Wealth advisors can learn important lessons from these high-profile cases.

Earl Spencer's decision to overlook his eldest daughter and pass on the Althorp estate to a younger son will rankle with many fighting for gender equality in all its forms. Hannah Glover, associate in the wills and estates team at Cripps Pemberton Greenish, uses Althorp's controversial decision to underscore what wealthy families with substantial assets need to consider when passing on their heritage to younger generations without putting families at odds. The editors of this news service are pleased to share these views; to respond, readers should email tom.burroughes@wealthbriefing.com or jackie.bennion@clearviewpublishing.com

Last month Earl Spencer, the younger brother of Princess Diana, revealed his controversial plan to leave the family's Althorp estate to his son, rather than his eldest daughter, Kitty. In an era where society is increasingly attuned to issues of gender inequality, Earl Spencer’s decision to adhere to the historic practice of male primogeniture with regard to Althorp’s succession planning is perhaps surprising. This decision can be contrasted with the move the Royal Family made in 2011 to update the Succession to the Crown Act. These updates mean that princes no longer take precedence over their sisters, bringing an end to the historic system of male preference primogeniture.

Male preference primogeniture is a custom whereby an individual chooses to favour their eldest son over their other children in matters of inheritance. A similar concept of ultimogeniture exists whereby the youngest child is favoured. Historically, other than to maintain hierarchical traditions, male preference primogeniture was invoked to ensure that large estates (like Althorp) were kept together and intact. Property ownership can become quickly fragmented following the death of just one or two co-owners.

Whilst Earl Spencer has been criticised for his decision, most strikingly referred to as a show of ‘institutional inequality’, he has made the right decision in starting the conversation about Althorp’s succession early on. All too often the UK Courts are asked to consider will dispute matters. For example, where a child, spouse or former spouse of the deceased brings a claim against their estate because they do not feel they have received reasonable financial provision.

Clearly, in cases where the deceased has arranged their affairs based on male preference primogeniture, there is a risk of similar disputes being brought by disappointed siblings. The court can be asked to consider whether or not the deceased made reasonable financial provision for the disappointed party and in doing so will consider a number of factors, including financial resources and needs and the size and nature of the net estate amongst other factors. Notable cases like Illott, in which the family contested the decision made by their relative to give a significant percentage of their estate to charity upon their death, demonstrate the emotional and financial impact cases like this can have.

As wealth advisors, we can take important lessons from these high profile cases. Where appropriate, encouraging clients to start the conversation with their family and friends early and perhaps even facilitating a family meeting to explain the arrangements they have made can help to minimise disputes later. Equally, ensuring that your clients have a professionally drawn will is important. When drafting a will, lawyers will consider the risks of a claim being brought against your client’s estate, suggesting ways to minimise this risk. For example, in some cases, making a statement of reasons to accompany the will can be helpful.

Early discussions are particularly crucial if a high net worth individual owns agricultural land, is in charge of a landed estate like Earl Spencer or owns or manages a business or family run company. It is important that decisions and actions are taken ahead of that individual’s death to manage the risk of disagreements arising between family members and others in management roles. Planning early will allow wealth advisors and/or family legal teams the time and opportunity to help to structure a client’s will and financial affairs in a way that maximises the availability of valuable business property relief and agricultural property relief from inheritance tax. If the qualifying conditions are met, the individual might find the inheritance tax they have to pay is minimal.

The takeaway lesson is that many family disputes are caused by communication breakdown when big decisions are made or in the event of a family death, so any steps you can take ahead of time will help to save both tears and money in the long run.