The Supreme Court have today allowed the charities appeal in the highly publicised case of Ilott v Mitson (2017).
It is the first opportunity for the Supreme Court to give guidance on the question of what constitutes ‘reasonable financial provision’ within the meaning of the Inheritance (Provision for Family and Dependants) Act 1975.
This case involved an adult child, who was not financially dependent on her mother, making a claim against her late mother’s estate. The mother did not make any provision for her in her Will and they had been estranged for 26 years. Her mother had left the majority of her estate valued at approximately £486,000 to various charities.
Who can make an Inheritance Act claim?
Under the Inheritance (Provision for Family and Dependants) Act 1975, certain categories of family and dependants may be able to apply for reasonable financial provision from a deceased’s estate if they have not been provided for sufficiently, or at all.
A person can bring an application providing they fall within one of the following categories:
- Spouse or civil partner of the deceased
- Former spouse or civil partner of the deceased
- Any person living with the deceased as spouse or civil partner
- Child of the deceased (this includes adopted children)
- Any person (not being a child of the deceased) who was treated as a child of any family
- Any person who, immediately before the death of the deceased, was being maintained wholly or partly by the deceased. This does not include situations where the maintenance is part of a commercial relationship (e.g. being paid to clean the deceased’s house)
Summary of the previous Court rulings on the case
District Judge Million at first instance decided that the Will did not make reasonable financial provision for Ms Ilott and he granted her a lump sum of £50,000 out of the estate. Ms llott appealed the amount of this award.
The Court of Appeal allowed Mrs Ilott’s appeal on the basis that the District Judge had limited her award unfairly by reference to her limited means and living expenses; and that he had failed properly to investigate the effect of the award on her benefits entitlement. The Court of Appeal increased the award to £143,000 to purchase a property and a cash sum of £20,000 to provide additional income.
The charities appealed this decision to the Supreme Court.
The Supreme Court’s judgment
The Supreme Court have set aside the Court of Appeal’s ruling and restored the initial award to Mrs Ilott of £50,000.
The Supreme Court have held that the District Judge did not make the errors identified by the Court of Appeal. The Judge was, in their view, very well aware of the effect of his order on the applicant’s benefits and had made the £50,000 so that the claimant could acquire new goods to improve her standard of life, whilst leaving behind a capital sum small enough not to affect her entitlements.
The Supreme Court confirmed that there is no objective standard of reasonable provision for maintenance as suggested by the Court of Appeal. The behaviour of both deceased and applicant, must be weighed when considering what would have been ‘reasonable financial provision’ for the testator to make.
The Supreme Court stipulated that ‘maintenance’ does not extend to ‘any or everything which it would be desirable for the claimant to have’. It implies provision to meet the everyday expenses of living. An adult child with an income and in comfortable circumstances will not have a need for maintenance. Further long estrangement is significant when considering what is reasonable financial provision.
It was also confirmed that the receipt of means tested benefits did not put an applicant in a special category and that claims could not be decided by comparing the financial needs of the applicant with those of the beneficiaries. Accordingly the beneficiaries do not have to justify their entitlement, nor show any expectation of benefit.
This judgment goes some way to restoring testamentary freedom and emphasises the value of the testator’s wishes.
The full judgment and the press summary can be found at https://www.supremecourt.uk/cases/uksc-2015-0203.html
For more information on issues raised in the blog please contact Associate Solicitor Sarah Sarwar in our Wimbledon office on 020 8971 1089 or email [email protected].