Reasonable Financial Provision

Reasonable Financial Provision – case of Ilott –v- The Blue Cross and Others  

Mrs Jackson was a relatively wealthy lady who passed away leaving an Estate worth almost half a million pounds.  Almost all of this had been left by Mrs Jackson to three animal charities to whom she had had no apparent special connection or affinity during her lifetime.   The will had been written a few years before her death and contained a clear provision that she had intentionally not made any provision whatsoever for her only daughter, Mrs Ilott.  In addition to this, she had also written a side letter to accompany her will confirming that this was her firm intention and instructing her executors to resist any claim that her daughter might attempt to make under the provisions of the Inheritance (Provision for Family and Dependants) Act 1975 or otherwise.

The background to this rather surprising position was that as long ago as 1978, when Mrs Ilott was only 17, she had left home to live with her boyfriend.  Mrs Jackson did not approve of this decision, nor the man that her daughter had chosen to be with and this remained her position at the time of writing her will and then her death, even though Mrs Ilott subsequently married the young man in question and they went on to have five children and remained in a stable relationship! 

Mrs Ilott and her family lived in a house owned by a housing association and largely relied on State benefits to get by.  In 2004 Mrs Ilott therefore decided that, notwithstanding her mother’s very clear position on the issue, she would bring a claim for financial provision from her late mother’s Estate.  When the matter was first ruled on by the Court in 2007, Mrs Ilott was awarded £50,000 by the district judge on the basis that there had been a failure to make reasonable financial provision but he limited the figure awarded in light of the facts of the case including the longstanding estrangement between mother and daughter, and the fact that he felt Mrs Ilott should not therefore have had an expectation to receive anything.  Neither side were happy with this result – Mrs Ilott felt she should have been awarded more and the charities felt that there had been no failure to make reasonable financial provision.

The Court of Appeal agreed with Mrs Ilott and more than trebled the amount she had been awarded by the district judge by directing that she should receive £143,000 in order to buy the house that she and her family lived in, and a provision for her to have the option to receive a further £20,000 in one or more instalments.  The charities were again not happy with this decision and they therefore applied to the Supreme Court.

In March 2017 the Supreme Court reinstated the decision of the district judge.  In doing so they clarified a number of aspects of the provisions of the 1975 Act that had been the subject of dispute along the way.  This included the following:-

  1. The test of “reasonable financial provision” is objective and looks at whether the outcome for the applicant is reasonable in the circumstances.  It is not a test of whether or not the deceased acted reasonably in not making the provision sought by the applicant.
  2. “Maintenance” does not mean any or everything the applicant could want, rather it should be related to the level of provision necessary to meet the everyday expenses of the applicant but this is not limited to subsistence level.
  3. Need on the part of the applicant will be a necessary condition for an award to be made, but it is not the only condition.
  4. The intention of the 1975 Act is to provide only for maintenance not to provide capital that could then be passed on as part of the applicant’s Estate in due course.  A clear example of this would be that the applicant should not become the owner of a property that could be left to someone who would not have qualified to apply for a share of the deceased’s Estate because once the applicant no longer has a need for maintenance, all available assets should be distributed in accordance with the deceased’s wishes, not the applicant’s.
  5. The date at which all the above will be assessed is the date of hearing.  This means it will be necessary not just to assess “need” when considering making an application under the 1975 Act, but also throughout the life of the claim in case conditions change.

 With regards to the charities, whilst the Court of Appeal unhelpfully referred to the legacies as a “windfall” the Supreme Court made the following observations:-

“The claim of the charities... was not based on personal need, but charities depend heavily on testamentary bequests for their work, which is by definition of public benefit and in many cases will be for demonstrably humanitarian purposes”.

In addition, these charities were the chosen beneficiaries of the deceased and it should not be ignored that an award under the Act is at the expense of those whom the testator intended to benefit.

Each potential claim under the 1975 Act will therefore continue to need assessment based on the fact of the particular matter.  Given that it took Mrs Ilott almost 13 years to actually receive an award, the benefit of early resolution should also be considered in the context of potentially lengthy and costly legal battles.

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