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Claims against estate by adult children

Claims against an estate by an adult child

Testators are often surprised to learn that their will could be subject to a claim after their death.

A disappointed beneficiary may have a claim against the estate for financial provision if the will fails to make reasonable provision or no provision at all.

The law provides a statutory basis for bringing a claim under the Inheritance (Provision for Family and Dependants) Act. This has been the law since 1975.

Often a child may bring a claim against the estate of a deceased parent. The Supreme Court has handed down a judgment this week in Ilott v Mitson (2017) UKSC 17 which provides some clarification of the law, although unfortunately, still leaves several areas without guidance.

10 years ago, Heather Ilott brought a claim for reasonable provision against the estate of her late mother, Mrs Jackson. The last will made no provision for the daughter. Mother and daughter had not had any contact for many years since Heather Ilott left home at the age of 17 years. Mother decided to leave her residuary estate of £486,000 between three animal charities. Surprisingly, there was no known connection between the charities and the deceased during her lifetime, so the residuary gifts were very much a windfall for The Blue Cross, the RSPCA and the RSPB.

Heather Ilott challenged the will under the 1975 legislation, and at first instance, was awarded £50,000.

Both parties appealed. Heather Ilott claimed that the award of damages for reasonable financial provision was too low (representing about 10% of net estate); The charitable beneficiaries appealed to challenge the award so the estate would pass to them in accordance with the terms of the will.

The 1975 legislation requires an objective assessment of whether the will made reasonable financial provision, and requires the court to consider the size of the estate and the financial resources of the claimant. The worse-case scenario for an executor is a large estate with an impoverished claimant.

Mrs Ilott is in her fifties, has five children, is receiving benefits, has no private pension provision and does not own property.

The Court of Appeal increased the award to Heather Ilott to £143,000.

The breakdown of this award was to allow Mrs Ilott to buy the rented home she was living in plus an additional £20,000 for additional income.

The three charities appealed again to the Supreme Court.

This time, by a unanimous decision, the Supreme Court overturned the earlier Court of Appeal decision and restored the original award of £50,000.

Lord Justice Anthony Hughes handed down the judgment. This confirms existing case law that “…an appeal will not succeed unless the judge made an error of principle…”.

Therefore, the function of the appeal court is not to `start again from scratch` or interfere with the opinion of the original judge making an award that “…was entirely open to him to make…”.

What help is this decision to practitioners advising clients about claims under the Inheritance Act?

The answer is very little.

Lady Hale, sitting in the Supreme Court, conceded that the judgment demonstrates “…the unsatisfactory state of the present law, giving as it does no guidance as to the factors to be taken into account in deciding whether an adult child is deserving or undeserving of reasonable maintenance…”.

The conclusions from a consideration of present case law are:

·        Adult children still have the right to claim if the will fails to make reasonable provision.

·        Heather Ilott had the right to claim and received damages of £50,000 from her mother`s estate.

·        Adult children can still claim if there is no will and the estate is distributed on intestacy.

·        It could be argued that there has been a rebalancing of the law in favour of the wishes of the testator and testamentary freedom.

·        The judgment provides support for charitable gifts regardless of any known lifetime connection or previous involvement with the charitable beneficiaries.

·        The Supreme Court acknowledged that many charities are heavily reliant on legacies in wills.

·        The Supreme Court acknowledged that charitable beneficiaries are affected by successful claims under the 1975 Act.

·        Authoritative guidance on claims by adult children remains “unsatisfactory”.

·        An award of damages for reasonable financial provision at first instance is a value judgment and will be difficult to challenge on appeal in future.

·        The purpose of the 1975 Act is to provide reasonable provision for the maintenance of the adult child, which, by definition, is the provision of income and not capital.

·        Future awards are more likely to include a life interest to a claimant (payment of income for life) rather than a lump sum to buy a house.

·        The cost of administering a life interest trust maybe disproportionate if the estate (and award) is of modest value.

·        The resources of the claimant should be considered, including any state benefits, although the award of £50,000 to Heather Ilott exceeded the threshold to claim housing and council tax benefit.

I would recommend clients obtain professional advice from a solicitor to take instructions and draft your will, particularly if adult children are excluded as beneficiaries, the distribution of the estate to children is unequal, or your estate is to be distributed between charities.

It is still good practice to record any lifetime association with charitable beneficiaries, particularly if the legacy is large or the share of the residuary estate significant.

Contact 01827 311411 or t.illsley@rutherfordslegal.com

Tony Illsley LL.B

Head of Rutherfords LLP Private Client Department

Tony Illsley is a partner with Rutherfords LLP and the appointed panel solicitor for the Midlands Air Ambulance Charity for South Staffordshire and a panel solicitor for the National Free Wills Network

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