Significant impact on those contesting a Will under the Inheritance (Provision for Family and Dependants) Act 1975.
Case study one: Ilott v Mitson UKSC 17 [2017] 2 WLR 979
This particular case centred around an inheritance dispute (contesting a Will). Melita Jackson died in 2004 leaving almost all her £486,000 estate to three animal charities with which she had no real connection.
Her daughter and only child, Heather Illott, had been left out of her Will. Heather had been estranged from her mother after she left home in 1978 to move in with, and later marry, a man her mother disapproved of.
Mrs Jackson left instructions for her executors to fight any claim Heather might make after her death. In a letter to her lawyers in 2002, she said “I can see no reason why my daughter should benefit in any way from my estate.”
The next few years demonstrated a timeline of events which highlighted the unsettled position with children of a deceased making claims under the Inheritance Act 1975;
2007:
- Heather applied to the Court under the Inheritance (Provision for Family and Dependants) Act 1975. This Act allows the Court to vary the distribution of someone’s estate to make reasonable financial provision for their spouse, cohabitee, children or someone who is financially dependent on them at the time of their death (e.g. foster children).
- Heather, a mother of five, had no pension and was living on state benefits. At her first hearing, she was awarded £50,000 by a district judge on the basis that she had been “unreasonably” excluded.
- Heather then applied for a larger share of the money. However, the High Court judge reversed the decision to award any money.
2011:
- Following a second appeal by Heather, the Court of Appeal ruled that she was entitled to a larger share of the estate.
- The Court of Appeal sent the case back to the High Court in order to determine what this share would be.
2014:
- Heather lost her battle in the High Court to get a larger share.
- Heather then appealed the decision of the High Court to the Court of Appeal.
2015:
- The Court of Appeal awarded Heather £140,000 to allow her to buy her housing association property and another £20,000 structured to allow her to keep her state benefits. The court ruled that Mrs Ilott would otherwise face a life of poverty because she was on benefits and could not afford to go on holiday or buy clothes for her children.
- The three animal charities then appealed this decision.
2017:
- The Supreme Court finally brought the matter to a close on 15th March 2017 with a final judgement that reduced Heather’s award back to the original £50,000. This is the first time that an appeal under this Act has reached the Supreme Court. This important ruling clarifies how the Inheritance Act works and how far it can go.
In summary, this judgement helps clarify how much consideration the Court can give to claims where a relative is not directly financially dependent upon the deceased but is having financial difficulties. It also reinforces the vital principle of testamentary capacity, which allows the deceased to leave their estate to who they choose whilst also confirming that the court does have power to circumvent the Will under the Inheritance Act 1975.
In the case of Ilott v Mitson the judgement left practitioners unclear as to what the current position and how to advise children of the deceased when considering a claim under the Inheritance (Provision for Family and Dependants) Act 1975.
Case study two: Ubbi & Anori (Minors) v Ubbi [2018] EWHC 1396 (Ch)
The 2018 case between Ubbi & Anori v Ubbi has provided some much needed guidance on how the factors set out in Section 3 of the Inheritance (Provision for Family and Dependants) Act 1975 should be applied in practice.
This case involved Mr and Mrs Ubbi who were married and had a child in 1994. Mr Ubbi made a Will in 2010 which left everything to his wife. He had however begun an affair with a Ms Corrado in 2007 with whom he went on to have two children.
He died in 2015 with an estate valued at around £3.5 million, all of which passed to his wife under the 2010 Will.
Ms Corrado therefore made a claim under the Inheritance (Provision for Family and Dependants) Act 1975 on behalf of her two children.
Whilst Mrs Ubbi accepted that some provision should be provided for the children the amount could not be agreed.
Whilst this case dealt with minor children as opposed to Ilott v Mitson which dealt with an adult child, it did give further consideration on what is considered to be ‘reasonable financial provision’ as stated within the Act. The judge in this matter held;
- The financial needs of a minor do not need to be elevated to the first or paramount consideration under the Act (as is required in family proceedings);
- It is not relevant as to whether the child was born within marriage but how the deceased treated the children maybe relevant; and
- The purpose is to provide maintenance and it is not to provide a capital sum to the children upon reaching 18 (any capital sum provided will therefore expect to be extinguished by the time the children reach 18).
The court assessed the children’s needs at around £1,200,000 until they were both 18. It was held that Ms Corrado (who herself had substantial assets) should be responsible for 65% of these costs with the deceased’s estate being responsible for 35% of this, being the sum of £386,290.60.
Interesting factors that the court held when assessing the actual needs of the children are:
- This assessed costs did not include a requirement for private schooling for the children;
- There was no need to include costs to purchase an adequate property as a rental property would be sufficient;
- The costs will depend upon the needs and circumstances of individual children and there are no average costs;
- Childcare costs will be considered; and
- Relevance will be placed upon how the deceased treated the children and their expectations for them.
Whilst the sums referred in this judgement may not relate to an everyday claim under the Inheritance (Provision for Family and Dependants) Act 1975 it provides important insight upon how the court will look at the needs of children when assessing a child’s claim under the Act.
The primary point to be taken from the case is to reiterate the importance of revisiting a Will when circumstances change. Failing to do so can result in loved ones being involved in lengthy, costly legal proceedings at a very difficult time.
If you need advice regarding contesting a will or matters relating to inheritance of children under the Inheritance (Provision for Family and Dependants) Act 1975, please contact stephen.stewart@elselaw.co.uk or call the office on 01283 526 200.