Complex Inheritance Case Highlights The Principle of Reasonable Financial Provision

The widely-reported case of a daughter who has made a claim on her mother’s estate after her death, despite their long estrangement, highlights the importance of leaving very clear instructions in your will about how you expect your estate to be handled upon your death. But it underlines too, the fact that the judiciary is focussed upon adhering to the law rather than being swayed by the emotive elements of a case. 

This week the Supreme Court has delivered a ruling in the appeal case of Ilott V The Blue Cross and other Appellants, which highlights some of the complexities of the Inheritance Act 1975 and why these complexities should be of interest to us all.

Mrs Ilott had been estranged from her mother for decades, having left home as a teenager to live with her now-husband.

Mrs Ilott and her family are of limited means, and largely rely on state benefits, with an annual net income of around £20,000. They live in a housing association property. 

Her mother left an estate worth £486,000 to various charities and she included a letter in her will, detailing the breakdown of her relationship with her daughter. In the letter she said she had made her intentions clear to her daughter, who could have no reasonable expectation of receiving an inheritance.

Following her mother’s death Mrs Ilott brought a claim under the Inheritance (Provision for Family and Dependants) Act 1975. This act allows spouses, children, cohabitants and others who may have been financially dependant on a deceased person, to apply to the court for provision (or additional provision) to be made for them, where the will or rules of intestacy do not already achieve this outcome. For all but spouses, this is limited to what is reasonable for their maintenance.

In order to decide what is deemed reasonable for a person’s maintenance, a court must take into account, amongst other things, the size of the estate, the financial position of the claimant and the financial position of any existing beneficiaries of the will. 

A District Judge agreed that the will did not make reasonable financial provision for Mrs Ilott and subsequently awarded her £50,000.

The charitable beneficiaries under the will initially appealed the finding that there was any lack of reasonable provision, but that challenge failed. The appeal then proceeded on the issue of the amount of money dealt with in the award, with Mrs Ilott believing it as being too low.

The Court of Appeal held that the District Judge had made two errors of principle in his approach – regarding the precise figure that should be awarded in light of the long estrangement and the affect of the monies upon the means-tested benefits entitlement of Mrs Ilott and her family. The Court of Appeal re-evaluated the claim for itself, and awarded Mrs Ilott £143,000 to buy the home she lives in, with an option to receive £20,000 in one or more instalments.

However, following a further appeal from the charitable beneficiaries, the Supreme Court has now reached a unanimous decision to overturn the Court of Appeal’s decision and reinstate the decision of the District Judge, so Mrs Ilott will receive the sum of £50,000, with this sum being deemed sufficient to meet her entitlement under the Act.

This case illustrates how complex this area of law can be. And irrespective of the rulings reached in this instance, a court will still approach each case according to its own merits, taking into account the principles of reasonable financial provision.

So it is vital for everyone to make a detailed will. If you have specific requests you can choose to attach a letter of wishes, though this is not essential or even legally binding. As always, there is no substitute for tailored and professional legal advice. 

Richard Howells is a Director & Head of Lifetime Planning Disputes at JCP Solicitors.  He specialises in Litigation involving Wills, Estates, Trusts and Property. For further information on disputing a Will or Trust please contact Richard on richard.howells@jcpsolicitors.co.uk or telephone 01267 266946.

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