Family Feuds & Final Wishes: A Practical Look at Inheritance Law

Inheritance disputes over the distribution of assets following someone’s death are commonplace. It is, quite understandably, an area of law which is highly emotive and personal to those directly involved within the dispute. For some, it will be an issue over their inheritance (or lack of), whereas others will have broader concerns. Inheritance disputes are also complex, with a menu of means to bring a challenge. For example, this could be in the form of challenging the validity of the will in question, or making an application under the Inheritance (Provision for Family and Dependants) Act 1975 ('the 1975 Act'). Such claims have become even more complex in the 21st century; there has been an increase in second marriages. This, in turn, has generated alternative and complex family models. The area is even further complicated in that there could be an issue between either the beneficiaries and executors (or even the co-executors) having some form of disagreement on, amongst other things, potential issues of misconduct.

This article will explore the basics of inheritance disputes by focusing on the statutory framework of the 1975 Act and important case law developments. It will distil the principles with the Court uses to decide what provision should be made for family and dependants, before then provide analyse matters of concern and the takeaway points from the case law developments. Whilst the issue of challenging the validity of a will falls outside of the scope of this article, it will be covered as a standalone topic in due course. This post should not be intended to be legal advice and should not be construed as such; it is for information and educational purposes only and therefore readers are always strongly encouraged to seek professional legal advice for their own matters.

It should also be noted that inheritance disputes can be appropriately dealt with through mediation (you can read about the procedure and benefits of mediation in a previous article, here) as opposed to going through the formal court process.

By way of context, claims under the 1975 Act focus on whether the will or intestacy rules make reasonable financial provision for an individual in all of the circumstances of the case. As can be noted, this means that there is no requirement for any subjective assessment of the merits of the Claimant's case; it is purely an objective exercise. The terms of the 1975 Act allow certain categories of people to seek reasonable financial provision from an estate, which will be discussed below. For others, they will be limited to receive financial provision for the purposes of their maintenance only.

The Court of Appeal in the leading case of Ilott v Mitson and others [2011] EWCA Civ 346 (and was confirmed in Ilott v The Blue Cross [2017] UKSC 17) outlined that there are usually two questions to answer:

1. Did the will/intestacy make reasonable financial provision for the Claimant; and

   
   

2. If not, what reasonable financial provision ought now to be made for them?

The Law

Reasonable Provision

The starting point for such claims is: "has the deceased's estate made reasonable and financial provision for the class of the potential applicant by the standard applicable to that applicant?"

There are two classes of people who can make a claim under the 1975 Act. The distinction between the two classes is crucial (it goes to the central question of what level entitlement the Claimant is entitled to). That distinction can be described as follows:

• In relation to spouses (or others treated as spouses or civil partners of the deceased), the provision required does not need to be for the Claimant's maintenance. Instead, it is based on what it is reasonable for the Claimant to receive.

• If someone does not fall within these narrow categories (this will include: former spouses, cohabitees, children, and people who were financially dependent on the deceased) they will be limited to, under section 1(2)(b) of the 1975 Act, "financial provision as it would be reasonable in all the circumstances of the case for the applicant to receive for his maintenance". This is a lower rate in comparison to reasonable financial provision which a spouse or civil partner would be entitled to.

The Meaning of Maintenance

Unhelpfully, the term "maintenance" is not defined in the 1975 Act. It is worth noting that the Courts have defined "maintenance". The immediate issue is that this is general: the concept will vary from case to case depending on a number of factors. There have also been numerous cases which have considered the definition of "maintenance", the standard to be applied in such cases and the higher standard. For example:

• Re Coventry [1980] 1 Ch 461 outlines that when considering whether the deceased's estate failed to make reasonable financial provision for the Claimant, it was immaterial whether the disposition was made by will or on intestacy or both. In deciding what would be reasonable for the Claimant's maintenance under the 1975 Act, maintenance was not to be limited to just enough to enable a person to get by nor was it to be extended to anything reasonably desirable for his benefit or welfare but meant such financial provision as would be reasonable in all the circumstances to enable the Claimant to maintain himself in a manner suitable to those circumstances. Importantly, the question was not whether the Claimant was in need of maintenance. The question was whether in all the circumstances looked at objectively it was unreasonable for the estate to make no provision for this Claimant.

• In Re Dennis [1981] CLY 2887, a father left his son £90,000 whilst still alive. The son spent the money. When the father died, he left the son £10,000 plus a life interest in a trust of £30,000. The son, however, was liable to pay around £50,000 for capital transfer tax on the original £90,000 and was liable to be made bankrupt because of that debt. The Court held that "maintenance" cannot include provision for liability for capital transfer tax.

• Millward v Shenton [1972] 1 W.L.R. 711 was in relation to a disabled son who was living entirely on state benefits. The Court held that the son was entitled to reasonable provision out of his deceased mother's estate. An elderly mother of seven children (of whom one had recently died of cancer) left the whole of her estate to cancer research. The applicant, one of her sons, who was a 54-year-old married man, was incapacitated from earning and was living, together with his wife, entirely on state assistance, and had chattels limited in value. The Court found that the estate did not make reasonable provision for that son, and that reasonable provision would be eleven-twelfths of the estate.

• Witkowska v Kaminski [2006] EWHC 1940 (Ch) is an interesting High Court decision. The Court held that maintenance may be what is reasonable in another country. In this case, the applicant had continued ties to Poland including the fact that she had a house and a son there. The Court also held that the applicant's unlawful presence in the UK was not a bar to her ability to make an application under the 1975 Act. The question was whether during the two years immediately preceding the passing of the deceased, that he and the applicant lived together as husband and wife in the same household. That was a question of fact and was not dependent on whether the applicant was an illegal overstayer.

Powers of the Court

The powers of the Court, and what provision to award, will depend on which of the above categories the Claimant falls into: spouses and civil partners are not restricted to maintenance, whereas other potential Claimants are. This decision is subject to the Court's discretion, as seen in: Ilott v Mitson [2011] EWCA Civ 346. The Court will make the decision based on the factors found in section 3 of the 1975 Act, which are covered below in the next sub-section. It should be noted that the Court will only consider making an award if the deceased has not made reasonable financial provision for the Claimant.

The Court will have regard to the standard of living enjoyed by the Claimant during the lifetime of the deceased as part of its examination of what type of provision to award. However, it should be noted that in Ilott v Mitson [2015] EWCA Civ 797 that the Court of Appeal explained the fact that an impecunious claimant has managed to live within their means is not conclusive as to the appropriate level of maintenance to which they are entitled. It therefore does not automatically mean that a Claimant who is managing to get by on very little will be entitled to very little.

There are a number of ways that reasonable provision can be awarded by the Court. They are found in section 2 of the 1975 Act and can be summarised as follows:

• An absolute capital sum;

• Income;

• Deferred payments;

• An amount settled on trust;

• A variation of an ante-nuptial or post-nuptial settlement; and/or

• An option to purchase an asset of the estate

It should be noted that the award is only be made in respect of the net estate. Problematically, there are some limits on what the Court can do in relation to some existing trusts under section 2. This is because assets in the trust often fall outside the definition of the net estate for the purposes of section 25 of 1975 Act. On top of that, the Court's powers to vary trusts under section 2 are limited to either trusts arising under the will or intestacy. Expert legal advice should be taken on this point.

Relevant Statutory Factors

The Court will conduct an examination of various factors, which can be found in section 3 of the 1975 Act. The entirety of section 3 will not be repeated owing to its sheer size; there are many basic factors which can apply in any individual case and, depending on the category in which the claimant belongs, there may be additional factors. There must be full consideration of the evidence in relation to each of the relevant factors and each must be given equal weight.

Amongst the relevant factors are the following:

• The size of the estate;

  
  

• The needs of the Claimant;

  
  

• Whether there are any other potential claims; and

  
  

• The financial position of the beneficiaries who stand to lose out should the claim succeed.

However, there are exceptions to this. In the case of Wright v Waters [2014] EWHC 3614 (Ch), the Court found that the Claimant's conduct towards her late mother was so deplorable that it outweighed all of the other (weighty) factors in her favour.

Other Practical Points

It should be kept in mind that there are very strict time limits for an inheritance claim. These types of claim must be brought within six months of the grant of probate or letters of administration (see section 4 of the 1975 Act).

Analysis

• The complexity of inheritance claims is further increased due to changes in societal norms. The 1975 Act was written when second marriages and blended families were not the norm. It is becoming increasingly clear that the 1975 Act may need to be amended to be reflective of this change in society. Therefore, it is essential to consider the balance between one's wishes to provide for a second spouse and the children of a prior relationship.

• Claims are always brought against the net estate (see section 25(1) of the 1975 Act) and it is for the Claimant to prove their case for reasonable financial provision at the appropriate standard.

• The timeframes involved in such cases are extremely tight and are strictly enforced. Therefore, it is imperative to seek legal advice and make a claim as soon as possible (and in any event, within six months of the grant of probate or letters of administration). This is not absolute: the Court does have discretion to allow late claims in limited circumstances, but they are fairly rare and usually require a compelling reason for the delay.

• Spouses are entitled to receive a higher proportion of the estate compared to other Claimants under the 1975 Act.

• When considering a claim involving a short marriage or civil partnership, the duration of the marriage or civil partnership is a relevant factor which must be taken into account by the Court.

• The applicable standard for maintenance is what would be reasonable for that Claimant to live on at neither a luxurious, nor poverty-stricken level; it should be enough to enable a person to get by but should not extend further to include welfare. The standard of living enjoyed during the deceased’s lifetime is a relevant and weighty factor, but it is not determinative in these cases.

  
  

• The question of what award, if any, to make is answered by reference to the evidence at the date of the hearing. That award will be assessed against all factors set out in section 3 of the 1975 Act.

• The factors found in section 3 of the 1975 Act are to be given weight. However, there are circumstances where they will be disapplied, usually due to poor conduct on the part of the Claimant. It is therefore possible for the Court to find, objectively, that the Claimant has acted so badly that they are not entitled to anything from the estate.

• As these types of proceedings rely solely on an objective analysis, the question before the Court will largely turn on the financial evidence before it. Therefore, hard evidence is likely to be crucial.

Please note that our posts should not be intended to be legal advice and should not be construed as such; they are merely discussions and therefore readers are encouraged to seek professional legal advice for their own matters.