There are various categories of applicant who can bring a claim for reasonable financial provision following the death of a testator under the Inheritance (Provision for Family and Dependants) Act 1975. The relevant categories of applicant include the past or present spouse or civil partner, a cohabitant, a child or any other person who was being maintained by the deceased.
An applicant needs to prove that the testator’s will fails to make reasonable financial provision for their maintenance, except that, in the case of a surviving spouse or civil partner, it is only necessary to show that the will fails to make reasonable provision for them in all of the circumstances (whether or not that provision is required for their ‘maintenance’).
Various recent decisions have offered further guidance on how this can affect charity practitioners. In Susan Lynette Moore v Stewart Geoffrey Holdsworth, Patricia Ann Holdsworth & Ors [2010] EWHC 683 (Ch), the judgment shows that the court will not necessarily award a spouse an outright interest in the matrimonial home where a life interest will suffice, particularly where an award of an absolute interest would be likely to lead to a situation where the proceeds of sale of the property would be eroded by care fees, etc. It will therefore be relevant for charities to bear this in mind when considering proposals to put forward in settlement of a claim brought under the Inheritance Act.
This case concerned an application by the deceased’s widow (S), who claimed that the will of her late husband (H) failed to make reasonable provision for her. Under H’s will, S was due to receive the residue of his estate, amounting to approximately £40,000. She already owned a 50 per cent share of the home which she and H had shared for 30 years. The property had originally been held in the joint names of S and H; however, after S had become ill with multiple sclerosis, the couple had decided to sever the joint tenancy because they were concerned that the whole of the proceeds may be dissipated in residential care fees for S, in the event of H predeceasing her.
The High Court found that S’s whole application under the Inheritance Act was premised on the basis that she wished to live in the property for the rest of her life. The court decided that this wish could be fulfilled by awarding S a life interest in the property, rather than an absolute interest which would be likely to lead to a large part of the estate being used up in paying for S’s care and other needs (a situation which she and H had been keen to avoid).
Free rein
In H v David Robert Mitson & Ors [2009] EWHC 3114 (Fam), the principle that in England and Wales a testator is free to dispose of his estate in whatever way he pleases was reinforced. It also demonstrates that, in the case of applications under the Inheritance Act, the existence of a blood relationship and necessitous circumstances are not, on their own, sufficient to establish a claim.
The deceased left her net estate of £486,000 to be divided between three charities (The Blue Cross, RSPB and RSPCA). The deceased made no provision for her daughter in her will. At first instance, the district judge held that the deceased had failed to make reasonable financial provision for her daughter’s maintenance and awarded the daughter £50,000 from the estate. However, on appeal, the Court of Appeal dismissed the daughter’s claim and upheld the terms of the deceased’s will.
The daughter in this case had left home at the age of 17 to go and live with her boyfriend, of whom her mother disapproved. There was no contact between the daughter and her mother for the next five years. A few years after leaving home, the daughter married her boyfriend and they subsequently had five children. The family income was described as “extremely modest”, with benefits making up 75 per cent of the income.
In reaching its decision to dismiss the daughter’s claim, the Court of Appeal listed a number of factors which should be remembered in cases of this type. This list will be helpful to charities and practitioners when dealing with Inheritance Act claims brought against estates from which charities are due to benefit.
The Court of Appeal’s tips for Inheritance Act claims
(i) It is for the claimant to prove his or her case.
(ii) Nothing in the Inheritance Act undermines the basic proposition that a citizen of England and Wales is at liberty at his death to dispose of his own property in whatever way he pleases.
(iii) Section 3 of the Inheritance Act does not ‘rank’ the matters to be taken into consideration. The weight of each of the matters specified in the section will depend upon the facts of the particular case. That is not to say that in an individual case one or two factors may not have a magnetic or even decisive influence on the outcome.
(iv) The question is not whether the deceased acted unreasonably, but whether, looked at objectively, the lack of disposition produces an unreasonable result.
(v) There is no threshold requirement that an adult child has to establish some form of moral obligation or special circumstance.
(vi) Necessitous circumstances cannot in themselves be a reason to alter the testator’s dispositions. (
vii) The ability of the claimant to earn a living is a significant factor.
(viii) An express reason for rejecting an applicant is a relevant consideration.
Responsibility for maintenance
The case of Baynes v Hedger & Ors [2009] EWCA Civ 374 reaffirmed that, to qualify as an applicant on the ground of ‘maintenance’ under section 1(1)(e) of the Inheritance Act, it must be demonstrated that the deceased had assumed responsibility for the applicant’s maintenance, and established that: (i) providing for someone during one’s lifetime does not necessarily amount to an assumption of responsibility to continue to make provision for that person; and (ii) the fact the applicant was living in a property purchased by the deceased does not necessarily mean they were being ‘maintained’ for the purpose of the Act. It is therefore important for charities to properly investigate a claimant’s standing to bring a claim, before accepting that they qualify as an applicant under the Act.
This case involved an Inheritance Act claim by the deceased’s goddaughter, who claimed additional provision from her godmother’s estate on the ground that she was being maintained by her godmother immediately before her death. The court held that the claimant did not qualify as an applicant under section 1(1)(e) because her godmother had only been concerned with helping her with her debts and had not assumed responsibility for her maintenance.
The deceased (M) had bought and sold various houses in which the applicant (H) had lived with her siblings and later bought a flat for H. H had financial difficulties and obtained various loans and sums of money from M over the years. M noted that H was seeking her help with her debts, but also stated that she did not want H to feel she was supporting her.
Following M’s death, H received a small gift under the terms of M’s will. In determining H’s subsequent claim under the Inheritance Act, the appeal court held that the assumption of responsibility for maintenance by another was a necessary ingredient of an entitlement to claim under section 1(1)(e) of the Act. However, it was found that M had not assumed responsibility for H’s maintenance according to the facts of this case. M had made no firm commitment to H and accordingly H was not eligible to bring a claim under section 1(1)(e).
Domicile of choice
To establish a claim under the Inheritance Act, an applicant is required to prove that the deceased was domiciled in England and Wales at the date of his death. It was held in the recent case of Holliday & Anor v Musa & Ors [2010] EWCA Civ 335 that, to determine this, the correct question was whether it was right to infer that, at any stage of his residence in England before his death, the deceased had formed the intention to settle in the UK indefinitely and to abandon his domicile of origin.
In this case, the deceased had been born in Cyprus to parents of Turkish descent. He left Cyprus in the 1950s and came to England with his family. Following his death, his partner (H) brought a claim against his estate under the Inheritance Act. A large number of witnesses spoke of the deceased’s sentiments of being part of the UK and having no desire to return to Cyprus. In reaching its decision that the deceased had acquired a domicile of choice in England by the date of his death and that he had abandoned his domicile of origin, the Court of Appeal held that it was relevant to look back at the whole of the deceased’s life, what he had done with his life, what life had done to him and what his inferred intentions were.
The Law Commission is in the process of undertaking a review of the law relating to family provision under the Inheritance Act. One of the provisional proposals of this review is that it should no longer be a pre-condition to an application under the Inheritance Act that the deceased must have died domiciled in England and Wales. The commission anticipates publishing a report and draft bill, setting out its proposals for reform, in late 2011.
Minimising risk
To help minimise the possibility of a claim pursuant to the death of a testator, solicitors should adhere to best practice by ensuring that a careful note is taken of a testator’s instructions for a will and the reasons for the testator making a will in the terms specified. The testator’s previous will should be discussed and the reasons for any major changes noted. The testator should be encouraged to write a letter of wishes, particularly where a member of the family is being disinherited or discounted and/or where a large gift to charity is being given. It would also be helpful for the testator to give reasons as to why he has chosen to benefit a particular charity.
Please contact Angela Bowman for more information.