If you lived in France or Germany (and many countries for that matter) you would be a bit stumped as these countries have forced heir-ship – you are required, by law, to leave certain percentages of your estate to your relatives.
However in England (and Wales) things are different. Here we have the concept of testamentary freedom meaning that people can leave their estate to any beneficiary they want – be it a charity, a friend or in one famous case the owners of the local Chinese restaurant.
The principal of testamentary freedom is challenged in practice by the Inheritance (Family and Dependants) Act 1975 – legislation that allows the courts to change the way an estate is distributed (either via a will or intestacy). This means that a parent’s decision to leave out their adult son or daughter doesn’t mean that child is not going to attempt to try and get something from their parent’s estate. An adult child’s challenge of her mother’s will was the subject of a recent Supreme Court decision that has been anticipated by Private Client solicitor right across the country for quite some time.
The case
Illot v Blue Cross and Others UKSC17 2017 (previously known as Illot v Mitson) concerned Mrs. Jackson and her decision to leave nothing to her only child, who she had been estranged from for the majority of the daughter’s adult life. Instead she left her entire estate, valued at the time of her death at just under £500,000, to a number of charities – none of which she had a particularly strong connection to.
The daughter had 5 children and was mainly dependent on state benefits. Her husband earned a very minimal wage. They lived in a housing association property and had limited savings. The daughter had never received any financial support from her mother.
The daughter, Mrs. Illot applied to the Court for an order under the 1975 Act arguing that her mother had failed to make reasonable financial provision for her.
The law
As a child of the deceased Mrs. Illot fell into a limited number of categories of people able to use the 1975 Act to make such a claim. The most common categories are spouses/civil partners, former spouses/civil partners, partners of the deceased who had resided together for the two years before death and children of the deceased. Other categories include someone considered a ‘child of the family’ and people who were dependant on the deceased.
The Court had to decide in consideration of all the circumstances, whether reasonable financial provision had been made to Mrs. Illot by her mother.
The Court at first instance determined that Mrs. Jackson’s will had not made reasonable financial provision for Mrs. Illot and ordered a lump sum payment of £50, 000. There followed a number of appeals and cross appeals with matters being decided by the Court of Appeal supporting a payment of £143, 000 to allow Mrs. Illot to buy her own home under the right to buy scheme. The Court also ordered a further option of £20,000 to be paid out to her in such a way as not to impact upon her right to benefits.
It was this judgment, by the second highest court in the country that seemed to really challenge the principal of testamentary freedom and served to create no small amount of uncertainty regarding the Court’s treatment of non-dependant adult children’s claims.
Mrs. Jackson, who had her full mental faculties and was consistent in her intention, made the explicit decision to leave nothing to her adult daughter. The Court of Appeal ended up changing this outcome so that Mrs. Illot effectively received 1/3 of her late mother’s estate. Not only did this go against what Mrs. Jackson wanted but it also meant that the charities lost out.
Many people view the 1975 Act as a means to remedy a wrong – such as when a person’s will leaves everything to a sibling but was written before the deceased met their partner and had children. Was the Court of Appeal effectively saying that non-dependent adult children had better claims to a person’s estate than a charity – regardless of what the testator wanted? It could be asked whether this ruling was very much at odds with a person’s right to choose what they left their adult children and overstepped the scope of the 1975 Act.
The 1975 Act treats spouses (this includes civil partners) more generously then the other categories where the Court is asked to consider whether reasonable financial provision has been made for that person’s ‘maintenance’. With spouses it does not refer to ‘maintenance’ – meaning the Court can be more generous and brings it in line with the way a divorce court would look at matter of division of assets.
The 1975 Act does not define what is meant by ‘reasonable financial provision’ or ‘maintenance’. The Supreme Court judgment attempted to assist with this issue. Lord Hughes who gave the lead judgment said that in his view maintenance was ‘to meet the expenses of everyday life’ – it was not to provide for the ‘well being’ or benefit of the applicant.
If a parent decides to leave nothing to an adult child who is not financially dependent on them should that child decide to challenge the will the challenge will be asking the Court to consider whether in all the circumstances the parent’s will gave reasonable financial provision for meet the child’s expenses of everyday life.
It could (and will) be argued that if a parent’s non-dependent adult child is financial solvent and has good earning potential then it may be hard for them to persuade a Court that they need assistance to meet their everyday expenses. This may mean the Courts will see a reduction in this sort of application.
To add even more complication to this already rather hazy area of law the Supreme Court acknowledged that in this particular case the very first judge could have made a range of decisions that would all have been ‘correct’ and not open to an appeal. This could have been the £50,000 payment, no payment at all or a more generous one.
The Supreme Court’s decision was to uphold the charity’s appeal and re-affirm the very first decision – saying that £50,000 was the correct sum of money to enable reasonable financial provision as to Mrs. Illot’s maintenance. Therefore Mrs. Illot did successfully challenge her mother’s will but received a far less generous payout than the Court of Appeal ordered.
Charities
It could be asked why this case was so significant. It is not at all unusual for adult children to be unhappy with their parent’s will. Often the matters that come to Court concern much larger estates – that Chinese restaurant case was a £10 million estate. So why did Mrs. Jackson’s will and an estate worth just under £500,000 find itself being the first case involving the 1975 Act to come before the Supreme Court?
The charities brought this appeal because it appeared that if the Court of Appeal decision was allowed to stand, non-dependent adult children could be seen to have a greater need than a charity. As charities are so dependent on legacies this could have potentially dramatically affected their fundraising.
The Supreme Court categorically stated (and in effect chastised the Court of Appeal) that a charity was a very worthwhile beneficiary – regardless of whether the deceased had a connection with it.
What next?
The Supreme Court’s judgment appears to have strengthened a person’s right to exclude their non-dependant adult children. It is very important to note that this does not change the right of an adult child to bring a challenge – it just might make that person think twice about their prospects of success.
The Supreme Court also confirmed that a person’s testamentary wishes are extremely important. In this case Mrs. Jackson not only wrote the will explicitly excluding her daughter but also explained her reasons. These form part of the circumstances to be taken into account.
So what does this mean for that parent who dislikes their adult son or who feels that their money would be better served going elsewhere? Whilst it is not possible to give ‘one size fits all’ guidance I can recommend the following;
- Consider your reasons. If you are being unreasonable this will be taken into account by the Court.
- Consider your child’s claim – if they are struggling financially (or rely on your assistance) then they may still have a case with merit.
- Why that charity? You can give to whoever you want but a long term relationship or specific connection may bolster the charity’s claim if challenged.
- Think of your executors – if you leave out a child knowing there is a good chance of a challenge – it won’t be you spending years fighting and going to Court – it will be them.
- Always speak to a solicitor – there may be ways to reduce an adult child’s likelihood of challenging your will or even an alternative that suits you (and your child) better.
Every case and every person is different and the best chance of having your last will respected (and upheld by the Court if necessary) is to have it drafted by a solicitor. It is not just a challenge under the 1975 Act that a solicitor will be able to advise you on – it is best to enter in to such an important document with your eyes wide open.
If you want to discuss your individual needs and what you want to achieve regarding your will, Hanne & Co. have 5 Private Client solicitors who would be very happy to assist you.
By Michael Brierley, Solicitor
