THE SCOPE OF THE INHERITANCE (PROVISION FOR FAMILY AND DEPENDANTS) ACT 1975 AFTER ILOTT V MITSON

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1 THE SCOPE OF THE INHERITANCE (PROVISION FOR FAMILY AND DEPENDANTS) ACT 1975 AFTER ILOTT V MITSON EMMA FACEY TEP & PATRICIA WASS TEP, CHAIR OF STEP WORLDWIDE

2 THE INHERITANCE (PROVISION FOR FAMILY & DEPENDANTS) ACT 1975 Key points The deceased must be domiciled in England and Wales A claim can be made with or without a full grant of representation/probate A claim should be made within six months of the grant of representation/probate Claims out of time can succeed Section 4 (Re Salmons and Berger v Berger)

3 THE INHERITANCE (PROVISION FOR FAMILY & DEPENDANTS) ACT 1975 Who may apply? Section 1 Spouse or civil partner of the deceased Former spouse or former civil partner of the deceased (but not one who has formed a subsequent marriage or civil partnership) Any person living in the same household as the deceased as husband or wife or civil partner of the deceased for two whole years ending immediately before death A child of the deceased Any person treated as a child of the family by the deceased Any person maintained by the deceased, in whole or part, immediately before death

4 REASONABLE FINANCIAL PROVISION The test Does the will or intestacy fail to make reasonable financial provision for the claimant? If not, to what extent should the Court exercise its powers under the Act? There are two standards by which reasonable financial provision is measured:- 1. The standard which applies to claims by spouses and civil partners - Section 1(2)(a) Spouse or 1(2)(aa) Civil Partner Such financial provision as it would be reasonable in all the circumstances of the case for a husband or wife to receive, whether or not that provision is required for his or her maintenance 2. The standard which applies to all other claimants - Section 1(2) (b) Such financial provision as it would be reasonable in all the circumstances of the case for the applicant to receive for his maintenance

5 MAINTENANCE WHAT IS IT? Maintenance is not defined within the Act It is not a level of luxury, nor one which sustains only a breadline existence It should allow the claimant live decently and comfortably Having regard to all of the circumstance which affect the claimant It is an objective assessment Can be by way of income provision as well as capital

6 SECTION 3 - MATTERS TO WHICH THE COURT IS TO HAVE REGARD The financial resources and financial needs which the claimant has or is likely to have in the foreseeable future The financial resources and financial needs which any other claimant has or is likely to have in the foreseeable future The financial resources and financial needs which any beneficiary has or is likely to have in the foreseeable future Any obligations and responsibilities which the deceased had towards any claimant or beneficiary The size and nature of the net estate

7 SECTION 3 FACTORS CONT. Any physical or mental disability of any claimant or beneficiary Any other matter, including the conduct of the claimant or any other person, which in the circumstances of the case the court may consider relevant Additional factors for a spouse/civil partner: The age of the claimant and the duration of the marriage or civil partnership The contribution made by the claimant to the welfare of the family of the deceased, including any contribution made by looking after the home or caring for the family The provision which the claimant might reasonably have expected to receive on divorce

8 WHILST ILOTT v MITSON HAS BEEN GOING ON Ames v Jones [2016] EW Misc B67 (CC) Danielle Ames (aged 41) brought a claim for reasonable financial provision against her father s estate He left his entire estate ( 700,000) to his second wife, Mrs Jones (aged 63 and in poor health) Ms Ames was dependent on her long-term cohabitant and did not work Halpern QC the claim did not succeed The estate was not large enough to support both Ms Ames and Mrs Jones Mrs Jones income was only just sufficient to maintain her and it was unreasonable to expect her to sell or borrow against her home Ms Ames evidence was unreliable and she was capable of working I conclude that her lack of employment is a lifestyle choice

9 WHILST ILOTT v MITSON HAS BEEN GOING ON Martin v Williams [2017] EWHC 491 (Ch) The deceased s long term partner, Mrs Williams, brought a claim for reasonable financial provision against Mr Martin s estate His will made in 1986 left his estate to his wife, Mrs Martin, which included his 50% share in the property he owned with Mrs Williams Mr and Mrs Martin has been separated for many years but had not divorced At first instance Mrs Williams was awarded Mr Martin s 50% interest in the property At appeal Mrs Williams was awarded a life interest in Mr Martin s 50% interest in the property The judge at first instance had understated Mrs Williams financial position and overstated Mrs Martin s.

10 ILOTT v THE BLUE CROSS AND OTHERS [2017] UKSC 17 The facts Melita Jackson ( Mrs Jackson ) died in 2004 aged 70 Her net estate was 486,000 (the main asset being her property) Mrs Jackson s daughter Heather Ilott ( Mrs Ilott ) left home at 17 to live with her boyfriend whom she subsequently married and had 5 children with Mrs Jackson did not approve and this resulted in a lifelong estrangement (26 years in total) Mrs Jackson made a will in 1984 excluding Mrs Ilott This was repeated in 2002 when Mrs Jackson made her last will

11 ILOTT v THE BLUE CROSS AND OTHERS [2017] UKSC 17 The side letter /letter of wishes stated Mrs Jackson s conclusion that no provision should be made for Mrs Ilott as she felt no moral or financial obligation towards her In the letter Mrs Jackson also instructed the executors to resist any claim that Mrs Ilott might bring The will made provision for a modest legacy to a benevolent association and the residue was left to the Blue Cross, RSPCA and RSPB Mrs Jackson had no particular connection with the 3 charities during her lifetime But this represented her freely made and considered choice of beneficiaries

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13 THE VARIOUS COURT HEARINGS First instance decision August 2007 DJ Million The Court considered Mrs Ilott s financial position she had a very small income, depended on state benefits and had negligible assets She rented a small house from the housing association and she chose not to work but to care for her 5 children The Court stated that the claim was presented in a ill thought out and unhelpful way But the Court concluded that Mrs Jackson had not made reasonable financial provision for Mrs Ilott and she was awarded 50,000 High Court Appeal October 2009 King J Appeal by Mrs Ilott on the basis that 50,000 was insufficient, plus a cross appeal by the charities The charities cross appeal was allowed and Mrs Ilott s appeal was dismissed The District Judge had been plainly wrong to conclude that the lack of provision was unreasonable Mrs Ilott got nothing

14 THE VARIOUS COURT HEARINGS CONT. Court of Appeal 2011 Arden J, Black J and Sir Wall Mrs Ilott appealed again but she was successful this time Mrs Ilott was entitled to make a life with her family of her choice and it was reasonable to remain at home rather than work She was not to be blamed for her lack of income The order of DJ Million was restored but remitted to the High Court for quantum to be determined. King J was wrong to allow the appeal Sir Wall I urge the parties to consider carefully whether a further hearing is in anyone s interests. Permission of the charities to appeal to the Supreme Court refused - June 2011

15 THE VARIOUS COURT HEARINGS CONT. High Court 2014 Parker J (Quantum) Capital over 16,000 will reduce the benefits to which Mrs Ilott would be entitled DJ Million was not wrong Appeal declined award remained at 50,000 Court of Appeal 2015 Arden LJ, Ryder LJ and Sir Rimmer The Court had not known the effect the award of 50,000 would have on Mrs Ilott s entitlement to state benefits Mrs Ilott was awarded 143,000 (the cost of acquiring her home from the housing association) Plus an option to take a further 20,000 to provide immediate capital for further income needs

16 THE DECISION OF THE SUPREME COURT The charities appeal was allowed and the first instance decision awarding 50,000 restored The Supreme Court highlighted the significance of testamentary freedom. A testator s wishes are part of the circumstances of the case to be considered. It cannot be ignored that an award under the Act is at the expense of beneficiaries chosen by the testator The estrangement between Melita and Heather was a significant factor Dismissing the claim, and awarding reasonable financial provision to Mrs Ilott would both have been legitimate outcomes in this case

17 THE DECISION OF THE SUPREME COURT CONT. The concept of maintenance is broad, but must import provision to meet the everyday expenses of living. It is not limited to subsistence level If housing is provided by way of maintenance, it will probably more often be provided by way of life interest rather than capital sum The law is unsatisfactory at present it gives no guidance as to the factors to be taken into account in deciding whether an adult child is deserving or undeserving of reasonable maintenance

18 THE FUTURE - WILL DRAFTING IMPLICATIONS How do we protect the testator, their wishes and their chosen beneficiaries? How do we protect ourselves? Detailed file notes/attendance notes Letter of wishes witness statements video or recorded evidence from the testator STEP Code for Will Preparation in England and Wales

19 THE FUTURE ESTATE ADMINISTRATION Business as usual Executors should take a neutral stance Charities what is their role in this? Information gathering Entitlement Research Study: Estates with charitable beneficiaries Institute of Legacy Management

20 THANK YOU Emma Facey Patricia Wass