Disinherited? Don’t lose heart. Disinheriting? Take care …

‘Woman rejected by mother in will wins £164,000 inheritance’ according to the BBC’s headline.  Melita Jackson died on 29 June 2004 leaving her net estate of £486,000 to a selection of charities.  Melita had had little if anything to do with these charities during her lifetime.  Sadly Melita had fallen out with her only child, Heather Ilott.  The pair became estranged when Heather was 17 or 18 years old because Heather ran away with a man who was to become her husband and father of her five children.

Heather’s claim against the estate of her late mother has  reached its latest decision from the Court of Appeal having been up and down from County Court to High Court and back up again to the Court of Appeal (Ilott v Mitson CA [2015] EWCA Civ 797).  Mrs Ilott’s latest appeal was that an award against her mother’s estate of £50,000 was insufficient for her maintenance and the award should be increased.  The Court of Appeal has set aside the award and substituted its own award of £143,000 plus up to a further £20,000.  Why and how?

The claim was brought under the Inheritance (Provisions for Family and Dependants) Act 1975.  Under section one of this Act the question arises as to whether the will makes ‘reasonable financial provision for … maintenance’ for a child (the provisions are more generous for spouses and civil partners).  The claim was defended by the charity beneficiaries of the will rather than the executors.  It was well settled in the higher courts that the late Mrs Jackson had failed to make reasonable provision, so finally the issue turned on the amount of a reasonable settlement.

The Court of Appeal has now determined that a proper award to Mrs Ilott would be enough for her to buy the freehold of her housing association home ie £143,000, plus the costs of acquisition.  On top of this the court has given Mrs Ilott the discretion to claim against a further capital sum in the estate of £20,000.  This flexibility will allow Mrs Ilott the flexibility to protect her right to state benefits on which it seems she and her husband have been living at a fairly subsistence level.  Particular note was taken of section three of the 1975 Act which lists a lot of factors which must be considered.  These include the resources of the claimant.

This is a fascinating case in its own right, but the implications for estate and succession planning are equally challenging.  To what extent might carefully-laid plans for the future devolution of family estates, farms and wealth be susceptible to challenge under the 1975 Act?  It was clear in this case for example that Mrs Ilott was fully aware of her disinheritance, three attempts at family reconciliation had failed, Mrs Mitson had left a clear letter of wishes.  The lessons will need to be analysed and digested carefully in estate planning.

Meanwhile the Treasury continues its review of Deeds of Variation   This is unlikely to lead to any changes before next year, but nevertheless it will be another factor to look out for in dealing flexibly but decisively with estate planning, devolution and succession.

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