Inheritance (Provision for Family & Dependents) Act 1975 – the adult child

 In Probate, Wills

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Under the Inheritance (Provision for Family & Dependents) Act 1975 [IPFD 1975] the courts have a discretion to alter the terms of the succession to a person’s estate despite our jurisdiction’s adherence to the principle of testamentary freedom. This discretion may be exercised in favour of an eligible applicant who can show that the deceased failed to make reasonable financial provision for them.

In the recent case of Ilott v Mitson [2011] EWCA 346 the court had to consider the claim of an estranged adult child. It calls into question just what a Wills draftsman can do to minimise the risk of a testator’s Will being affected by such a claim.

The facts

Melita Jackson died in 2004 aged 70. Her estate was valued at £486,000. She made a Will on 16 April 2002 in which she left the entire estate to various charities (the RSPB; the Blue Cross and the RSPCA). She made no provision for her only child, her daughter Heather Ilott, who Mrs Jackson stated in a letter of wishes, had left home at 17 to live with the Ilott family and subsequently married Mr Ilott.

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There had been a series of quarrels between mother and daughter which resulted in them having little contact over the years. Mrs Jackson indicated in her letter of wishes that she only saw her daughter twice since her departure in 1978 – once on her 60th birthday and once in May 2001. As a result Mrs Jackson advised Heather that she would not be leaving her anything in her Will.

The letter of wishes explained why she had made no provision for her daughter and specifically asked her Executors to contest any action her daughter might bring against the Will and also asked them to use the letter as evidence in any such court proceedings.

Mrs Ilott has five children and was dependent on benefits. She had not had any money from her mother beyond the age of 21 and so could not be said to be financially dependent on the deceased at the time of her death.

The decisions under appeal

The initial application by Mrs Ilott in 2007 came before a District Judge who held pursuant to s.1 IPFD 1975 that “the disposition of the deceased’s estate effected by her Will …was not such as to make reasonable financial provision for the appellant” and awarded her a lump sum of £50,000 representing the capitalisation of the sum which the District Judge found would be reasonable in all the circumstances of the case for the appellant as an adult child of the deceased to receive for her maintenance – ss.1(1)(c) and 1(3) IPFD 1975.

Only claims by spouse or civil partners can be for capital sums or maintenance so it is likely that the capitalised payment in lieu of maintenance was to assist the charities in not having to wait for their money.

Mrs Ilott appealed against the amount of the District Judge’s order and the charities cross-appealed on the ground that the DJ had failed to properly apply the law and that had he done so he would not have made any award to Mrs Ilott since the lack of provision by the deceased was reasonable.

The appeal and cross-appeal was heard on 9 October 2009 before Eleanor King J and she allowed the charities’ cross-appeal and dismissed Mrs Illott’s claim on the basis that the DJ had erred in law and that he had not balanced the various factors under s.3 IPFD 1975 appropriately.

Leave to appeal for a second time was granted and thus the Court of Appeal were asked to allow and appeal against the dismissal of the appellant’s application under the Act and to remit her appeal against the amount of the award to a different High Court Judge for determination.

The law

The case conducts a thorough review of the approach to be taken in adult children’s claims under the IPFD 1975.

Under s.3(3), in relation to any application made by a child of the deceased, the court (without prejudice to the generality of s.3(1)(g) and in addition to the matters listed in s.3(1) (a) – (f), must have regard to the manner in which the applicant was being or in which she might expect to be educated or trained. Given Mrs Ilott was not a minor this was not relevant.

Sir Nicholas Wall also said that as Mrs Ilott was an adult child it was not appropriate to base the court’s decision on the relief of the State from the obligation to support the applicant through the provision of benefits and tax credits.

Ss.3 (5) & (6) require the court to take into account facts known at the date of the hearing; resources, including earning capacity; and to take into account financial obligations and responsibilities too.

All the Judges hearing the appeal confirmed that there was no prerequisite to making a claim on behalf of an adult child to demonstrate there was a moral obligation on the deceased to provide for them or some special circumstance. Instead as the cases to date show the exercise which a court must follow is in two factors:

  1. The trial judge must look at the situation objectively and decide on the basis of the factors listed in s.3(1) whether the disposition or lack of disposition produces an unreasonable result – this is a value judgement by the judge
  2. The exercise is a balancing act in which the factors in s.3(1) are weighed on one side of the scales or the other. Some factors may be neutral but many will go into the scales either in favour of or against the proposition that there has been a failure to make reasonable financial provision for the applicant – this may mean that the absence or presence of a moral obligation on the deceased may be a deciding factor but there is no obligation to put it into one side of the scales or the other or to treat it as a prerequisite for a claim to succeed or fail – Sir John Know in Re Hancock [1998] 2 FLR 346

Even the Law Commission in their review of the law for their consultation on Intestacy and Family Provision on Death (Consultation paper 191) said:

“2.79 It was formerly though that a claim by an adult child would be subject to the additional threshold of ‘special circumstances’ or a ‘moral claim’. In Re Hancock the Court of Appeal held that this was incorrect, although it may be difficult for a child who is able to earn their own living to show that reasonable financial provision has not been made for them ‘without some special circumstance such as a moral obligation’.

2.80 It has subsequently been held that the world ‘moral’ is intended only to emphasise that the obligations and responsibilities to which the court must have regard under s.3(1)(d) IPFD 1975 need not be purely legal.”

Lady Justice Black said that

“A dispassionate study of each of the matters set out in s.3(1) will not provide the answer to the question whether the Will make reasonable financial provision for the applicant, no matter how thorough and careful it is. As Judge LJ said in Re Hancock at 355C, s.3 provides no guidance about the relative importance to be attached to each of the relevant criteria. So between the dispassionate study and the answer to the first question lies the value judgement to which the authorities have referred. It seems to me that the jurisprudence reveals a struggle to articulate, for the benefit of the parties in the particular case and of practitioners, how that value judgement has been, or should be, made on a given set of facts. Inevitably, this has led to statement that this or that matter is not enough to found a claim and this or that matter is required.”

So each case will depend on its own facts and upon how the judge strikes a balance between the s.3(1) factors to decide reasonableness first and then the size of the order if appropriate second.

The decision

All the judges hearing the appeal were of the view that the decision of the judge at first hearing in which he concludes whether or not the dispositions of the deceased’s estate made reasonable financial provision for the applicant should not be interfered with on appeal unless they were wrong in law.

In this case they concluded the District Judge had correctly applied the law and that they were not therefore in agreement with the High Court Judge’s decision to overturn his decision as to the reasonableness or otherwise of the deceased’s Will.

Therefore, the deceased’s Will did not make reasonable financial provision for Mrs Ilott and the matter is remitted to the High Court to determine the size of the award but with the strong encouragement to the parties to avoid further litigation but to agree the division of the estate between them to minimise any more costs being incurred.

Practice points

  1. At first glance this case appears to put the nail in the coffin of ‘testamentary freedom’ but that is and had been the effect of the IPFD legislation from the outset – it provides the courts with a discretion to make a change to the deceased’s testamentary provision or the intestacy rules if in a particular case an eligible applicant shows that such provision is unreasonable in accordance with the statutory checklist in the Act.
  2. The case makes it absolutely clear that a claim brought by an adult child is no different from any other applicant and the existence of a moral claim or special circumstance is not a prerequisite to success.
  3. Practitioners should continue to encourage clients to leave a letter alongside a Will which might be challenged explaining why they have made the provision or made no provision for particular potential beneficiaries of their estate but in the light of Sharp v Adams [2006] EWCA Civ 449 it might be helpful to leave something rather than nothing to the beneficiaries which the deceased wishes to ignore.
  4. Charities are keen to receive estates where the obvious beneficiaries are to be ignored but then they reap the whirlwind when the beneficiaries argue that either the Will is invalid (e.g. Re Ritchie [2009] EWHC 709) or, as here, the provision unreasonable.
  5. If a discretionary trust is included in the Will or made over a life policy outside the Will it provides the trustees with the necessary scope to negotiate and to perhaps a solution short of litigation which charities and others should be encouraged to think about. The costs of litigating are so high and it is makes sense to mediate instead.

Although this case has received significant publicity it should not alter the way in which practitioners advise clients in situations where family members or significant potential beneficiaries are to be overlooked in their Will or receive little more than a token gift.

7 April 2011

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