15th March 2017
Supreme Court judgment concerning a claim under the Inheritance (Provision for Family and Dependants) Act 1975 brought by an estranged daughter who received no provision from her deceased mother
- The applicant and the deceased had been estranged for 26 years preceding the deceased’s death. The applicant lived independently of her mother, in straitened financial circumstances.
- In the deceased’s will, she left the majority of her estate to charities and made no provision for the applicant. The applicant had known about this decision for many years and lived without any expectation of benefit from the estate.
- The District Judge nevertheless found that the deceased’s will did not make reasonable financial provision for the applicant and awarded her £50,000. The appeal proceeded on the issue of quantum.
- The Court of Appeal held that there were two errors of principle:
- The judge held that award should be limited in light of the estrangement and lack of expectation of benefit, but did not identify what the award would be without these factors and apply the attributable reduction.
- The judge made his award without knowing what effect it would have on the applicant’s benefits, some of which were not payable if the applicant had savings over £16,000.
- The Court of Appeal awarded the applicant £143,000 to buy her home, and the option to receive £20,000 in one or more instalments to avoid affecting her benefits.
- The District Judge did not make the errors on which the Court of Appeal relied. The original order was restored.
- For an applicant other than a spouse or partner, reasonable financial provision is limited to what it would be reasonable to receive for maintenance only. This is an objective standard.
- Maintenance cannot extend to everything which would be desirable to have, but is not limited to subsistence level. The suitable level for maintenance falls to be assessed on the facts of the case at the date of the hearing. Maintenance may be provided by way of a capitalised lump sum.
- The 1975 Act does not require the judge to set a hypothetical standard of reasonable provision and then increase or discount it with reference to variable factors. An assessment of reasonable financial provision should be made in light of all the relevant section 3 factors, which the District Judge had done.
- The District Judge addressed the impact on benefits twice. The award was of value as it could be used on replacing household equipment, which fell within the provision of maintenance of daily living, and would avoid the applicant retaining capital over the £16,000 means-testing threshold for long.
- Reasonable financial provision can in principle include the provision of housing, but ordinarily by creating a life interest.
- Receipt of means tested benefits is likely to be a relevant indication of a claimant’s financial position. The position of a claimant on benefits is not directly analogous to that of a disabled claimant, as the Court of Appeal had appeared to suggest.
- The Court of Appeal’s order gave insufficient weight to the deceased’s clear wishes and the long period of estrangement. The argument that charities had little expectation of benefit should be treated with caution, as testamentary bequests for charities are highly important. The testator’s chosen beneficiaries do not need to justify their claim either by need or expectation.
- The present law gives no guidance as to the factors to be taken into account in deciding whether an adult child is deserving of reasonable maintenance.