Author: Helena Luckhurst
This article is taken from Helena Luckhurst’s blog The Wealth Lawyer UK
Last week, the Supreme Court brought to an end a 13 year legal battle over the late Mrs Jackson’s Will. The Will left virtually all of Mrs Jackson’s assets (some £480,000) to three UK charities, cutting out entirely her only child (Mrs Ilott), who was for many years estranged from her mother but who lived in very financially straitened circumstances with her husband and five children.
Mrs Ilott brought a claim against the estate under the Inheritance (Provision for Family and Dependants) Act 1975. That Act allows certain categories of applicants to apply for reasonable financial provision from a deceased UK domiciliary’s estate. The potential applicants under the Act include a child of the deceased but reasonable financial provision is limited to ‘such financial provision as it would be reasonable in all the circumstances of the case for the applicant to receive for his maintenance’ (section1(2)(b)). The District Judge, at first instance, awarded £50,000 out of the estate to Mrs Ilott, in satisfaction of her 1975 Act claim but, on appeal, the Court of Appeal awarded £163,000.
The Supreme Court (per the judgment of Lord Hughes, with whom the rest of the Supreme Court Judges agreed) acknowledged that the 1975 Act impinges upon testamentary freedom in the UK. However, the concept of testamentary freedom remains central to English law:
‘The law knows of no rule of automatic succession or forced heirship’ (paragraph 1).
The decision also recognised that the long estrangement between the mother and daughter should be given due weight. The 1975 Act states that, in determining whether the deceased’s Will or the intestacy rules (if there is no Will) make reasonable financial provision for the applicant under the Act, the court is obliged to have regard to a number of matters, including the financial resources and financial needs of the applicant, as well as those of the other beneficiaries. The size and nature of the estate and ‘any other matter, including the conduct of the applicant or any other person, which in the circumstances of the case the court may consider relevant’ (section 3(1)) are also taken into account.
The Supreme Court was critical of the Court of Appeal’s view that the long estrangement counted for little:
‘It is not the case that once there is a qualified claimant and a demonstrated need for maintenance, the testator’s wishes cease to be of any weight. They may of course be overridden, but they are part of the circumstances of the case and fall to be assessed in the round together with all the other relevant factors…it was not correct that so long and complete an estrangement was of little weight…care must be taken to avoid making awards under the 1975 Act primarily awards for good behaviour on the part of the claimant or penalties for bad on the part of the deceased’ (paragraph 47).
The court confirmed that the estrangement should limit the quantum of the award.
The judgment also provides useful guidance on what maintenance means in practice. It was noted that the concept of maintenance is broad but it should be taken to mean an amount to meet the everyday expenses of living – neither everything that would be desirable for the claimant to have but equally not limited to a subsistence level of living. Reference was made, with approval, to a claim by a married adult son living in comfortable circumstances on a good income, whose claim to have his mortgage paid off was refused (Re Jennings, deceased  Ch 286, per paragraph 14). Equally, the court confirmed that necessitous circumstances are not, by themselves, always sufficient to justify a claim under the Act. Maintenance should be regarded as the provision of an income, albeit that a capital sum could be awarded to provide the income stream. If housing is needed to meet a claim for maintenance, the court noted that a life interest would usually be awarded in preference to a capital sum. In Mrs Ilott’s case, many of her everyday living expenses were being met by her state benefits. The £50,000 awarded was felt to be the correct amount to enable Mrs Ilott to purchase essential white goods, basic carpeting and curtains and replace worn out furniture in the family home. These were regarded as necessities for daily living by the court and therefore meeting the requirement for maintenance. If the £50,000 award was used in this way, Mrs Ilott’s capital would soon fall below £16,000 again, at which point her state benefits would restart. The Court of Appeal’s decision to award a capital sum to enable Mrs Ilott to buy her home was rejected because her Housing Benefit was paying the bulk of her rent.
The Supreme Court’s decision restores confidence in the will-making process. It provides an invaluable road map for anyone tasked with advising a prospective will-maker whose Will provisions may prove controversial to their family and any financial dependants, as well as for consolers of disappointed children.
Helena Luckhurst, Partner, Fladgate LLP (firstname.lastname@example.org)