July 30, 2015

Why landmark ruling will spark an increase in claims from disinherited offspring

By Martin Holdsworth, partner, Jones Myers

The decision by the Court of Appeal to increase an award from £50,000 £163,000 in the case of Ilott v Mitson, will undoubtedly have far reaching consequences – and could lead to an increase in claims from independent adult children who have been disinherited by their parents.

The award enabled the claimant, Heather Ilott, to purchase her housing association property for £143,000, and to benefit from a small lump sum of £20,000. This is significant because Heather Ilott was a fully independent, estranged adult child, whose mother, Mrs Jackson, had gone to great lengths to exclude from her will.

Whilst this latest appeal was solely on the issue of how much Mrs Ilott should get, and does not change the initial reasoning for giving an award of money in the first instance, it is another step closer to eroding the principle of what is called ‘testamentary freedom’ – i.e. the freedom for individuals to dispose of their property upon death as they see fit.

Heather Ilott initially challenged her mother’s will in 2007, under the Inheritance Act 1975, on the basis that her mother failed to make reasonable financial provision for her. She appealed against a High Court decision to award her a £50,000 lump sum in 2011 – seeking a larger award on the grounds that £50,000 was not reasonable provision, as it extinguished her state benefits and would reduce her monthly income.

The Court of Appeal agreed that Mrs Jackson’s decision to leave her entire £500,000 estate to various animal charities produced a result which was “unreasonable…having regard to the appellant’s [Mrs Ilott’s] straitened circumstances”, but further, that “the court can and should make reasonable financial provision out of the deceased’s estate for the appellant’s [Mrs Ilott’s] maintenance so that her living expenses are relieved without affecting the state benefits on which she relies”.

In determining the amount of an award for reasonable financial provision, the Court is required to have considered a number of factors listed in the aforementioned Inheritance Act 1975. Amongst other things, this includes regarding the applicant’s financial needs and resources and the beneficiaries of the estate, and more widely, any other matter, including the conduct of the applicant or any other person, which in the circumstances of the case the court may consider relevant”. Each case must therefore be judged on its unique set of circumstances.

In this particular case, the Court of Appeal recognised that “it was common ground that Mrs Jackson had no connection with the charities during her lifetime” and that “in this case…there is no other claimant apart from the charities”, who “have no demonstrated need or expectation”. Indeed, Lady Justice Arden commented that “For the charities, any money from this estate is a windfall.” The court’s decision therefore strongly suggests that Mrs Ilott would not have been as successful, if at all, had her mother left her money to people or charities with whom she had a genuine connection.

The second unique and important characteristic of this case was Mrs Ilott’s notably low living standards and her reliance on state benefits. The judgement sums up how “the appellant’s [Mrs Ilott’s] resources, even with state benefits, are at such a basic level that they outweigh the importance that would normally be attached to the fact that the appellant [Mrs Ilott] is an adult child who had been living independently for so many years”.

In the eyes of the law no financial provision can be deemed ‘reasonable’, and estranged, independent adult children in better financial circumstances may not be as successful.

There is a distinct possibility that this decision will result in an increase in claims by independent adults who have been disinherited by their parents – and the prospect of potentially gaining a larger slice of an estate than had previously seemed possible under case law will inevitably encourage those deciding whether or not to bring a claim. However, it remains a balancing act, where the reasonable financial needs of a claimant will be weighed against any other competing claims to the estate and considered amongst all the unique characteristics of the case.

Anyone wishing to exclude an immediate family member from their will should carefully consider how this can be properly achieved and seek specialist legal advice.

If you have any questions or comments about wills and/or divorce related matters, please call us on 0113 246 0055, leave us a comment below, drop us an e-mail or contact us on @helpwithdivorce.