Cohabitants – Transfers of property as part of a settlement

 In Probate

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Is it possible for a cohabitant to receive a transfer of property as part of the settlement of an IPFD claim?

IPFD – Cohabitant – Thompson v Ragget [2018] EWHC 688

Case Summary from LawSkills | Private Client specialist trainersThis case turns on the level of provision appropriate for a cohabitant of 42 years standing for whom no provision was made in the testator’s Will. It considers the case law on cohabitees who have been awarded an outright transfer of property to cater for accommodation needs and considers whether a ‘clean break’ is preferable to awarding a life interest.

The facts

Wynford Hodge died on 4 February 2017. He had made a number of Wills over recent years but the last Will was made on a few weeks before he died and was in favour of two of his tenants, the defendants in this case: Ms Evans and Mr Berisha.

The defendants were not related to Mr Hodge and had lived a fairly hand to mouth existence working part time for him and renting a property on the farm under an assured shorthold tenancy. Since 2014 they had undertaken some unpaid errands for the deceased and helped to refurbish the property they occupied. Mr Berisha worked on the caravan park, starting out at 1-2 days per week and in the months before Mr Hodges death, working 7 days a week.

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The defendants had two children and had little expectation of living an extravagant lifestyle. When Mr Hodge asked Ms Evans if she wanted to be a millionaire she had said she would not and would be happy with a holiday every year and enough money to bring up her children.

Mr Hodge could not have been said to have accepted any responsibility for their welfare but he certainly did not wish his cohabitant’s children to benefit hence his last Will leaving everything to his tenants and nothing to his cohabitant of 42 years or her children.

He left with his Will a letter in which he specifically referred to Ms Thompson and her four children: Gary, Lee, Dean and Sharon. He stated that he did not trust any of the children apart from Gary. He said that he felt they had taken advantage of him and so he no longer wanted to leave his estate on trust for Joan for life as this would provide a substantial sum which he said she did not need. He felt that given her state of health, Ms Thompson would not be able to live at the farm independently without him as her principal carer, and would need to go into a home. He said she had her own savings and own money.

Contrary to the letter left with Mr Hodge’s Will Ms Thompson had about £2,500 of savings and income only of a state pension and disability living allowance totalling £1,114 per month.

Following his death Ms Thompson had returned to stay in a nursing home but her GP said she would become unnecessarily institutionalised if she stayed there and in any event Ms Thompson wanted to return to the farm.

An occupational therapist undertook an assessment and found that she could manage living in the cottage, rather than the farmhouse, if it was adapted to her needs and if she had carers living in. Her son Dean’s wife, Janet, had suitable experience as a carer and she and Dean were keen to live at the cottage and look after her.

Mr Hodge owned a farm and caravan park as well as a bungalow and cottage. All together his estate was valued at £1,535,060. The cottage had been purchased with a view to Mr Hodge and Ms Thompson moving to live there as their health deteriorated and conditions in the farmhouse were not appropriate for them to manage there.

The law

The Judge found that Ms Thompson could live at the cottage with a suitable care package, something which Mr Hodges had not taken into account. Her claim as cohabitee had to take into account her age – 79 – and the period of cohabitation, which was 42 years, and her contribution to the welfare of Mr Hodge’s family (which included looking after the home and his mother at the end of her life).  If the claim was merely as a dependent of Mr Hodge then regard had to be had to the length of time they were together and the basis on which Mr Hodge maintained her and assumed responsibility for her maintenance.

Mr Justice Jarman QC considered whether the law permitted an outright transfer of property or a life interest with a power of advancement when settling a cohabitant or dependant’s claim.

This issue was not referred to in the recent Supreme Court decision of Illot v Blue Cross [2017] UKSC 17 but in that case Lord Hughes did refer to a decision of Mr Justice Munby in In re Myers [2005] WTLR 851 in which it was observed that in a claim by an adult child it is likely that housing would be provided by a life interest for maintenance purposes rather than as a capital sum.

Where cohabitees are concerned there have been awards of outright transfers of property:

  • Negus v Bahouse [2007] EWHC 2628
  • Webster v Webster [2009] IFLR 1240
  • Musa v Holliday [2012] EWCA 1268

Particularly where to do anything other than order an outright gift would have served to antagonise the situation.

The decision

The Judge decided that given the long period of cohabitation in this case and the fact that Ms Thompson’s son Dean and his wife Janet were prepared to live with her and provide for her care it was appropriate to provide for her maintenance accommodation for which Ms Evans and Mr Berisha had no need. Even though they would still be neighbours if an outright gift of the cottage was made Ms Thompson would be able to make all the decisions about altering her home without reference to them.

The Judge reviewed the list of renovations and adaptations recommended by the occupational therapist and requested by the family for moving etc and ordered £28,844.68. In terms of ongoing costs he assessed those at £23,154.76 annually so that the appropriate amount of capital required over and above the property to provide for those under the Duxbury tables was £160,000.

He commented that this would still leave Ms Evans and Mr Berisha with by far the major part of a substantial estate.

He rightly said that whilst Mr Hodge wished that Ms Thompson’s family should not benefit from any provision this wish should not hinder the reasonable provision for her maintenance.

Practice points

  1. Once again practitioners should note that letters of wishes are useful evidence of the thinking of the testator but do not by themselves provide a solution if the premise behind them is flawed – in this case assuming that the cohabitant would be only able to manage in a care home and had assets of her own.
  2. Providing for completely unrelated persons instead of a cohabitant of long standing is unlikely to be upheld unless the cohabitant is of independent means and clients should be advised accordingly.
  3. Giving a life interest in property as part of a settlement of a claim is all very well and may be necessary in some cases but it can prolong the agony where the parties are already unable to communicate.

 

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