The freedom to leave your estate to whom you wish is a hallmark of the law of succession in England and Wales. In contrast to most other European countries, no “forced heirship” rules apply, i.e. there is no legislation which dictates or limits the way in which property and possessions can be left on death, and this is seen as an important part of our personal liberties.
However this freedom is not without limits. The Inheritance (Provision for Family and Dependants) Act 1975 (“the Inheritance Act“) gives a spouse and certain other classes of eligible claimant including those financially dependant on the deceased, the ability to bring a claim against the deceased’s net estate if a Will or intestacy fails to make reasonable financial provision for that person.
In such a claim, the court is able to make a wide variety of awards including a transfer of property and/or payment of a lump sum from the deceased’s estate. When considering whether or not to make an award, the court will consider a number of factors including the needs and resources of all relevant parties and the size and nature of the estate. This note summarises some of the key issues but is not a comprehensive guide to claims under the Inheritance Act.
Initial Procedural Requirements
Before commencing a claim under the Inheritance Act, the following procedural requirements must be satisfied:
- the deceased must have been domiciled in England and Wales at the time of their death;
- the claim form must be issued within six months from the date of the grant of representation to the estate that is the subject of the claim. The court does have discretion to extend this time limit , but only in certain circumstances; and
- the claimant must be alive at the time of the claim and remain alive until its determination.
Who May be Eligible to Bring a Claim?
Section 1(1)(a)-(e) of the Inheritance Act sets out the persons who may be eligible to bring a claim:-
- any spouse or civil partner of the deceased;
- any former spouse or civil partner of the deceased (provided she or he has not remarried);
- any cohabitee who was living with the deceased as husband and wife, or as civil partners, for a continuous two year period immediately prior to the deceased’s death;
- any child of the deceased;
- those treated as a child of the deceased (including those with whom the deceased had no blood link); and
- any other person who was being financially maintained by the deceased.
Reasonable Financial Provision
The first and key question in all claims under the Inheritance Act is “has the disposition of the deceased’s estate made reasonable financial provision for the claimant?”
Standards of ‘Provision’
There are two standards of ‘provision’ by which ‘reasonable financial provision’ is measured. Which standard to apply depends on the status of the claimant:
- if the claimant is the spouse or civil partner of the deceased, the provision required need not be for the claimant’s maintenance, instead it is based on what is reasonable for the claimant to receive, whether or not it is for that person’s maintenance (“the reasonableness standard“); and
- If the claimant is any other person, the standard is such financial provision as it would be reasonable in all the circumstances of the case for the claimant to receive for his maintenance (“the maintenance standard“). ‘Maintenance’ is not defined in the Inheritance Act, but has been defined by the courts by reference to what it would be reasonable for the claimant to live on.
Has Reasonable Financial Provision Been Made?
The question of whether the Will (or the intestacy) has failed to make reasonable financial provision for the claimant in all the circumstances of the case according to the standard applicable to that claimant is an objectiveone, and therefore turns largely on financial evidence. The burden is always on the claimant to establish that reasonable financial provision has not been made for them.
Section 3 of the Inheritance Act contains a list of all the factors to which the court must have regard when determining, at the hearing, whether reasonable financial provision has been made, and if it has not been made, what the court should award. These factors include:
- the financial resources and financial needs which the claimant has or is likely to have in future;
- the financial resources and financial needs which any beneficiary of the estate has or is likely to have in future;
- any obligations or responsibilities which the deceased had towards any claimant or beneficiary of the estate of the deceased;
- the size and nature of the net estate of the deceased;
- any physical or mental condition of any claimant or any beneficiary of the estate of the deceased; and
- any other matter, including the conduct of the claimant or any other person.
Some of these factors actually, or potentially, apply in all claims whilst some others apply only to certain types of claim.
In claims made by surviving spouses and civil partners, the court must also take into account the amount of money the claimant would have received had the marriage ended in divorce, rather than by death. This is known as the “deemed divorce factor”. It is important to note that this is only one of the relevant factors, not a determining factor over-and-above the others, but it can be persuasive.
 Or others who are treated as spouses or civil partners (s.14 and s.14A of the Act). This broadly relates to situations where there has been a divorce/dissolution of a civil partnership, within 12 months of this divorce one of the parties dies and the ancillary relief proceedings had not been concluded.
In such cases, the court must also factor in the age of the claimant and the duration of the marriage, as well as the contribution made by the claimant to the welfare of the family.
All factors must be given equal weight, and all evidence relating to these factors that is presented to the court must:
- be up-to-date;
- take account of post-death fluctuations in values of assets (not only in the estate, but in respect of the parties’ means themselves); and
- take account of changes in fortune and circumstances which have arisen since the commencement of the claim i.e. receipt by the claimant or a beneficiary/defendant of an inheritance under the estate of a third party.
If it has been determined that reasonable financial provision has not been made by the deceased for the claimant, it is for the court to decide to what extent to exercise its powers under the Inheritance Act to make reasonable financial provision. As above, spouses and civil partners are not restricted to an award to meet their maintenance whereas other claimants are.
An award by the court may take the form of a capital sum, income provision (including possibly a right to occupy property), deferred payment or an amount settled on trust. The question of what award, if any, to make is answered by reference to the evidence at the date of the hearing, assessed against the factors in Section 3 of the Inheritance Act. However an award may only be made in respect of the net estate, which does not include certain property that may be chargeable to inheritance tax, such as property passing by survivorship. There are also limits on what the court can do in relation to, for example, existing trusts.
The Conduct of an Inheritance Act Claim
An Inheritance Act claim is no different from any other type of contentious litigation, therefore anyone commencing or defending such a claim must have a full and up-to-date knowledge of the Civil Procedure Rules (“CPR“), especially CPR 57 (Probate Claims). There are, however, features peculiar to Inheritance Act claims of which one must be aware, notably:-
- mediation – Inheritance Act claims are very suitable for mediation. Even in cases where a crucial point, such as domicile, is at stake, this can be determined by the court as a preliminary point, at which stage (assuming, in the case of domicile, that the outcome is in favour of English or Welsh domicile) the quantum of any award and the manner in which it should be made can be the subject of mediation. Mediation has the advantage that any settlement can be more creatively structured to suit the family’s circumstances;
- bars to claims of former spouses or civil partners – It is commonly a clause of the orders dissolving the potential claimant’s former marriage/civil partnership with the deceased that the parties cannot make an Inheritance Act claim at a later date; and
- Pre-Nuptial Agreements – It has yet to be tested in court whether a provision in a pre-nuptial agreement barring a claim under the Inheritance Act is effective and precludes a spouse from actually bringing a claim.
If you have any queries regarding the contents of this briefing, please contact the Head of the Private Client Team and Contentious Trusts and Probate Sub-Group, Andrew OKeeffe, or your usual Wedlake Bell adviser.