Claims under the Inheritance (Provision for Family and Dependants) Act 1975

Claims under the Inheritance

(Provision for Family and Dependants) Act 1975

In England we are free to leave our property by Will to whomsoever we choose.  There are no rules here which say that we are compelled to leave our property to one or other of our nearest and dearest. However, should we fail to do so, then some of those people may be able to claim under the Inheritance (Provision for Family and Dependants) Act 1975, should they be able to satisfy the legal requirements to do so.  Case law shows that courts will make provision where it is felt to be fair provided that the deceased died domiciled in England and Wales and did not make reasonable financial provision for the applicant.

Who may apply?

The application must be made within six months after the grant of probate or letters of administration.  Currently those who are permitted to make an application are as follows:

• Surviving spouse/civil partner, and former spouse/civil partner who has not remarried.
• Children of the deceased or those treated as children of the deceased.
• Non-family members who have been maintained by the deceased e.g. cohabitees including same sex cohabitees.

What does the court consider?

The Act imposes a two stage task upon the court when addressing a claim for financial provision.  Leaving aside cases of total or partial intestacy, the first question is whether the Will made reasonable financial provision for the claimant.  The second question which arises only if the first is answered ‘no’ is whether and to what extent the court should exercise its own wide powers in that respect.

In relation to applications by surviving husband or wife of the deceased, the expression ‘reasonable financial provision’ means:

“Such financial provision as it would be reasonable in all circumstances the case for a husband or a wife to receive, whether or not that provision is required for his or her maintenance” (section 1(2)(a)).

Section 3(1) requires the court, in adapting both stages of its analysis, to have regard to a list of the following seven matters:

a)    The financial resources and financial needs which the applicant has or is likely to have in the foreseeable future;

b)    Financial resources and financial needs which any other applicant for an order under section of this Act has or is likely to have in the foreseeable future;

c)    The financial resources and financial needs which any beneficiary of the estate of the deceased has or is likely to have in the foreseeable future;

d)    Any obligation and responsibilities which the deceased had towards any applicant for an order under the said section to or towards any beneficiary of the estate of the deceased;

e)    The size and nature of the net estate of the deceased;

f)     Any physical or mental disability of any applicant for an order under the said section 2 or any beneficiary of the estate of the deceased;

g)    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.

It is clear from sub-section (g) that there is no limit to any matters to which, in any particular case, the court may have regard.  In addition, in relation to an application by a surviving spouse, section 3(2) requires the court additionally to consider:

a)    The age of the applicant and duration of the marriage;

b)    The contribution made by the applicant to the welfare of the family of the deceased, including any contribution made by looking after the home or caring for the family.

And the court is also to have regard to the provision which the applicant might reasonably have expected to receive if, on the day on which the deceased died, the marriage, instead of being terminated by death, had been determined by decree of divorce.  This has been referred to as ‘the divorce cross-check’.

Therefore it can be summarised that there are two different standards of provision.  A surviving spouse (civil partner) is entitled to such provision as is reasonable in all the circumstances, whether or not such provision is required for his or her maintenance.  Any other applicant is only entitled to such provision as is necessary for his or her maintenance.

The approach of the court

(a) Towards Surviving Spouses/former spouses who have not remarried

The approach of the court towards surviving spouses has been described as being on the generous side.  The court does not feel itself limited to what would have been ordered upon divorce. Those in civil partnerships can now also claim in the same way as heterosexual couples under Schedule 4 of the Civil Partnership Act 2004.

The court in the case of Fielden –v- Cunliffe (2006) (2005 EWCA Civ 1508) stated that a short marriage brought about by death may, depending on the circumstances, inspire more generosity in the court than one ending in divorce.  In this case the children of the deceased, who was a wealthy disabled man who had married his housekeeper just a year before he died, found that on appeal the former housekeeper obtained an award equivalent to 60% of the estate.  In Lilleyman & Lilleyman [2012] EWHC821 (Ch) the deceased had been married for two and a half years to the claimant prior to his death.  The total length of the relationship was four years.  The deceased had three businesses and interests in various properties. In a wide ranging and intelligent judgment, Mr Justice Briggs covered the conflict between the ‘reasonable needs’ test as set out in the Inheritance Act, and whether the “yardstick of equality” (the test for marital provision) ought to apply as if the marriage had been ended by divorce.  Was reasonable provision to be identified solely by reference to the claimant’s reasonable needs, including a need for financial security for the rest of her life or did reasonable provision call for her to be given a substantial share in what had been matrimonial property, in excess of her reasonable needs?

In dealing with the distinction between the Lilleymans’ matrimonial property, or their family assets, Mr Justice Briggs summarised the applicable legal principles as follows:

1. The onus lies upon a person asserting that the property of one or other of the spouses is non-matrimonial to prove it.

2. The matrimonial home is usually to be regarded as matrimonial and family property even if contributed solely by one of the spouses.

3. Property acquired during the marriage, otherwise than by inheritance or gift, is usually matrimonial property but part of it may not be family property if it has not been acquired for family use.

4. Property pre-owned by one of the spouses is usually, not so regarded, unless it is then committed to long term family use.

5. Where one spouse brings to the marriage an existing business, and develops it during the marriage, then its value at the beginning of the marriage may usefully be regarded as non-matrimonial where its increase in value thereafter may be part of the fruits of the partnership, even if wholly derived from the activities of one of the spouses.

6. Where one spouse brings a pre-existing family business to the marriage, it may be positively unfair to have recourse to it for the purposes of equal sharing, in particular if to do so might cripple the business or deprive it of much of its value.

The judge confirmed that the divorce check was just that, and said that should be treated:

“As neither a floor nor a ceiling in relation to the relief available under the Inheritance Act, nor as something which requires a meticulous quasi–divorce application to be analysed side by side with the application of the separate provisions in section 3 of the Act.  A divorce cross-check is just that, a cross-check, no more and no less”.

Taking into account the assets already held by the widow, she was awarded £500,000 out of a total estate of £6m.

(b) Towards Adult Children

Reported cased so far have very much supported testamentary freedom over the sense of entitlement that many adult children have towards their parent’s estates.  Although they are eligible to apply, the courts in general have felt that adult children of the deceased should be maintaining themselves, and unless there is a very good reason why this is not happening, their claims will not be successful.  Up until 2011 there was much debate about whether the case law introduced an additional hurdle for adult claimants, sometimes described as a “moral obligation” or as “special circumstances”.  The recent case of Ilott –v- Mitson & Ors [2011] EWCA Civ 346 concluded that an adult child as applicant was in the same position as any other and there was no additional gloss to be put on the statute in terms of a moral obligation or special circumstance.  In Ilott, the Applicant who was 50 at the date of the Court of Appeal hearing was the only child of the deceased who had left a net estate of £486,000 on her death.  She left the vast majority of this to three charities, disinheriting her daughter.  The parties had not spoken for over 30 years although there had been some attempts of reconciliation which had not been successful.  The Applicant was married with five children and her husband worked part time with 75% of the family’s income deriving from state benefits.  At first instance, the District Judge awarded the Applicant £50,000 from the estate.  The Charities appealed but the award was upheld by Mrs Justice Eleanor King. In the Court of Appeal, Lord Justice Wall ruled that there was no extra burden on the Applicant because she was a child of the deceased.  The District Judge whilst looking at the Section 3 factors in the Act when deciding on the claim, but ultimately the Judge himself had a discretion in deciding what, if any, relief to award.  The Judges said that the size and nature of the estate will always be relevant, and any prejudice to any other beneficiary of the estate.  However the Court of Appeal was not tasked with the Applicant’s appeal against the quantum of the District Judges award and therefore the Court remitted the case to a High Court Judge to decide upon that.  Unfortunately we do not know what the outcome was.

(c)Towards Cohabitees

Before 1996 it had been necessary for a cohabitant applying under the Act to show a dependency upon the deceased, but through the amendments introduced by the Law Reform (Succession) Act 1995, in order to qualify as an Applicant, it is necessary to show that he or she had lived with the deceased:

“During the whole of the period of two years ending immediately before the date when the deceased died”.

And that the conditions of the cohabitation runs as follows:

“(a)      in the same house as the deceased and

(b)       as a husband or wife of the deceased”

Case law has shown that the two year period is enforced quite vigorously, even where couples are on the cusp of breaching it, if they have not done so, then the cohabitant will not be able to succeed.   As to living together as husband and wife, the law makes clear that there must be a proper relationship between the deceased and the Applicant, and not simply sharing a roof.  In the case of Churchill and Roach [2003] WTLR (779) His Honour Judge Morris QC set out the following characteristics of a relationship:-

1. Elements of permanence
2. The frequency and intimacy of contact
3. An element of mutual support
4. Consideration of the degree of voluntary restraint upon personal freedom
5. An element of pooling of financial resources.

It is clear that the relationship must have similar characteristics to a marriage.  Same sex couples can also now apply under the Act however it is important to know that the surviving cohabitee’s claim is limited to provision for their maintenance only, with no entitlement to claim to family assets.

Conclusion

There is no doubt that the 1975 Act encroaches upon the freedom of the testator, by allowing claims on the estate following death.  Recent case law seems to be favouring a position where Claimants will be able to succeed where it is reasonable for them to do so.

©Punam Denley, May 2012

Blanchards have a great deal of experience of Inheritance Act claims and disputes over Wills.  Please contact us on 08456586639 or by email at pd@blanchards.co.uk

Section: Trust & Inheritance Issues