The Supreme Court has given its judgment on the case of Ilott v Mitson. This much anticipated case relates to a claim by an adult child under the Inheritance (Provision for Family and Dependants) Act 1975 against her mother’s estate. The case offers important guidance for potential claimants under the Inheritance Act. It should also be considered by those drafting a will in respect of potential claims which could be brought by their adult children.
Mrs Jackson drafted a will in 2002 which disinherited her daughter, Heather Ilott, entirely. Mrs Ilott and Mrs Jackson has been estranged for 26 years prior to her mother’s death since Mrs Ilott left home at 17. When Mrs Jackson died in 2004, her estate was left to three charities; the Blue Cross, RSPB and RSPCA. Mrs Ilott was reliant on state benefits, she was not working and lived in a rented housing association home with five children. Mrs Ilott claimed against the estate for reasonable financial provision as a child of the deceased.
Mrs Ilott was originally awarded £50,000 out of an estate worth about £486,000. The Court of Appeal heard Mrs Ilott’s appeal in July 2015 and they increased the award from £50,000 to £143,000 to buy the house she lived in with an option to receive a further £20,000 in one or more instalments. The award by the Court of Appeal was structured so that Mrs Ilott could use the money to purchase a house while preserving her entitlement to state benefits. The charities appealed and the Supreme Court has today unanimously decided to reinstate the judge’s original decision and the £50,000 award.
The Inheritance Act sets out in section 3 factors that the court must consider when deciding first if a claimant has received reasonable financial provision and secondly, what, if any, reasonable financial provision should be awarded.
One of the key factors in this case was the length of the estrangement and the fact that Mrs Jackson had, as early as 1984, made a will disinheriting her daughter. There was no uncertainty that she did not want her estate to go to her daughter. It will be of comfort to those wishing for more security over their testamentary freedom that the court confirmed that Mrs Jackson’s wishes were a factor in the matter and that any award is at the expense of those who the testator intended to benefit. Although this is not set out explicitly in the legislation, this is always the starting point and should be considered as one of the matters that the court must consider under section 3(1)(g). This redirects a judge’s attention to the underlying concept of testamentary freedom; that a testator can benefit who he / she wishes in a will. In this case the fact that the beneficiaries were charities should not prejudice their rights and need for bequests from estates in order to operate.
The Inheritance Act allows for children to claim against an estate but any award is limited to what is reasonable for their “maintenance”. This standard of maintenance is the one used for all applicants excluding spouses so it is important for claimants under other categories. The court reminded us that the description of ‘maintenance’ was a deliberate legislative choice intended to link an award to need, and not to create legacies or gifts where none was intended.
In keeping with the recognition that an award deprives the intended beneficiaries, the court directed that an award should be structured so as to minimise the impact on the beneficiaries. For example housing should be provided by way of a life interest rather than by a capital sum or for provision of a vehicle to enable a claimant to get to work in order to generate their own income.
This guidance will be important when considering the value of a potential claim and range of things that can be described as ‘maintenance’. However, in terms of how a judge should balance the section 3 factors it remains the case that each judge must make an assessment on the facts, guided by the section 3 factors. Lady Hale observed that the state of the law was “unsatisfactory” as there is no guidance as to how a judge might determine whether an adult child is “deserving” or “undeserving” of reasonable maintenance. The range of options which could result from a different weighing of the factors means that a reasonable provision could vary from no award to the higher award imposed by the Court of Appeal.
With such a ringing condemnation of the state of the authorities, the next step must be for the Law Commission to look into this area so that practitioners can more accurately advise potential claimants and defendants under the Inheritance Act.