Family Provision Law

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    Business in Wills
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    Today we going to look at one of the misunderstood topics which I believe exits in estate planning today and hopefully in this article we can look to help the will writer discharge your duty of care to your client.

    The topic I want to bring to your attention today is the idea of excluding potential beneficiaries from a testators estate and I am more than aware we all must have had interviews with clients who have wished to exclude family members and we have maybe in the past not made the client aware of the consequences which their estate may face in excluding these individuals.

    The importance of the consequences of which I’m talking about is the Inheritance (Provision for Family and Dependents) Act 1975 and I feel many will writers still fail to fully explain the importance of this act to their clients.

    Before we start let’s examine the principle which is known as ‘Testamentary freedom’ and what this actually does? In the past this principle states that a testator would have the ability to dispose of their assets as they see fit.

    Testamentary freedom has been seen to be a key principle in English law, however this principle has been eroded overtime and we need to look how this will affect the client if they do not consider the effects of this act.

    The first step we have to do to ensure in discharging our duty is to inform the client of how the act works, in regards to making them aware of the potential claims which can be made against their estate.

    However we also need to go further than we currently do and outline the possible consequences to the client and this should result in you giving the right advice and ensure you discharge your duty of care.

    The main types of cases we see in daily practice today is a client will want to exclude family members or they will not want to make enough provision for those they should.

    This would mean that the wills which we create for the client need to be constructed to be able to suit the client’s wishes, but the will also needs to be constructed to take into consideration the law which currently exists in England and Wales.

    Failure to do so can lock a client’s estate in litigation for a number of years and even worse if the estate looses to the individual claiming against the estate, the potential litigation cost can easily out way the alternatives of dealing with this situation.

    In today’s presentation we are going to look at the two main categories of potential applicants who are regularly excluded and we will look to examine how the courts have determined the treatment of such cases by examining some key case law.

    The first step is to ensure we are aware who can claim under the 1975 Act. The following is a list of applicants who can make a claim under the Family Provision Act under section 1(1):

    1. The spouse of the deceased;
    2. A former spouse of the deceased who has not remarried;
    3. A child of the deceased;
    4. Any person (not being a child of the deceased) who, as a result of the deceased’s marriage, the deceased treated as a child of the family;
    5. Any person who, immediately before the death of the deceased, was being maintained by him either wholly or in part.

    Under the Law Reform (Succession) Act 1995 a sixth category of applicant was added for deaths after 1 January 1996.

    Any person who, during the whole of the period of two years ending immediately before the date the deceased died, was living:

    a) The same household as the deceased, and
    b) As the husband or wife of the deceased.

    We can see from the above there is a wide catchment of applicants, but out of the 6 mentioned above we are only going to focus mainly on two types of applicants in this paper.

    The first being spouses and the second group of applicants will be children, as these are the ones which are commonly excluded or left without sensible provision in wills which we construct.

    It’s also very important to remember out of these mentioned groups they do fall under different types of provision which should also be remembered.

    The court under section 1(2) (a) and (b) of the 1975 Act, provide the court with the power to grant 2 types of awards. This is important to remember as the above applicants will be awarded different awards,

    1) To a spouse/ civil partnership the award will be to make reasonable provision i.e. to keep them to a reasonable standard and this will be determined by the size of the estate as what is reasonable will vary, and
    2) Whereas the other applicants can only apply for a provision of maintenance.

    This is very important as if you are to indentify the types of claims which will be made.

    We also need to be aware that section 3 of the 1975 Actv allows the court to consider various factors in considering an applicant’s claim. The following factors are what the court examines when deciding an applicants claim, 1) Financial resources, 2) financial needs, 3) deceased’s obligations and responsibilities, 4) size and nature of the net estate, 5) physical and mental disability of any claimant or beneficiary and finally 6) any other matter including conduct.

    These are very important points which are often overlooked but need to be considered in estate planning.

    The first class of applicants I wish to examine is a spouse making a claim on the estate, as you may sit in client interviews who are currently in second marriages who may say they will not provide for their new spouse, but just to the children. The question I ask is does this cause a problem in the way we structure a will? The question of lack of provision for a spouse is addressed in the following case.

    Fielden v Cunliffe is an important decision as it shows even a short marriage would still require the testator to make reasonable provision for a surviving spouse.

    In this case Testator married his then housekeeper. The testator at the time was aged 66 and his wife to be was only 48. In the period of less than a year the testator died leaving an estate worth £1,400,000. His will made the following directions to a number of discretionary settlements which included the following beneficiaries, his new wife, his brother (who had also died at this point), his sister-in-law, nieces and
    nephews, his gardener, friends and the Worsley Hall Nurseries which was a family owned business.

    Mrs. Cunliffe was not happy with the fact that she was left without any direct inheritance from her late husband’s will and decided to bring a claim under the 1975 Act stating there should be reasonable provision made for her.

    As we all know a discretionary trust offers nothing more to the beneficiaries than a mere hope to receive under the trust. The executors in this case tried to settle with Mrs. Cunliffe with an offer to appoint a lump sum of £200,000 pounds from the settlement. This was rejected by Mrs. Cunliffe.

    The will demonstrated that the testator had failed to make reasonable provision for his spouse in his will. When this case was examined by the courts the case facts established that Mrs. Cunliffe was financially dependent on the testator, due to the fact she had no money of her own and before she married the testator her income came from her role of a housekeeper and therefore no funds to support herself.

    The court under these circumstances examined how the application of the Act would be used in these circumstances also the court applied the test under section 3 of the 1975 Act as outlined above.

    In determining the award to be given to the spouse the court considered the following points, 1) the size of the estate, 2) the needs of the applicant, and 3) the financial resources of the applicant to help them determine the award.

    The first point the court considered was did the will make reasonable provision? The court considered what a spouse would expect to get from an estate which is worth 1.4 million pounds. They concluded that two hundred thousand pounds which was offered by the trustees was not an adequate award.

    The court also examined points 2 and 3 of section 3 of the act and concluded the applicant had little or no resources of her own so the needs of the applicant had to be met by the testator’s estate. The justice in this case all agreed by looking at the life expectancy of Mrs. Cunlife, the testator’s estate should award more than two hundred thousand pounds and they awarded six hundred thousand pounds from the estate as this was considered to be reasonable provision under these circumstances.

    The above case highlighted that a spouse needs to left with what is deemed has reasonable provisions from the deceased estate. This point was also affirmed in the case of Baker v Baker.

    In the above case the use of discretionary trust failed to meet the requirements of what was needed under the Act, however if the will would have been set up with a good Immediate Post Death Interest (IPDI) Trust. This situation could have been avoided as this trust could have made the necessary provision which the spouse should have been awarded under the 1975 Act.

    The main situations you will see in today’s Will Writing profession is one’s where clients wanting to disinherit/ exclude their grown up children, which unfortunately is quite common. The 1975 Act as seen above states a child is an applicant, this does not state that the applicant is either a minor or adult is entitled to apply under section 1(1).

    It was thought that adult children of the deceased who have been capable of maintaining themselves will not be successful in making a claim unless they can establish that there is a very good reason why they should be provided for by someone other than themselves (this principle was established in the case of R Coventry v Coventry).

    Therefore this gives us the impression that adult children who have no reliance on their parents estate, should not be able without good reason to make a successful claim to a deceased estate.

    However, this is not the case and we can see that each case will be judged on its own merits this point was shown in the case of Myers v Myers and Others and Gold v Curtis in which the courts have successfully established that parents have an obligation and responsibility to their adult children. This is one of the 6 points under section 3 of the 1975 Act.

    In the case of Gold v Curtis the deceased had left nothing for her son and the entire estate to her daughter, indicating she had given to her son enough in her lifetime and they had been estranged.

    The son had in fact only ever received two modest payments from his mother of £1,200. and £600 pounds. Before her death they had both reconciled and the deceased had seen her grandchildren in their childhood. Also one of the grandchildren suffered a mental disability, therefore the child would be reliant on the son for life.

    The court in these circumstances decided that the mother’s estate had not made provision for the son and with the fact that the son had a dependant for life (the disabled child). The court decided the estate should make reasonable provision for the applicant and therefore he was successful in claiming.

    Also recently case law has again developed this idea that a parent owes a child some obligation or responsibility. This point was also illustrated in the case of Ilot v Mitson and others which proves how the 1975 Act should be applied in such cases.

    This case involved Mrs. Heather Ilot who was the daughter of Mrs. Melita Jackson.

    The mother and daughter had been estranged and had a complex relationship, as the daughter left home when she was 17 in 1978 to be with her soon to be husband Mr. Ilot.

    Mrs. Jackson on learning why her daughter had left the family home was not happy.

    The reason for the daughter’s departure was to be with Mr. Ilot, who Mrs. Jackson did not approve of at all.

    In the time period leading up to Mrs. Jackson’s death the two had become very estranged and have been seen to go on record as only meeting up a handful of times in the period up to Mrs. Jacksons death. In 2002 Mrs. Jackson wrote a Will which was executed alongside a letter of wishes, the will excluded Heather from Mrs. Jackson’s estate. Mrs. Jackson then wrote to Heather telling Heather that she had been excluded from her estate.

    Later Heather wrote back ‘I have to accept that you have rejected me. It is very upsetting to know this but you obviously have your reasons’.

    This is the last communication between the mother and daughter. Mrs. Jackson later died on the 10th of July 20004 leaving an estate of 486 thousand pounds between various charities and leaving her daughter nothing in her Will.

    The court at first hearing examined the points of the case and applied the 6 provisions under Section 3 of the Act 1975 Act.

    District Judge Million on 29th and the 30th of May 2007 – highlighted that Mrs. Jackson had failed to make reasonable provision for Heather and he even sited the letter of wishes contained many inaccuracies, therefore giving Heather a poor character which was not the case.

    The District judge also applied Lord Geoff’s statement from Re Coventry stating, ‘That the principle of course governs the approach of the court to the assessment required to be made by the court of the reasonableness of the provisions or lack of provision. A good reason to exclude a member of the family has to be a relevant consideration. However, in my view, the recognisation by the testator of the status of members of his family and his goodwill towards them in this case are taken into proper account and given weight to each case’.

    The court found the reason for Heather’s exclusion was due to her marrying Mr. Ilot, which was the main consideration of her mother cutting her out of the estate was not deemed a good enough reason to exclude the applicant. The outcome was the applicant was awarded 50 thousand pounds from Mrs. Jackson’s estate as Heather was seen to be owed an obligation or responsibility from the deceased estate.

    The above decision went to the Appeal Court and the district judge Eleanor J King stated that the district judge had erred and gone too far in his interpretation of section 3 of the 1975 Act.

    E.J. King saw this failure to look at the objectives in section 3 of the 1975 Act as a failure to recognize the facts of case. In this instance the relationship held between daughter and mother had fully dissolved and no obligation or responsibility was owed by the deceased.

    It was held by the judge the relationship had broken down beyond repair and fault was mainly the fault of Heather and Heather had accepted this fact and her mother’s act by cutting her out of the Will. This judgment was heralded to be a victory for the principle of testamentary freedom and allowed the testator to be able to distribute their assets as they see fit.

    The judgment was appealed again to the court of appeal agreed with the judgment from First hearing and overturned the decision from the Appeal court and made the award.

    We have yet to see if this case will go to the House of Lords, but if it does we will keep you updated. However we need to keep this in mind that an adult child who is excluded from an estate for not a good reason could successfully make a claim under the Inheritance (Provision for Family and Dependants) Act 1975.

    Conclusion

    In conclusion we can see that the testator does have the power in their life to dispose of their assets as they see fit, however if the testator is removing people who should be entitled to their estate a potential challenged could arise through the courts.

    Therefore the 1975 Act allows individuals to claim against the estate and provide some positive readdress for them. The words you need to inform your client is to ensure that they act reasonably, when excluding family members who would normally be deemed dependant or eligible to claim under the 1975 Act.

    Also if you are to exclude any individuals by the use of exclusion clauses in a will it is important that you get your client to write a letter of wishes which is accurate, if this is not this can cause more damage then good.

    If we are dealing with excluding children to counteract an exclusion claim it may be wise to either consider the use of a small gift with a letter of wishes explaining why the legacy is so small or place in the will a discretionary trust.

    The use of a discretionary trust for children can allow the flexibility for the trustees to tackle the situation in a manner in which they see fit and this help any mediation which may be needed.

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    Matt Walkden Will Writer

    About Matt Walkden

    I am a Professional Will Writer and I offer a small number of other products that complement my Will Writing such as Lasting Power of Attorneys (LPA’s), Fixed Price Estate Administration, often called Probate and some Property Products such as changing a family home from Joint owners to Tenants in Common.

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