Yesterday’s media featured a Court of Appeal case concerning the claim by an adult child, Mrs Ilott, against the estate of her late mother, Melita Jackson. The ruling in Mrs Ilott’s favour raises questions about the extent to which an individual can leave their assets in their Will to whoever they wish to benefit. In this article we look at whether the judgment limits testamentary freedom more than was already the case.
An estranged daughter and a contested Will
Mrs Ilott was an only child but had been estranged from her mother, Mrs Jackson, for some years. Mrs Jackson’s Will left her net estate of £486,000 to three well-known charities, with which she had no known lifetime connection. Mrs Jackson made no provision for her daughter. Consequently, Mrs Ilott brought a successful claim against her mother’s estate under the Inheritance (Provision for Family and Dependants) Act 1975 (the Act) and in 2007 she was awarded £50,000 from Mrs Jackson’s estate. Mrs Ilott subsequently launched an appeal against the amount of the award which was the subject of the judgment published this week.
Yesterday’s judgment focused entirely on the quantification of the award in Mrs Ilott’s favour as the question of whether she had a claim under the Act had been decided by the Court of Appeal in her favourin 2011. Under the Act’s provisions, the child of a deceased person is entitled to bring a claim against a parent’s estate if “reasonable financial provision” has not been made for the child in the parent’s Will or on their intestacy. If successful, financial provision for a child, as defined by the Act, means “such financial provision as it would be reasonable….. for the applicant to receive for his maintenance.”
In the High Court the amount awarded to Mrs Ilott was determined on the principle that maintenance had to be income based, on the assumption that a large capital payment would mean the loss of the State benefits which formed a major part of the Ilott family’s income, and that the level of those benefits should provide a ceiling on the amount that could be awarded. These factors led to the award of £50,000 to Mrs Ilott. On appeal Mrs Ilott was seeking enough money to buy the Housing Association property in which she and her husband lived in addition to a capital sum of £50,000 to meet other needs.
The Court of Appeal decided that the High Court award was based on two fundamental errors. First, the High Court had erroneously considered that the award should be limited because Mrs Ilott did not expect to receive any benefit from her mother’s estate and she already lived within limited means. Second, the High Court judge had erred because he did not know what effect any award he made would have on Mrs Ilott’s State benefits’ entitlement.
The Court of Appeal held that they were entitled to look at both the present and future needs of the applicant, that the £50,000 award did not amount to reasonable financial provision for Mrs Ilott’s maintenance, and that it was essential to preserve her entitlement to benefits otherwise no financial provision would in effect be made. The court found that “existing means are not conclusive as to the appropriate level at which a claimant is entitled to be maintained” and awarded Mrs Illott £143,000 (the amount needed to purchase her property), the reasonable expenses of acquiring it and the option of requesting a further capital sum of £20,000 from the estate within two months of the order. This was expressed as an option rather than a right so that Mrs Illott could consider her benefits’ position before requesting any capital.
Does this judgment decrease the limits on testamentary freedom?
It is important to note that yesterday’s judgment was about the amount of the award to Mrs Ilott and not about whether she had a substantiated claim under the Act in the first place. That question was determined in Mrs Ilott’s favour in 2007 and on appeal in 2011.
Since the Act came into force in 1975 certain specified categories of individuals have had the right to claim against an estate which does not make reasonable financial provision for them, so freedom of testamentary disposition has been restricted by the Act for 40 years. It was the position for some years after the Act came into force that an adult child had to show special circumstances to succeed in a claim such as, for example, an ongoing disability. It was decided in a 1993 case that this was no longer the law.
In deciding whether a Will has made reasonable financial provision for an applicant the court has to take into account a number of factors laid down by the Act. These are wide ranging and include any matter which the court may consider relevant. The court held in this case that the fact that Mrs Ilott was an adult child living independently of her mother was a factor that had to be taken into account and that “At minimum that means that the court is not concerned to provide [the applicant] with an income that would fully support her needs.”
The court considered that Mrs Ilott’s financial resources were at such a basic level that they outweighed the fact that she was an adult child living independently. In awarding Mrs Ilott an optional capital sum of £20,000 it was pointed out that this was not a large amount because of the factors against the claim: the fact that she was an adult independent child, Mrs Jackson had expressed a clear wish to benefit others and the fact that mother and daughter were estranged.
Clearly therefore although an adult, independent child no longer has to show special circumstances to succeed in a claim, the fact that they are adult and financially independent will still be a factor in considering that claim. Many cases decided under the Act are decided on their specific facts and it could be, for example, that if Mrs Ilott’s financial situation and future prospects were more favourable, and if Mrs Jackson had supported the charities named in her Will during her lifetime, there may have been a different outcome with regard to the amount awarded.
For further information please contact Anthony Fairweather.