65 cases. There are 240,000 grants of representation every year; that figure appears in the commission’s report. It is a minuscule proportion, but of course any one case is too many. Not far from where I used to practise in Newcastle—I declare my interest as a now-unpaid consultant in a firm in which I was formerly senior partner—there was a serious case where, I recollect, a £90,000 bill was levied on a £100,000 estate by a solicitor who was, of course, subsequently struck off and also visited with criminal sanctions. I think the office where he carried out this misfeasance remains to this day unlet and unoccupied. That is not to say that my noble friend is not right to raise the issue. It will be interesting to see what proposals he has to make about it.

The noble Lord, Lord Marks, made some interesting points. He referred to the fact that dealing with the issue of cohabitees is to be Liberal Democrat policy, which must of course give great heart to cohabitees, bearing in mind what happened to things like student loans and nuclear power. Nevertheless, hope springs eternal in a Lib Dem’s breast. We might see some action—possibly—along those lines. I share the noble Lord’s concern about cohabitation. The commission argues a strong case for dealing with what is now a growing number—the noble Lord referred to 6 million although I think the documentation suggests 7.5 million —of people, about 15% of families, living in that state. I am not sure why the Government choose not to proceed—not necessarily in this Bill but in this Parliament—on a matter which I would have thought would command support. The consultation responses to the commission’s report were fairly limited. Although I recall there were some in the part about cohabitation, they were a relative handful.

If I have a confession to make, it is that I did not quite struggle through the entirety of the Law Commission’s report, but did look particularly at the section on cohabitation—which, appropriately enough, comprises about 15% of the report. There were obviously those with particular religious views who were concerned about the cohabitation proposal but there did not seem to be great hostility beyond that. I would have hoped that the Government would look more sympathetically at that. It need not be in this Bill but they could, at least, pursue further consultation with a view to bringing forward legislation, whichever Government assumes office after the next election.

I agree with the noble Lord on that issue but am not entirely convinced about his references to the desirability of the half-share—which, under present circumstances, may be held on a life interest—becoming absolute. In many cases that would be absolutely appropriate, but it might be a bit hard in a situation where the total estate is not that much more than the statutory amount of £250,000 but where there are children, particularly if they are from a first marriage or civil partnership, for example. Such children might see their inheritance reduced effectively to a quarter of the estate; whereas ultimately, under the existing framework, it could be a half. If there is a lot of money, that is less relevant, but if it is a relatively modest estate there might be some potential hardship to children, particularly in the case of a second marriage or second civil partnership. Having said that, I suppose that it is always possible to revisit these matters in due course, but it would be interesting to see how that plays out.

Two other matters occurred to me. The first comes from the left field, as it were, and relates to the position where a testator or intestate with English domicile had two wives. That may be the case if someone of a certain religion had come from a country where it was possible to have more than one spouse. I am not sure what the current situation is, let alone how that would apply in these circumstances. I do not know whether the Minister, his colleague or those behind him can advise about that. It is not going to be a huge issue but it might be an issue.

I mentioned the second issue—the potential impact when a joint tenancy is part of the family’s assets—at the meeting that the Minister helpfully organised. A joint tenancy is one in which there is an undivided share of property. A husband and wife, or any two people, hold the property, which automatically passes on death to the other. It is not included in the estate and is not therefore taken into account under the present arrangements. That is as opposed to a tenancy in common, where you have a distinct share that can be left by will or would pass under the intestacy rules. I suppose it is possible that the inheritance family provision legislation could apply in that context; someone may feel that they have been significantly bypassed and could make an application. I do not know what the prospects of success for such an application would be. Perhaps I am overcomplicating things but I wonder whether some notice ought to be taken of the potential impact of a joint tenancy absorbing perhaps a significant part of the estate and taking it outside of the regime that the Bill helpfully provides. Perhaps one might consider that in Committee or perhaps the Law Commission might want to advise the Minister before we get to Committee as to whether anything might be done in that respect.

Basically, we are supportive of the proposals. Subject to possible minor adjustments here and there, they represent a way forward. I join the noble and learned Lord, Lord Lloyd, and others in paying tribute to the commission and particularly to Professor Cooke for the amount of work done and the clarity with which the case has been made, both in documentation and in the helpful session that we had. We look forward to completing the work on the Bill fairly rapidly. It will certainly provide justice for many people and improve on the current situation. In principle, therefore, we support the Bill.

--- Later in debate ---

[Lord McNally]

I could not agree more. I also say that I take very seriously my responsibility to bring the non-controversial parts of the work before the House.

Whether we should take the non-domicile question out of the Bill can be looked at in Committee. It seems to me that what we have done is no more than to recognise the realities we face in our relations with our Scottish colleagues, but I take on board the point made by my noble friend Lord Marks that in an increasingly international world some of this might have cross-border dimensions.

My noble friend Lady Hamwee made the point about housing now being a big part of any inheritance. She also raised the question of inheritance tax implications. We can look at that in Committee if necessary, but on her specific question about the commencement provision, there is no precise timing as yet, but the intention is that commencement will be all at one time.

I was extremely pleased by the contribution of the noble Lord, Lord Shaw, both for his welcome for the Bill and for the personal example that he gave, which was extremely helpful to the Committee. I shall treasure the compliment of the noble and learned Lord, Lord Lloyd; I shall tuck it away. We will have to leave it to the historians to decide whether it is Wills, Ashton, Etherton or one of the joint parentages we were talking about earlier in the debate. Nevertheless, the fact that the noble and learned Lord has been willing to take on the chairmanship has given an impetus and confidence to this procedure.

I was greatly sorry that the noble Lord, Lord Beecham, did not take this opportunity to give us a quote from Bleak House. Surely there is one somewhere here.

[Lord Beecham]

I have done that so often.