Having recently grappled with the complex constitutional issues raised by the Government’s Brexit appeal, the Supreme Court Justices were faced with another important decision in the case of Ilott v The Blue Cross & Others  UKSC 17.
It was the first opportunity for the Supreme Court to consider and give guidance on the issue of what constitutes “reasonable financial provision” within the meaning of the Inheritance (Provision for Family and Dependants) Act 1975 (“the 1975 Act”). The 1975 Act essentially enables the Court to make financial provision from a person’s estate for that person’s family and dependants, in certain circumstances.
From a public policy perspective, this is an important issue. There is general consensus from the public that a person’s wishes on their death (assuming they have made a will) should be complied with. Indeed, there is, in English law, particular significance attached to testamentary freedom. Set against this, are the needs of the deceased’s family and dependants, who may have been deliberately disinherited by the deceased.
This was a case where the deceased, Mrs Jackson, had made a will which disinherited her adult daughter, Mrs Ilott. Mrs Jackson left her entire estate (worth circa £486,000) to various charities (with whom she had no particular connection) whilst her daughter (and family) lived in modest financial circumstances, receiving state benefits.
The Supreme Court decided that the Court of Appeal had made errors in the application of the test for reasonable financial provision under the 1975 Act. The Court of Appeal had awarded Mrs Ilott the sum of £143,000 to buy a house and £20,000 for additional income.
The Supreme Court upheld the District Judge’s decision at first instance (where he awarded Mrs Ilott a lump sum payment of £50,000). They placed significant weight on the value judgments made by the District Judge in respect of the evidence heard at first instance, which included evidence about the period of estrangement between Mrs Jackson and Mrs Ilott of some 26 years and the fact that Mrs Illot had no expectation of benefitting from the estate. They made clear that a testator’s wishes, and their reasons for making a will, are both highly relevant factors that should be afforded significant weight.
The Court also made clear that in the case of an adult child (or that category of claimant under the 1975 Act); reasonable financial provision means such provision as it would be reasonable for them to receive for maintenance. “Maintenance” does not extend to “any or everything which it would be desirable for a Claimant to have”, nor is it limited to “subsistence”.” It implies provision to meet the every day expenses of living. Accordingly, an adult child with an income and in comfortable circumstances will not have a need for maintenance.
The decision is important in the context of disinherited offspring and, perhaps most importantly, emphasises the value of a testator’s wishes. The decision also provides important commentary on the principles to be applied in valuing and determining 1975 Act claims.
Furthermore, in her supplementary judgment, Lady Hale set out her view of the unsatisfactory state of the present law, which gives no guidance as to the factors to be taken into account in deciding whether an adult child is deserving or undeserving of reasonable maintenance. Accordingly, it seems that despite the helpful guidance from the Supreme Court, there will continue to be difficult claims brought under the 1975 Act which have to be resolved on a case-by-case basis.
It is anticipated that the decision will provide assistance for those making a will (and estate planning generally) and those involved in contentious probate proceedings.
For further information and advice on all aspects of estate planning or general concerns about inheritance, please do not hesitate to contact Hardeep Nijher or Matt Smith.
The judgment can be found at the following link: http://www.bailii.org/uk/cases/UKSC/2017/17.html
Matt Smith, Senior Associate