The basis for Succession Act and Family Provision Act claims is on the basis of needs or specifically in some legislation the costs of maintenance, education and advancement in life. It is necessary to arrive at a lump sum value in respect of those future needs, but how do you calculate a lump sum value?
There are two general components to a lump sum value:
- The current value of the costs likely to be expended into the future, on a per annum or weekly basis, and
- A discount rate reflecting the earnings that a lump sum could earn after inflation and tax.