With many second marriages and blended families as well as a growing awareness of inheritance issues, testators are well—advised to think carefully about balancing their wishes to provide for a second spouse and their children of a prior relationship.
Recent years have seen a rise in claims for provision from estates, suggesting that this balance is a very difficult one to strike. It is more important than ever to consider the purpose of the Act, who can benefit from it, the factors a court will consider and the type of awards available if successful.
The purpose of The Inheritance (Provision for Family and Dependants) Act 1975
The law in the UK starts from the long established principle that an individual is entitled to dispose of their estate as they see fit. Unlike in some other countries, there is no law of forced heirship which dictates how an estate should be inherited; usually among close family members.
However, the UK courts have a limited power to make orders which interfere with the effect of a will (or the effect of the intestacy rules where there is no will) where there is judged to be a failure to make reasonable financial provision for a defined class of people connected to the deceased.
The Act offers recourse to such applicants but only if they can demonstrate that the provision actually made (which might be no provision at all) is not reasonable. The power is however limited to ordering only such provision as is reasonably necessary for the maintenance of the applicant. It has been said that this standard means the applicant should be able to live ‘at neither a luxurious nor poverty stricken level’.
If the applicant is a surviving spouse or civil partner of the deceased, they can claim at a higher maintenance standard which is whatever is necessary for their maintenance in all of the circumstances. This is significant because with spouses and civil partners, the court can take into account the standard and style of living and reasonable expectations of the applicant, including what they might have expected to get if the relationship had ended with divorce instead of death, and that may well exceed what they need for their day to day maintenance.
Take legal advice early
If you think that you might have a claim, taking early advice and ensuring you know when a grant issues in the relevant estate, are both absolutely crucial.
A claimant must issue a claim within 6 months of the date of a grant of probate or grant of letters of administration. In exceptional circumstances, the court may permit claims brought after this time, however, there is no guarantee that late claims will be allowed to proceed, and the claimant must produce persuasive evidence to explain their delay and demonstrate the strength of their claim to have the best chance of securing leave out of time.
Be ready to provide information about your finances
A claimant will be expected at a very early stage to provide full disclosure as to their own financial needs and resources. This is necessary so that the estate and the court has a clear picture of what you have and what you need now and in the foreseeable future.
However, the reality is that the burden of showing that reasonable provision has not been made falls on the claimant. Without this information, the estate – and the court – will not be able to form a view about what reasonable provision might be if it is accepted that the will failed in this respect.
Those defending a claim, who are often the beneficiaries of the estate, are not required to provide disclosure of their financial needs and resources, although that which they are left by virtue of the will or intestacy rules will be known once a grant of probate is extracted and the executor provides information about the estate as they must in their neutral capacity in any claim. If a Defendant chooses not to disclose any information about their finances, the inference is likely to be drawn that they are well provided for and cannot mount a needs-based defence.
Who can make a claim under The Inheritance Act 1975?
The classes of applicant who may bring a claim is defined under the Act, and includes:
- the spouse or civil partner of the deceased
- the former spouse or civil partner of the deceased (as long as that person has not remarried/entered into a subsequent civil partnership)
- a person who, for the two years prior to the death, was living with the deceased as if they were a spouse or civil partner
- a child of the deceased
- a person who was treated as a child of the family by the deceased
- any other person who was being maintained, wholly or partly, by the deceased immediately prior to their death.
A person is classed as being maintained by the deceased if they were financially supported by the deceased in some way during their lifetime and that maintenance continued until the death. This can include monetary maintenance in the form of regular payments or large gifts. Provision of housing can also be maintenance, such as the deceased allowing the claimant to live in their property either rent free or at a nominal or reduced rent.
Cases in recent years have involved growing numbers of adult children bringing claims under the Act and although it is certainly easier for a child under the age of 18 to prove they were financially dependent on the Deceased and/or that the Deceased has a moral obligation to provide for them, significant awards can and have been made to independent – even estranged – adult children.
In the leading case of Ilott v Mitson , a substantial award was given to an adult daughter who, despite a long estrangement from her late mother, was in difficult financial circumstances and made her application having been left out of her mother’s will altogether in favour of a number of charities.
On appeal, the original award of £50,000 from an estate worth £486,000 was increased to £143,000. The charities appealed the increase and although they ultimately succeeded in having the daughter’s award limited to £50,000, the case demonstrates that even where an adult child has been living independently of their parent for many years, had no relationship with them at all and where the estate is modest, it is still possible that the court will find that reasonable financial provision has not been made for an adult child.
What are the relevant factors in assessing claims?
The Act itself provides a clear list of factors the court must consider. Financial needs and resources will always be central, but not all of the other factors will be relevant in every case:
- the financial resources and financial needs which the applicant has or is likely to have in the foreseeable future
- the financial resources and financial needs which any other applicant for an order under section 2 of this Act has or is likely to have in the foreseeable future
- 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
- any obligations and responsibilities which the deceased had towards any applicant for provision or towards any beneficiary of the estate of the deceased
- the size and nature of the net estate of the deceased
- any physical or mental disability of any applicant or of any beneficiary of the estate of the deceased
- 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. Conduct can include the conduct of the deceased, not just those interested in their estate.
The court can make an award in a range of formats including an order to sell or transfer an estate property or the award of a lifetime right to occupy a property which then reverts to the estate.
This remedy is most likely to be applied in cases where a housing need can be met by an applicant being allowed to stay in an estate property, but the capital is preserved for the other beneficiaries, often the next generation.
The court might also award the claimant a lump sum one off payment, or payments at regular intervals. These types of awards are less common but may be appropriate if the claimant is particularly vulnerable and therefore having access to such a large sum may pose as too much of a risk. Applicants should bear in mind that unless they are a surviving spouse or civil partner of the deceased, the award is limited to what is required for maintenance. The function of the court is not to make awards of capital to those who might be disappointed with the terms of the will but who cannot show any real maintenance need.