Over recent years the Courts have seen an increase in the number of claims being brought under the Inheritance (Provision for Family and Dependants) Act 1975. As the value of property increases, giving greater assets to claim against, and with ever more complicated family compositions those left out of a Will are asking the Courts to adjust the distribution of Estates.
High profile cases have also increased public awareness of the ability to bring a claim and, in some cases, have given hope to adult children who would previously not have thought they could challenge the provision in a parent's Will.
The case of Ilott v The Blue Cross and Others (which went to every Court in the land and finally reached the Supreme Court in 2017) determined that some financial provision should be made for Heather Ilott from the Estate of her late mother. Mrs Jackson deliberately excluded her daughter after an estrangement that began when Heather Ilott left her mother's home at the age of 17 and never returned. By a letter of wishes Mrs Jackson,explained her reasons for leaving her daughter out of her Will and the provisions of the Will then left her Estate, valued at £486,000, to three charities.
The publicity that arose as a result of this case may have given adult childen the impression that they are entitled to provision from a parent's Estate when they die. This is not the case.
Claims under the 1975 Act
Where someone dies domiciled in England and Wales, the Inheritance (Provision for Family and Dependants) Act 1975 sets out the categories of people who can make an application for financial provision from the deceased person's estate. These rules apply whether the person has died after making a Will or whether there is an intestacy and the intestacy rules then determine how an Estate is to be distributed. The claim is brought on the basis that the Will or disposition under the intestacy rules does not make reasonable financial provision for the applicant.
Under s.1 (1) (c), a child of the deceased is an eligible claimant. The mere fact that a claimant falls within the categories of people who can bring a claim does not guarantee success of a claim.
The court must apply a two-stage test to consider (i) has there been a failure to make reasonable financial provision for the applicant; and if so, (ii) what order should be made. Under s.1 (2) (b), 'reasonable financial provision' for adult children is limited to what would be reasonable for their maintenance. The Act does not define “maintenance” but it is clear from previously decided caselaw that “maintenance” is more of a need to meet everyday living expenses rather than a sum that would pay for everything the claimant desires.
A number of factors are then set out in Section 3 (1) of the Act that the court should consider when applying the two-stage test. These include the financial needs and resources of the claimant and of those entitled under the Will or intestacy, the size and nature of the Estate and the obligations and responsibilities the deceased had towards the claimant.
Miles v Shearer and Shearer
In April of this year, judgment was handed down in the case of Miles v Shearer and Shearer. The claim was brought by the two daughters of Anthony Shearer, a former Chief Executive of Singer and Friedlander Merchant Bank who left an Estate valued at £2.2 million.
Mr Shearer's adult daughters from his first marriage brought claims against the Estate which were defended by his second wife Pamela. The children had been privately educated during their childhoods and were brought up in Holland Park.
Juliet Miles was aged 40 when she brought the claim. She had children of her own and lived in the same household as her mother, the former wife of the deceased. She was not working and sought provision by way of a housing fund and money to train for a future career as well as some provision for her youngest child who suffers from autism. That child – a granddaughter of the late Mr Shearer, does not fall within the class of claimaints entitled to bring a claim under the 1975 Act. Lauretta Shearer was aged 39 and also a parent. She was in a salaried job and had her own home though her ex-husband owned an 11% interest in the property and she sought funds to allow her to convert the mortgage from interest only to capital and to buy out his interest.
When the late Mr Shearer and his first wife divorced in 2007 their finances were divided. The following year Mr Shearer gave each of his daughters a substantial sum of money for a house deposit. Juliette received £177,000 and Laurette received £185,000. Mr Shearer made it clear at the time that he considered his financial obligations towards his daughters to be at an end.
Both Claimants failed in their attempt to obtain a ruling that ‘reasonable financial provision’ be made for them from the Estate of their late father. The Court found that both claimants could make adjustments to their lifestyles and meet their “need” for maintenance. Since there is no legal obligation to maintain a child after the age of 18, the claimants had to show that Mr Shearer had an obligation or responsibility to them at the time of his death. They failed to do so.
The outcome of the case may be that the daughters face substantial legal costs as they may have to meet not only their own costs but those of Mr Shearer's second wife in defending the claim.
Where does that leave us?
Courts will always seek to preserve the sanctity of a Will and the right of a person to leave their Estate as they wish.
The Inheritance (Provision for Family and Dependants) Act 1975 gives claimants who fall within certain categories the possiblity of bringing a claim if they have not been provided for.
Such claims should be considered on their individual merits – no two claims will be the same and no two claimants (even if they are related) will have the same needs for maintenance.
Although the children in Miles v Shearer and Shearer were unsuccessful other children, such as Heather Ilott have succeeded in their claims.
The Courts enjoy a wide discretion under the terms of the 1975 Act to adjust the distribution of an Estate where reasonable provision has not been made for a spouse, a civil partner, a co-habitant or child or other dependant. They will only exercise this discretion where it is clearly justified.
It will usually be sensible to engage in negotiation and mediation to try to avoid the cost and stress of a trial. Early disclosure of a claimant's financial needs can help to clarify what they may be able to seek from an Estate and will be key in determining their likely prospects of bringing a successful claim.
Whether you are bringing a claim or facing one, taking early legal advice can help to minimise legal costs and to establish the best way forward.
For more information, please contact a member of our Contentious Trust & Probate team.
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