Claims on estates and the issue of Testamentary Freedom
English Law has always recognised the concept of testamentary freedom. That is, the freedom to leave your estate to whoever you choose and having no legal obligation to provide for any particular person.
The Supreme Court highlighted the significance of testamentary freedom and provided much need clarity in its recent decision of Ilott vs The Blue Cross & others regarding potential claims against an estate by disappointed beneficiaries.
The brief facts of the case are that Mrs Ilott was the estranged daughter of the deceased, having left home at the age of 17 to live with Nicholas Ilott. The deceased disapproved of Mr Ilott and despite the couple later marrying, having five children and making attempts to reconcile with the deceased, they remained estranged. Mr and Mrs Ilott rent their property from a housing association and are in receipt of state benefits.
The deceased died in 2004 and left a Will leaving her entire estate to Charities, excluding her daughter entirely.
Mrs Ilott brought a claim under the Inheritance (Provision for Family and Dependants) Act 1975 (“the 1975 Act”) on the basis of a lack of “reasonable financial provision” for her. Mrs Ilott was awarded £50,000 at first instance. On appeal to the Court of Appeal this award was increased to £163,000, representing an award of £143,000 to purchase a property and £20,000 cash to provide an income.
The beneficiaries under the Will, the Charities, challenged the decision and permission was granted by the Supreme Court who restored the first instance decision, awarding £50,000 to Mrs IIott.
The following is a synopsis of points highlighted by the Supreme Court for such claims being made under the 1975 Act which are to be considered alongside the usual factors under section 3 of the 1975 Act:-
- Long term estrangement is a significant relevant factor;
- The deceased’s wishes and reasoning for the terms of the Will are relevant and need to be given suitable weight;
- For adult children, reasonable financial provision is limited to “maintenance” and does not extend to everything that would be desirable for the claimant to have;
- Reasonable financial provision can include the provision of housing, but ordinarily by creating a life interest (i.e. the right to reside in a property for a lifetime) rather than awarding a capital sum. By doing this you are not depriving the intended original beneficiary of the capital asset as they will receive this once the life interest has ceased;
- State benefits are to be treated as a resource of any claimant and a Court must consider whether they will continue to be received; and
- A claim cannot be decided by comparing the needs of the beneficiaries and the claimant. A beneficiary under a Will does not have to justify their entitlement.
Whilst this decision goes some way in clarifying the factors which a Court will have regard to when determining the level of provision that should be made for successful claimants, some of the Supreme Court Justices were also critical of the current law in this area and its failure to give clear guidance as to balancing the factors under the 1975 Act.
It is highly satisfactory from a Will drafting point of view that this case has now reinforced the value of the wishes of the deceased in their Will and testamentary freedom. However, we would always suggest that if you are planning to exclude a child, spouse, former spouse, partner or other dependant from your Will that you consider the following:-
- What a Court may consider is a reasonable financial provision if the terms of the Will were contested under the 1975 Act; and/or
- Leaving a small legacy which is to be forfeited if a claim is to be brought by the beneficiary; and/or
- Writing a detailed letter of wishes, or even an explanatory sub-section in the will, explaining why you wish for those individuals to receive a smaller sum or be omitted altogether.
These actions can often improve the chances of the estate reaching the intended beneficiaries as wished for under the Will.
If you feel that any of the above issues may be relevant to your own Will and situation then please feel free to contact us on 01245 504904 to book an appointment to discuss these in more detail.