At 9:45am this morning [Wednesday 15 March 2017], the Supreme Court handed down judgment in the case of Ilott v Mitson (handed down as Ilott v The Blue Cross & others). This is the first Inheritance (Provision for Family and Dependants) Act 1975 claim to reach the UK's highest court, the Supreme Court.
The Supreme Court has found unanimously in favour of the charity appellants when considering, for the first time, the scope of judges' powers under the Inheritance Act. The ruling confirms our right to choose who will inherit our estate when we die.
Judgment was given by Lord Hughes, as agreed by Lord Neuberger (President of the Supreme Court), Lady Hale (Deputy President of the Supreme Court), Lord Kerr, Lord Clarke, Lord Wilson and Lord Sumption. The Judgment makes for very interesting reading and can be found here.
The factual background to this well-known case will be familiar to practitioners. However, by way of a very brief background, Mrs Heather Ilott brought a claim under the Inheritance Act for reasonable financial provision to be made for her out of her late mother's estate. Her mother Mrs Melita Jackson died in 2004 leaving a will which left the entirety of her estate (approximately £486,000) to three charities.
Mrs Ilott and her mother had been estranged for many years. Although the court found fault on both sides, it attached greater responsibility to Mrs Jackson.
Mrs Ilott lived in a house rented from a Housing Association and the majority of her family's income derived from state benefits. Her financial circumstances were conservatively described by the District Judge as modest.
At first instance, Mrs Ilott received an award of £50,000. She appealed against this award on the basis that it was too low and deprived her of her means-tested benefits. After a lengthy appeals process, the Court of Appeal awarded Mrs Ilott (1) £143,000 to buy the house she lived in and (2) an option to receive a further £20,000 in one or more instalments. The charities appealed against this decision, and permission was granted by the Supreme Court. Today, the Supreme Court handed down its decision, allowing the charities' appeal and reinstating the award of £50,000 made by the District Judge at trial.
The Supreme Court's Judgment
The Supreme Court took the view that that the Court of Appeal had no proper basis for interfering with the judgment made by the District Judge at first instance. The Supreme Court's judgment gives important guidance on a number of aspects in the jurisdiction, some of which are set out below:-
It is now clear that making reasonable financial provision for “maintenance” does not mean providing everything the applicant reasonably needs, and the Supreme Court’s judgment makes clear that an applicant’s needs will not necessarily be the measure of an award under the Act.
The Supreme Court's judgment also makes clear than an applicant's need may not be enough, on its own, to justify an award.
The testator's wishes must be taken into account
The Supreme Court highlighted the significance of the testator's wishes, and held that "It is not the case that once there is a qualified claimant and a demonstrated need for maintenance, the testator's wishes cease to be of any weight…" (para 47).
It cannot be ignored that an award under the Inheritance Act is at the expense of those that that testator intended to benefit. In particular to this case, a testator's decision to leave money to charities should be respected - "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. More fundamentally, these charities were the chosen beneficiaries of the deceased. They did not have to justify a claim on the basis of need under the [Inheritance] Act" (para 46).
Furthermore, where it can be argued that the testator acted unreasonably, the reasonableness of the testator's decisions are capable of being a factor for consideration within section 3(1)(g) (and sometimes section 3(1)(d)) of the Inheritance Act but just because a testator has acted unreasonably, that does not automatically mean that (when analysed objectively) his/her will fails to make reasonable financial provision for a claimant (para 17).
The Supreme Court also criticised the Court of Appeal for failing to give sufficient weight to the mother and daughter's estrangement. The Supreme Court held that the estrangement might have led some judges to justifiably conclude that the claim should be dismissed altogether. However, the trial judge was entitled to make provision for the claimant as he had done so.
The Supreme Court's decision represents the leading authority on needs-based claims under the Inheritance Act and will be of great importance to practitioners assessing such claims. We welcome the clarity the ruling brings in terms of the scope of a judge's power when considering Inheritance Act claims, particularly of those brought by adult children.
If you would like advice on challenging a will, or indeed on any other inheritance or trust dispute, please contact our Disputed Wills, Trusts and Estates Team by telephone 0800 0931336 or by email email@example.com.