By a unanimous decision the Supreme Court today upheld the importance of testamentary freedom, to the great relief of the appellant charities.
The appeal arose out of a claim for reasonable financial provision under the Inheritance (Provision for Family and Dependants) Act 1975, brought against the estate of Mrs Jackson by her daughter, Mrs Ilott. Mrs Ilott and her mother had been estranged for the majority of the 26 years preceding Mrs Jackson’s death in 2004, during which time Mrs Ilott and her family had lived independently of her mother but in straitened financial circumstances.
In her last will of 2002, Mrs Jackson left the majority of her estate to a number of charities, making no provision for her daughter. This was a decision Mrs Jackson had made as early as 1984, reflected in her will of that year. Mrs Ilott had been aware for many years of this decision and had lived without any expectation of benefit from the estate.
The District Judge found that Mrs Jackson’s will did not make reasonable financial provision for Mrs Ilott and awarded her £50,000. The Court of Appeal held the District Judge had made two errors of principle in his approach. Firstly, he held the award should be limited in light of the long estrangement and lack of expectation of benefit, but did not identify what the award would have been without these factors and the reduction attributable to them. Secondly, he made his award without knowing what the effect of it would be on the benefits which Mrs Ilott and her family presently received, some of which were subject to a means test and which would not payable if Mrs Ilott had savings in excess of £16,000. The Court of Appeal re-evaluated the claim for itself, and awarded Mrs Ilott £143,000 to buy the home she lived in, and an option to receive £20,000 in one or more instalments. The award was designed to avoid affecting Mrs Ilott’s benefits entitlement.
The Supreme Court held unanimpusly that the District Judge did not make either of the two errors on which the Court of Appeal relied to revisit his award, and so his award was restored.
The matters to which the court must have regard in exercising its power to award reasonable financial provision are listed under s.3 of the Act. For an applicant other than a spouse or partner, reasonable financial provision is limited to what it would be reasonable for her to receive for maintenance only. This is an objective standard, to be determined by the court. The limitation to maintenance provision represents a deliberate legislative choice and demonstrates the significance attached by English law to testamentary freedom. Maintenance cannot extend to any or everything which it would be desirable for the claimant to have, but is not limited to subsistence level.
As to the first suggested error, the process suggested by the Court of Appeal is not warranted by the Act. The Act does not require the judge to fix some hypothetical standard of reasonable provision and then increase or discount it with reference to variable factors. All of the s.3 factors, so far as they are relevant, must be considered, and in light of them a single assessment of reasonable financial provision should be made.
As to the second suggested error, the District Judge specifically addressed the impact on benefits twice. The Court of Appeal’s criticism that his award was of little or no value to Mrs Ilott was unjustified. A substantial part of the award could be spent on replacing old and worn out household equipment which the family had previously been unable to afford. This fell within the provision of maintenance of daily living, and would avoid Mrs Ilott retaining capital for long above the £16,000 threshold.
Reasonable financial provision can in principle include the provision of housing, but ordinarily by creating a life interest rather than a capital and inheritable sum, which possibility appeared not to have been considered by the Court of Appeal.
Lady Hale in her judgment reviewed the history of the Act and preceding legislation and commented on the unsatisfactory state of the law, giving as it does no guidance as to the weight of the factors to be taken into account in deciding whether an adult child is deserving or undeserving of reasonable maintenance. The approach under the Act, she said, invariably involves a value judgment, which may be problematic as there is a wide range of opinion among the public and the judiciary about the circumstances in which adult descendants ought or ought not to be able to make a claim on an estate which would otherwise go elsewhere.
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