I’ve promised to leave my property to someone after my death, and now I’ve changed my mind ….

Most people believe that they have the freedom to decide who they leave their estate to following their death, however this is not always the case, and in some circumstances, the decision can be taken away from you whilst you are still alive.

Proprietary Estoppel

The principal of proprietary estoppel allows claimants who have been promised property (or other assets), to obtain a legal interest in that property, subject to the claimant satisfying the relevant criteria.  Fundamentally the claim enforces the principal that in some circumstances, a promise is legally binding.

In order for a claim to be successful, the claimant must evidence three elements;

(1)            That a promise has been made (which can also be a representation or assurance);

(2)            That the claimant has relied upon that promise; and

(3)            The claimant has suffered loss as a result of reasonably relying upon the promise.

An Example

Charles has two adult children, Henry and William. Charles is diagnosed with dementia but wishes to remain in his home for as long as possible.  Charles asks Henry to move in with him and become his full time carer on the understanding that Charles will make a will leaving Henry the family home.  Henry agrees, gives up his job and moves in with his father to care for him.  As Henry and Charles were family, they did not feel the need to enter into a legal agreement setting out the terms of the arrangement. 

Several years later, Charles had a change of heart and felt that it would be unfair to William if he left the whole of the family home to Henry.  Whilst he still had the mental capacity to make a will, Charles changed his will leaving the family home to Henry and Charles in equal shares. 

Following Charles’ death, Henry may be successful in bring a proprietary estoppel claim against Charles’ estate to recover the whole property, on the basis that a promise was made to leave the house to Henry, he relied upon that promise by moving in and caring for Charles and suffered a loss as he gave up his job to do so.

Claims Prior to Death

In the example above, Henry was not made aware that Charles had broken his promise until after his death, however in the case of Gee v Gee [2018] EWHC 1393 (Ch) the High Court enforced a promise made by a father to son before the father’s death and reversed a transaction which had breached the promise.

Mr & Mrs Gee owned a farm which was run through a company owned almost entirely by Mr Gee.  They had three children, the eldest of whom, John, who had spent most of his life living and working on the farm.  John had earned less than he would have been paid elsewhere and worked incredibly long hours, on an assurance from his father that he would inherit the farm (with some provision also being made for his siblings).

In 2014, Mr Gee changed his mind and wished for Robert to take over the farm and company within Mr Gee’s lifetime. The farm and company were transferred to Robert following which John’s employment was terminated.  John issued proceedings under the principal of proprietary estoppel as for decades he had been promised the farm, which he relied upon to his detriment by working long hours for low pay.

John was successful in his claim and the court determined that it was too late for Mr Gee to change his mind regarding who would inherit the farm and that he could not go back on the promise he made to John.  As a result, John was awarded a majority shareholding in the farm and the land which was transferred to Robert was ordered to be transferred back to Mr Gee and subsequently transferred to John.

What should you do?

If you are in the position of Mr Gee or Charles, it is important to bear in mind that the principal does not just apply to an outright promise and a claim can be brought on the basis of representations and assurances, such as a series of comments along the lines of “one day the farm will be yours”.  Therefore, if you do not wish to erode your freedom to leave your assets to whomever you wish, do not make promises or create expectations that you are not sure you will fulfil.

Most importantly, ensure that you make a will which clearly addresses the issue of succession and discuss the same with your family members to ensure that there are no expectations which will not be fulfilled.

If, however, you find yourself in the position of Henry or John, it is very important to ensure that the terms which have been reached are contained within a legally drafted agreement and is signed by both parties.  It can sometimes be difficult to raise the issue of a formal agreement with family members as it is assumed that it is not necessary on the basis of the relationship of love and trust.  However, a conversation regarding a formal agreement and incurring the relatively small cost of preparing an agreement will likely prevent future disputes from arising and will save you the significant costs which will be incurred should a claim need to be issued with the court in order to enforce the oral agreement.

How can we help?

If you find yourself involved in a proprietary estoppel claim or wish to take steps to avoid a dispute in the future, please get in touch, we are will be happy to help.