Probate and Will, Trust & Estate Disputes

Publish date

1 June 2020

1975 Inheritance Act claim

The claimant brought at 1975 Inheritance Act claim for provision from the estate of her late father (“the Deceased”). The defendants were the claimant’s mother (the beneficiary under the will) and brother (who was also the personal representative of his father’s estate).

The Deceased died in 2016. The claimant had largely lived at home with her parents until late 1999, when aged 30 she accepted a place at university. At about that time she experienced a breakdown and began to see a psychotherapist. The claimant claimed to have lived independently, but seen her parents every couple of weeks until 2007, when she was accepted on a MA course in Sheffield. The Deceased set up a standing order to help fund her through her 3 year post-graduate studies by a monthly payment of £400. He also provided £2,000 towards her course fees. The Deceased had also set up a joint account for the claimant in her and her parents’ names, which from 2007 she occasionally withdrew small sums from. In 2011 when the claimant had her first child with her partner, the Deceased removed the claimant from the joint account as he disapproved of this. Additionally, the claimant had broken off contact with her parents in 2010.

The claimant’s health had been problematic for many years and she had not worked since the birth of her first child.

The net value of the Deceased’s estate was £554,000. The claimant argued that she had a series of needs to be met. Firstly, she wished to buy a two bedroom flat for her and her two children, which she claimed would cost in the region of £375,000 to 500,000. Next in her order of priorities was a fund to provide for continuing psychological therapy. Her third requirement was for a small capital sum to replace her car and to purchase new white goods. Her fourth requirement was for an income fund to meet the shortfall in her living expenses. Her income was limited to child benefit and universal credit in the total sum of just over £1,000 per month. This calculation was based on her partner living with her, but due to the claimant’s psychiatric difficulties that was no longer the case. In the alternative, the claimant asked for an enhanced income fund to provide for a more comfortable standard of living.

Clearly the claimant’s claim would be unaffordable, in the sense of exceeding the maximum that the estate had in it.

The judge undertook a two-stage approach by asking firstly, did the will make reasonable financial provision for the claimant, and secondly if not, what reasonable financial provision ought now to be made for the claimant. In order to answer the two questions he had regard to the factors set out at Section 3(1) of the 1975 Act.

Given that the claimant was an adult child of the Deceased, the standard for what was reasonable financial provision was defined in the 1975 Act as: “Such financial provision as it would be reasonable in all the circumstances of the case for the applicant to receive for her maintenance”.

The judge heavily relied on the Ilott v The Blue Cross and others [2018] case, which considered specific guidance for claims by adult children.

The judge acknowledged that this was a difficult case as on the one hand there was no doubt that the claimant was in a position of real need. But, on the other hand, she had cut herself off from her family many years ago and had no financial support from them for over 20 years, save for a short period from 2007 to 2011.

The claimant had entered into a Conditional Fee Agreement, the effect of which was that her solicitors and counsel would be entitled to nothing from the claimant if her claim failed. In order to balance that risk an uplift of 72% would be applied in the event that the claim succeeded. As a matter of law, the other party to litigation cannot be ordered to pay the uplift. Yet, the claimant asked the court to make an order that the additional success fee should fall on the estate as part of her award.

The estate was not large and the judge said that the priority must be to ensure that the claimant’s mother, the beneficiary under the will, had sufficient funds properly to be maintained for the rest of her life.

The judge recognised that the claimant was largely financially independent and estranged from her parents. The claimant’s priority need must be to get well again and the judgment had that as its target for the award made.

The judge found that the will did not make reasonable financial provision for the claimant and that he should therefore make an award that would constitute reasonable financial provision. He made it clear that the award should be calculated by reference to what the claimant required to meet her current financial needs and not set her up with a home or income fund for life.

The judge ordered that the sum of £138,918 be paid to the claimant. He broke this done into £17,000 for the ongoing costs of therapy and psychiatric oversight; £48,168 for the claimant’s shortfall in income; £32,000 for the benefit of universal credit that the claimant would lose; £15,000 for replacement of the white goods and upgrade of the car as the claimant requested; £10,000 for a rental deposit; £16,750 as a reasonable CFA mark-up (approximately 25% of the uplift). The judge pointed out that this met all of the claimant’s claimed needs except the cost of a new property, which he decided would not be reasonable on the facts of the case.

This is an interesting, some might say surprising, judgment in that the “child” of the Deceased was an adult, not supported by the Deceased and was largely estranged from the Deceased. The estate was also small but yet an award for the claimant amounting to circa 25% of the net estate was made regardless. The case clearly demonstrates how much “need” is paramount to the success of Inheritance Act claims. It will be interesting to see if the judgment is referred to in future adult child claims.

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