Beyond the grave
Emma Collins provides a summary of case law developments regarding claims under the Inheritance Act.
Family lawyers may be called upon to advise on a range of potential claims under the Inheritance (Provision for Family and Dependants) Act 1975 including those by adult children, spouses or cohabitants. Recent case law has provided useful guidance on areas such as how maintenance may be defined, and competing claims between past and current partners.
No review of case law developments regarding claims under the Inheritance Act could start without considering Ilott v The Blue Cross , in which the Supreme Court was concerned with the claim of Mrs Ilott against the estate of her estranged mother. Practitioners looking for assistance on the thorny issue of adult children's claims however may be disappointed, as Lady Hale's judgment highlighted the regrettable lack of guidance in such cases.
The claimant had been estranged from her mother for 26 years, since leaving home at the age of 17. Her mother had died in 2004 and left the majority of her estate, valued at £486,000, to two charities (in which she had shown no interest during her life) and made no provision for Mrs Ilott, her only child. The claimant was married with five children and depended on state benefits, some of which were means-tested and would be lost if she had capital of more than £16,000. She and her husband lived in a housing association house, in relation to which they had a right to buy.
The district judge found that the mother had not made reasonable financial provision for her daughter, and awarded the sum of £50,000. Mrs Ilott appealed against the quantum. The Court of Appeal allowed her appeal (Ilott v Mitson ) and substituted its own award, enabling the claimant to buy her home and giving her an additional £20,000 payable in one or more instalments. The Court of Appeal found that the district judge had made two errors of principle:
- In finding that the award should be limited, in the light of the long estrangement, the claimant's independent life and lack of expectation of benefit, the judge had failed to identify what the award would have been without those factors and thus the reduction attributable to them; and
- The award was made without knowing what the effect of it would be on the benefits that the claimant and her family received at that time and, in fact, the award had little or no value to the claimant because of its impact on benefits.
The Supreme Court was unanimous in its decision, with Lord Hughes giving the lead judgment. The approach it took was to first consider the factors with regard to reasonable financial provision, ie (at para 35):
… this judge [at first instance] had dutifully worked his way through each of the s3 [of the Inheritance (Provision for Family and Dependants) Act 1975] factors. The long estrangement was the reason the testator made the will she did. It meant that Mrs Ilott was not only a non-dependent adult child but had made her life entirely separately from her mother, and lacked any expectation of benefit from her estate. Because of these consequences, the estrangement was one of the two dominant factors in this case; the other was Mrs Ilott's very straitened financial position.
The Supreme Court concluded that the judge at first instance had been entitled to reach the conclusion he did, namely that there was a failure of reasonable financial provision, but what that reasonable provision would be was coloured by the nature of the relationship between mother and daughter. The judge in Ilott had not failed to address the impact on benefits of any order he might make, indeed he had specifically addressed the impact of benefits twice. Moreover, the criticism that he had produced an award that had little or no value to the claimant was unjustified. It was a central feature of the claimant's financial position that although her family could just about manage, the family income was insufficient to maintain the ordinary domestic equipment on which every household depends. While the claimant could use the award as she liked, if a substantial part of it was spent on replacing old and worn-out essential household items that the family had previously been unable to afford, the impact on the family's benefits would be minimised. While the Inheritance Act was not designed to provide a 'spending spree' for a claimant, the necessary replacement of essential household items was not an indulgence, rather it was the maintenance of daily living. The claimant would be able to put the household on a much sounder financial footing without retaining for very long a level of capital beyond the £16,000 ceiling at which entitlement to housing and council tax benefits was lost.
In addition, there were a number of potential difficulties with the Court of Appeal's order. Reasonable financial provision could, in principle, be made by way of housing, but that should be done by creating a life interest in a sum rather than outright payment of it. There was no discussion of that question in the judgment. Moreover, in the absence of a discretionary trust, it was likely that the benefits means test was likely to apply to the option to draw down £20,000 at will. The reasoning as applied by the Supreme Court to the facts of the case and the order made by the Court of Appeal was explained (at para 46) as follows:
- The order gave little, if any, weight to 'the quarter of a century of estrangement or to the testator's very clear wishes', the Court of Appeal having offered the view (at para 51) that these factors counted for little, and that the claimant's lack of expectation of any benefit from the estate was of little weight, in part because the charities had no expectation of benefit either. The Supreme Court took the view that those observations should be 'treated with caution'.
- The charities' claim was not on a par with that of the claimant, but while the charities' claim was not based on personal need, they depended heavily on testamentary bequests for their work, which was described by the Supreme Court as 'by definition of public benefit and in many cases will be for demonstrably humanitarian purposes'. The charities were the chosen beneficiaries of the deceased and did not have to justify a claim on the basis of need under the Inheritance Act, as the claimant had to do.
Accordingly, the Court of Appeal's order was set aside and the order of the district judge was restored. In her supporting judgment (see paras 49 to 66), Lady Hale helpfully reviewed the history of the Inheritance Act and the preceding legislation in the light of the questions the case had raised about the nature of family obligations, the relationship between family and state, and the relationship between the freedom of property owners to dispose of their property as they see fit and their duty to fulfil their family obligations. Lady Hale commented on the unsatisfactory state of the present law, which 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.
An individual's long-established right to leave their wealth to whomever they choose is thus alive and well, and adult child claimant cases remain as difficult as ever to advise on. Of note is that the charity beneficiaries in Ilott brought their appeal on a matter of principle given that charities are generally reliant on bequests in wills, which illustrates the particular tenacity of opposition that an adult child claimant is likely to face from charity beneficiaries as defendants.
Other adult children have had mixed outcomes in their claims in the past year. The claimant children in Ball v Ball  were three out of eleven children and failed to establish a claim to an equal share of their mother's estate with their eight siblings who had been favoured in their mother's will in what was admittedly a very modest estate. Their assertion (among others), that their late mother's failure to acknowledge the abuse they had suffered at the hands of their late father created a moral obligation towards them which should be compensated by them benefitting under her will, did not find favour with the court. The County Court decision in Ames v Jones  is a reminder that adult children must establish that the will or intestacy did not make reasonable financial provision for their maintenance. Here the 41-year-old adult daughter failed to discharge the burden of proving her current and future needs, and she was deemed capable of working.
In contrast, the estranged adult daughter in Nahajec v Fowle  (also a County Court decision) was successful in persuading the court that her father, who had left the family when she was a child and with whom she had unsuccessfully tried to establish a relationship in adult life, had failed to make reasonable provision for her. She received an award providing her with some support in progressing her career.
The decision in British Red Cross v Werry  provides a perhaps unusual example of a case where a claim by a cohabitant, that had been settled by an agreement providing for her to receive a life interest in the deceased's property, was set aside on the basis of mistake. It was discovered on the death of the claimant that there had in fact been a will in existence that had made better provision for the now late claimant, not least in giving her the property in which she had lived outright. All the parties had proceeded on the mistaken belief that there was an intestacy. The resulting consent order and deed of trust were set aside and the proceeds of the property which had by now been sold passed to the charity beneficiaries of the now-deceased claimant.
Cohabitants versus spouses
Martin v Williams  is a salutary tale of the difficulties increasingly faced by long-term cohabitants and spouses when their partner/spouse dies having not finalised a divorce and without giving consideration to changing their will. Despite a 20-year separation, the wife in Martin remained the sole beneficiary under her late spouse's will, which he had not changed despite assurances to his long-term cohabitant that he would do so. The first instance judge's decision to pass the entirety of the deceased's share in a jointly owned property to his cohabitant was overturned on appeal as having been overgenerous. It was substituted with a life interest in the claimant cohabitant's favour, that interest reverting to the wife on death. The appeal court considered that the judge had failed to take proper notice of the wife's needs and had failed to take into account the cohabitant's ownership of a half-share in another property with her sister, placing too much emphasis on the difficulties faced by the claimant in realising her interest in that property.
The decision in Roberts v Fresco  is a reminder that a claim under the Inheritance Act is not a cause of action and does not survive the death of the claimant. Both Whyte v Ticehurst  and Re Bramwell (Deceased) and Campbell v Tobin  remain good law in that regard.
Definition of maintenance
For an illustration of the potential breadth of the definition of maintenance, see Lewis v Warner  where on appeal it was confirmed that, exceptionally, maintenance could include a transfer at full consideration. The deceased's will had failed to make reasonable provision for her long-term elderly partner, who was aged 91 by the time of the appeal, because it did not allow him to remain in their home where he preferred to remain because he was in poor health and was assisted by neighbours. In those circumstances, the judge had been entitled to order the transfer of the property to the claimant for a payment to the estate of full market value. This was despite the fact that the claimant was considerably wealthier than the deceased and had had no expectation to benefit from her estate or to make any claim. The deceased's daughter who was the sole beneficiary of the will had wanted to take possession of the property to sell to the highest bidder. At para 26 of his judgment, Newey J said:
On balance, it seems to me that 'maintenance' can exceptionally encompass an arrangement for full consideration. The word 'maintenance' suggests the provision of assistance to enable a person to meet the requirements of his daily life. Someone of ample financial means will not normally need any such help. In principle, however, 'maintenance' does not seem to me to be necessarily confined to support with a person's 'cost of… daily living'… It is capable, in my view, of referring to other forms of assistance with the requirements of daily life. If, therefore, a person is in want of a particular thing to sustain a reasonable quality of life, the provision of it could possibly represent 'maintenance' regardless of his financial means. In other words, a person can potentially (albeit only very rarely) be in need of 'financial provision' for his 'maintenance' without being in any way short of money: his money may not be able to secure him what he requires. As a result, there appears to me to be no absolute bar on the provision of something for full consideration representing 'financial provision' for a person's 'maintenance'.
The recorder had concluded that the fact that the deceased's will did not allow the claimant to keep the roof over his head meant that it failed to make reasonable provision for him and Newey J was not persuaded to overturn that decision.
Inheritance Act claims will often turn on the facts of the case and as illustrated by recent case law, that makes advising on such claims challenging. What has emerged however from recent case law is that 'maintenance' can be widely interpreted, ranging from the replacement of household appliances as in Ilott, to the opportunity to stay in a long-term home as in Lewis.
This article first appeared in Family Law Journal.