Recent Developments in Inheritance Law Under the Inheritance (PFD) Act 1975
Explore recent case summaries and key aspects of the Inheritance (PFD) Act 1975, including reasonable financial provision, categories of claimants, court orders, factors for consideration, and notable cases like Ilot v. The Blue Cross. Learn about permissions to apply out of time, recent court decisions involving spouses, civil partners, adult children, and competing claimants, and the importance of engaging in mediation. Stay updated on legal developments in inheritance law.
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Inheritance (PFD) Act 1975: Recent case round-up Christopher Stead www.pumpcourtchambers.com
Introduction The 1975 Act Reasonable financial provision Categories of claimant (s.1) Orders the court can make (s.2) Factors to consider (s.3) The value of recent case-law review The limits of recent case-law review Ilot v The Blue Cross and ors [2018] AC 545 The Act plainly requires a broad-brush approach from the judge to very variable personal and family circumstances. (per Lord Hughes, [24])
Introduction (ctd.) On the periphery: Permission to apply out of time (s.4) Re Bhusate [2020] EWHC 52 Followed and applied in Chimelu v Egemonye [2023] WTLR 23 (Chancery DR Manchester) No good reason for delay not a bar No distribution, even though C s fault Good merits not eclipsed by delay CFA success fee uplift Court of Appeal - a debt that could constitute a need for which reasonable financial provision might be made out of the estate Hirachand v Hirachand [2022] 1 WLR 1162 Qualified (1) CFA must be only way of funding Qualified (2) partial amelioration of the debt might be sufficient Supreme Court - permission to appeal Always be ready to engage in mediation Rochford v Rochford [2021] WTLR 951 (Peterborough County Court) indemnity costs against high-handed party who rebuffed early offer of mediation
1 Spouses and civil partners Paul v Paul [2022] EWHC 1638 (Fam) Re Ramus [2022] EWHC 2309 (Ch) Re Singh [2023] EWHC 304 (Fam)
1 Spouses and civil partners 1 Spouses and civil partners Paul v Paul [2022] EWHC 1638 (Fam) 1 Spouses and civil partners Paul v Paul [2022] EWHC 1638 (Fam) Re Ramus [2022] EWHC 2309 (Ch) Re Ramus [2022] EWHC 2309 (Ch) Re Singh [2023] EWHC 304 (Fam) Re Singh [2023] EWHC 304 (Fam) 2 Children (adult) 2 - Children (adult) Lettice v Lettice [2023] 1 P&CR Lettice v Lettice [2023] 1 P&CR Re Annan [2023] EWHC 662 (Ch) Dignam-Thomas v McCourt [2023] EWHC 546 (Fam) Re Annan [2023] EWHC 662 (Ch) 3 Competing Claimants Dignam-Thomas v McCourt [2023] EWHC 546 (Fam) Re Bala [2023] EWHC 1054 (Ch)
Spouses and Civil Partners Paul v Paul [2022] EWHC 1638 (Fam) Happy marriage, but surprising will no provision for C except 1000 chattels, the rest for four children (two in a previous marriage) Actual common intention constructive trust 50% FMH D4 still in school, with fees to pay Reasonable financial provision not made order, relying on divorce cross-check 50% of the estate
Spouses and Civil Partners Paul v Paul [2022] EWHC 1638 (Fam) [30]: Helpful summary of Ilot, [16]-[25]: The test is not whether the deceased acted unreasonably. The correct test is an objective one: whether the deceased s dispositions, in not making greater financial provision for the applicant, have produced an unreasonable result. Thus, an unreasonable or indeed spiteful testator may have made reasonable financial provision for an applicant. Equally, a reasonable and caring testator may have failed to make reasonable financial provision. For similar reasons, it is not the purpose of the 1975 Act to correct unfairness or provide rewards for good conduct. Testamentary freedom remains paramount outside the limited ambit of the statutory provisions. It has become conventional to treat the consideration of the claim as a two-stage process, namely (1) has there been a failure to make reasonable financial provision, and if so, (2) what order ought to be made? However, in most cases, there is a large overlap between the two stages, to which the s.3 factors are applied equally. It is open to a judge to address both questions arising under the Act without repeating them. A broad-brush approach is required. If the conclusion is that reasonable financial provision has not been made, needs are not necessarily the measure of the order to be made. Regard must be paid to each of the s.3 factors, such as beneficiaries' needs and the Estate's size and nature. Provision is to be judged based on evidence at the date of the hearing, not death [see s.3(5) of the Act]. Whether best described as a value judgment or a discretion (and the former is preferable), each case turns on its own facts.
Spouses and Civil Partners (2) Re Ramus [2022] EWHC 2309 (Ch): Long marriage, but separation at the end Deceased sadly took his own life Will and codicils C received life interest in the Property, and was named as part of a class of discretionary beneficiaries of the residue Trustees had power to terminate C s life interest at any time, and exclude her from benefit D1 daughter, executor, and trustee D2 and D3 executors and trustees D4 son C s concern - poor relationship with D1, and trustees general power to terminate and/or exclude from benefit Issued 1975 Act claim on grounds that her precarious position under the will, in leaving matters in the hands of trustee discretion, was not reasonable financial provision
Spouses and Civil Partners (2) Re Ramus [2022] EWHC 2309 (Ch): C s desire maintain standard of living, purchase suitable property in Harrogate, have a sufficient cushion, etc. D1 s concern minor beneficiaries not given enough thought; and that motivation behind the claim was to better D4 s position (C had in fact loaned D4 50,000) C s assets - 1.6m some for house purchase, some ring-fenced Yearly shortfall between income and monthly expenses: circa 30,000 The estate - 1.02m D1-3 submissions included noting that on a Duxbury calculation, a 77 year old female with 30,000 net annual need requires lump sum of circa 216,000. C s assets more than provided that, even following house purchase and ring-fencing 488,000.
Spouses and Civil Partners (2) Re Ramus [2022] EWHC 2309 (Ch): Judge s analysis and decision, in dismissing the claim: A discretionary trust can in the appropriate circumstances amount to reasonable financial provision. In this case, the widow s substantial assets provided such circumstances. Duxbury is a tool, not a rule, but is a useful guide, even allowing longer life expectancy and larger sums the underlying methodology and assumptions of the Duxbury calculations are the usual starting point and where there is no countervailing evidence, the usual finishing point [293] C s case at its highest (in terms of outgoings and assets) would still mean she had a lump sum in her own name higher than any Duxbury capitalised award Plus, she could make an unsecured loan to her son of 50,000 difficult to sustain a needs-claim for failure to make provision The trustees could be trusted to act within powers and follow deceased s letter of wishes. In any event no jurisdiction under the Act to remove them Divorce cross-check unlikely to receive anything given C already had nearly 2/3 of the marital assets
Spouses and Civil Partners (3) Re Singh [2023] EWHC 304 (Fam): Wife surviving husband after a marriage of 66 years Full and equal contribution as a wife, and working in family clothing business, but never taking salary or stake Financial dependence 6 surviving adult children Estate worth either 1.99m, or 1.2m Will left everything to two sons (D2 and D3) Claimant 83, less than 12k p/a in benefits, disabled living with daughter D3 lives in FMH Claim 50% of the estate, whatever the value D2 no opposition to the claim D3 no involvement when personally served, threw claim in the wheelie bin Various applications, including for abbreviated claim and interim payment
Spouses and Civil Partners (3) Re Singh [2023] EWHC 304 (Fam): Decision: it seems to me that this is the clearest possible case entitling me to conclude that reasonable provision has not been made for C After a marriage of 66 years, to which she made a full and equal contribution, and during which all the assets accrued, she is left with next to nothing. [25] Yardstick of equality Abbreviated inquiry no challenge to the claim, so treated as undefended 50% net estate, with no need to wait for clarification of value before making such an order C s costs to be paid out of the estate prior to the division 20k interim relief under s.5
Adult children Lettice v Lettice[2023] 1 P&CR: Anne (daughter) brought claim against Margaret s estate House divided between children and grandchildren, with residue divided between children (circa 3k each of residue) Anne claimed: Round the clock care for Margaret for 17 years High level of dependence having given up work to care for Margaret, on Margaret s wishes Monthly income of 669, significant shortfall Various outgoings claimed accommodation, pension contributions, gardener, cleaner, private dental care Later admitted that she pursued vocational activities, and live rent-free with Margaret against Margaret s wishes Margaret in fact had wanted Anne to vacate the property when she died, if not before
Adult children Lettice v Lettice[2023] 1 P&CR: Deputy Master McQuail: Margaret came under no obligation towards Anne any greater than the other children Anne was out at work as a minister, and therefore not a carer Probable that there was another source of income No reasonable need for many of the outgoings claimed expenditure claim was ambitious and without objective foundation No evidence as to how the prospective inheritance of circa 100,000 would not provide accommodation Claim dismissed
Adult children (2) Re Annan [2023] EWHC 662 (Ch): George Alfred Annan died 6 January 2021 3 children: Wayne, Russell, and Heather Estate unencumbered property worth 220,000, accounts with 250,000, and some cash and other chattels. 2013 Will left 10,000 to each child, the residue to George s wife, but the residue to pass to Heather if his wife predeceased him (she did) Heather claimed only she had a close relationship with George; the judge preferred the evidence of Wayne, Russell, and others, that there was a mutually supportive extended family, and that Heather had fallen out since George s death However letter of wishes and attendance note - George disapproved of conduct of Wayne and Russell, and left them 10,000 only so as to try and avoid a 1975 Act claim Wayne had killed his niece s partner Russell gambling
Adult children (2) Re Annan [2023] EWHC 662 (Ch): Mr Justice Zacaroli reviewed the law, noting the following principles from Ilot: Distinction between spouses and non-spouses, captured in the requirement for maintenance for the latter category, shows that whilst maintenance is a broad concept, it cannot extend to any and everything it would be desirable for a claimant to have; The word maintenance connotes only payment which, directly or indirectly, enables the applicant in the future to discharge the cost of his daily living at whatever standard of living is appropriate to him; the provision that is to be made is to meet recurring expenses, being expenses of living of an income nature (although the award itself may be made by means of a lump sum, or indeed by paying off debts in order to enable the claimant to carry on a profitable business or profession for his maintenance Level of maintenance is flexible, assessed on the facts of each case; it is not limited to subsistence, but is judged by the standard appropriate to the circumstances Maintenance is necessary, but not sufficient some sort of moral claim to be maintained by the deceased, although this is not necessarily the sine qua non (despite usually being at the centre of such claims) It is an objective standard. The reasonableness of the deceased s behaviour may be a 3(1)(g) factor, but an unreasonably behaving testator may still make reasonable financial provision. Facts fall to be assessed as at the date of the hearing
Adult children (2) Re Annan [2023] EWHC 662 (Ch): Wayne Married six adult children Owned 3 properties, combined equity of 244,000 Bounceback loan owed debt to relative who helped him out when in prison Statutory charge on one property Rental income, plus income from business, and wife s income household income of 36,000 Received some payments from George towards end of George s life Russell Chronic disability Benefits Modest savings Unclear evidence on housing need, but asserted 25,000 extra needed to hep with future care Heather Reliant on inheritance for the rest of her life, and given the modest estate, a negative impact if claims were successful
Adult children (2) Re Annan [2023] EWHC 662 (Ch): Decision: Wayne - refused Joint income to be taken into account when considering outgoings claimed in respect of household Debts not to be considered Increase in expenses (higher mortgage and others) not explained, or own choice Payments from George did not give rise to responsibility to maintain, and not considered as a sense of parental responsibility, as Wayne was the most financially successful child Russell - granted Gambling habit, and building modest savings I do not need to decide whether Russell s current gambling constitutes a problem. It is enough to conclude, from the fact that he has sufficient spare money to spend on gambling, that he has more than enough to meet his current needs. Poor evidence on housing needs, now and in future However, health and care - I consider that the unreasonableness lies in there being no recognition at all of Russell s current and future needs arising from those disabilities reasonable provision is therefore met by there being some amount set aside to meet at least part of those needs, which will supplement, as needed, the care he can expect from family members and from the state. 25,000 award based on estimate of Russell, and paucity of evidence was criticised, but nevertheless appropriate
Adult children (2) Re Annan [2023] EWHC 662 (Ch): 25,000 to be held on discretionary trust, both to protect state benefits but also in light of gambling problem Terms to be made available in discretion of trustee when required to cover costs of case
Adult children (3) Dignam-Thomas v McCourt [2023] EWHC 546 (Fam) Two sisters in difficult physical and financial circumstances sought provision from their father s estate D2 their brother, who lived in the property which formed the estate ( 355,000) sole beneficiary under the will D2 no AoS filed, and despite multiple attempts and adjournments, no engagement with proceedings or responses to inquiries (except a few emails about health) Court proceeded assumption of capacity and notice C1 counsel bold submission D2 s non-defence meant court could proceed D2 taken as having no competing needs Rejected by the court
Adult children (3) Dignam-Thomas v McCourt [2023] EWHC 546 (Fam) C1 (61) two way street of kindness and to help out received financial support from the deceased, but also provided care, visits, regular phonecalls, etc. Significant health problems of her own, as well as her husband for whom she was carer Very modest equity in home, significant mortgage, facing repossession Unsecured debts of 43,000 Bulk of income husband s pension, which would be (mainly) lost when he dies Monthly shortfall circa 1000, but with house sale and rent, this could be extinguished 117,600 sought
Adult children (3) Dignam-Thomas v McCourt [2023] EWHC 546 (Fam) C2 (68) Widow, almost blind, significant care needs mainly supplied by children, but included dressing and eating Similar level of mutual support with deceased as C1 Paid care and assistance would reasonably be needed Yearly shortfall of 7,000 No debts Mortgage free property, worth 365,000 Care needs, refurbishment, equipment, but equity release net sum sought of 114,000.
Adult children (3) Dignam-Thomas v McCourt [2023] EWHC 546 (Fam) Decision: C1 - 70,000 Once house sold capital reserve of 150,000 Should provide sufficient protection even if husband s pension lost Lower shortfall/deficit than C2 C2 - 90,000 With equity release capital reserve of 190,000 Court took account of deceased s wishes to provide for all children, despite will only providing for D2 Also two way street of support no reasonable financial provision in the Will Balance to D2 of 173,000 Limited knowledge of his income and needs were available, and the court took them into account
Competing Claimants Re Bala [2023] EWHC 1054 (Ch) Master Brightwell, [1], [29]: What follows below may be seen as an exhortation to parties embarking on litigation under the Inheritance (Provision for Family and Dependants) Act 1975 ( the 1975 Act ) to consider in advance the potentially devastating consequences of fighting points of marginal relevance at inordinate cost with the effect of depleting a significant estate so that none of the competing claims on it can be fully met. It may also highlight the difficulties in determining claims before the value of the net estate has been established, and the futility of pursuing through to the end of trial claims of a magnitude which the net estate is on any view not large enough to meet If ever 1975 Act claims cried out for settlement without incurring the costs of trial, these claims did.
Competing Claimants Re Bala [2023] EWHC 1054 (Ch) C1 surviving spouse of the deceased, and his third wife She also had the deceased s mother, and one of his brothers, living with her C2 and C4 their young children (C4 a twin, whose brother had died in infancy) D1 son of the deceased from his first marriage, initially an executor, and brought constructive trust/estoppel claims in relation to various properties These claims were dismissed, and D1 found to be untrustworthy D1 had also alleged MN had signed probate and other documentation, when MN lacked capacity MN 30 year old daughter of the deceased from his first marriage claimant in another claim against the estate Significant physical and mental disabilities Living with the second wife of the deceased, cared for by her
Competing Claimants Re Bala [2023] EWHC 1054 (Ch) The Will quite confused, but essentially left the whole estate on discretionary trust to a number of named beneficiaries, and included a letter of wishes The claims not actively defended (following decision in Subsidiary Claim by D1), but one defendant, a son of the deceased and his second wife, appeared and gave brief evidence Therefore claims competing with each other mainly C1 and MN, as C2 and C4 interests overlapped with their mother, C1 Master found gaps in everyone s evidence, as to income and outgoings, especially funding of litigation Most significant dispute of fact where MN had lived between 2015 and 2019 C1 with deceased s second wife since 2015 Second wife only since 2019, shortly before deceased died presumably, an attempt to maximise deceased s obligation Master found C1 s evidence more persuasive, but little difference, as deceased had clear obligation in any event
Competing Claimants Re Bala [2023] EWHC 1054 (Ch) Condition and needs of MN Expert evidence aspiration for independent living, privately funded, alongside assessment of disabilities, skills, and so on. Master held little evidence of (a) MN s desire, and (b) MN s ability to do so Proposal for such living was enormously expensive, and unable to be borne by estate Consideration of C1 and children in light of divorce cross-check Review of authorities equal partnership does not necessitate equal division, especially when primary carer and children need provision higher award possible, especially when minor children and housing needs are in play However, distinction with financial remedies other claimants and beneficiaries need to be considered
Competing Claimants Re Bala [2023] EWHC 1054 (Ch) Income and expenditure of C1 (not limited to maintenance) and children Little confidence in figures provided for C1, no Duxbury calculation, undisclosed financial assistance Main need housing - 750,000 for modest accommodation, plus moving costs, car ( 40,000), and liability for loans, plus income Children - 181k and 231k respectively Income and expenditure of MN (maintenance) 395 PIP Suggestion of private funding for independent living not possible to fund from estate, but other care figures, holidays, and so on Obligations Obligation for minor children, and for MN into adulthood Size and nature of estate Uncertain, due to various properties, liabilities, and administration costs best and worst case scenarios cannot make estimate on facts which might be wrong - 1.6m, but might be less Divorce cross-check If divorce, C1 likely to get significantly higher than 50% with children still living with her
Competing Claimants Re Bala [2023] EWHC 1054 (Ch) Deal with costs first Parties agreed no reasonable financial provision made for the others (except MN took issue with C2 and C4, when provision for their mother would be the same) Parties agreed costs to come out of the estate first, and then deal with award Costs stood at circa 700,000 persistent myth that costs of 1975 Act claims are paid out of the estate usual CPR costs rules apply However, if costs not paid risk of insufficient sums for awards No active defendants, and all Cs agreed that provision had not been made for the others, and that their combined claims will exhaust the net estate, so all parties to benefit consent to having costs being paid out of the estate first Costs to be assessed on indemnity basis if not agreed Once costs paid estate worth a little over 1million
Competing Claimants Re Bala [2023] EWHC 1054 (Ch) Decision: Clearly, no reasonable financial provision had been made question is how to balance MN cannot have provision for independent living and care impossible to fund. So, left with either family care, or the state. This limits the financial need she had, but does not detract from strong moral claim that some provision must be made extra care, improve life quality, perhaps therapy, and other costs identified. Award: 550,000 to C1 minimum needed for housing The next 300,000 gets evenly divided between C1 and MN, meaning MN maximum award is 150,000 Anything left goes to C1 likelihood is a net award of 900,000 to 1million (depending on valuation of property) for C1 C2 and C4 get no award, but provision is made in award for C1
