The Court of Appeal’s decision in the case of Ilott v Mitson
released on Monday has created somewhat of a storm of media stories and comment during the last 24 hours. Many commentators in the press and bloggers from the general public appear to have misunderstood the significance of the decision and, in many cases, have over-emphasised the impact that the case may have in future.
There are some that have gone as far as commenting that the case has radically changed the law and that a person’s Will is no longer safe from being overturned or challenged. This is incorrect.
Since the coming into force of the Inheritance (Provision for Family and Dependants) Act 1975, it has been possible for adult children such as Heather Ilott to apply to Court to seek an Order for ‘reasonable financial provision’ to be awarded from an estate where, in circumstances, the Applicant feels that the deceased’s Will (or intestacy if there is no Will) did not provide such reasonable financial provision. Therefore, the fundamental laws upon which Heather Ilott’s claim were based have been in existence for approximately 40 years.
It was first decided by the courts back in 2007 that Heather Ilott did not receive reasonable financial provision from her mother’s estate. The judgment released on Monday by the Court of Appeal was in response to an appeal regarding the quantification of the amount of money that Heather Ilott should receive. Had this latest appeal failed, Heather Ilott would still have received the £50,000 that she was originally awarded in 2007.
In this latest appeal, the central issue was whether the judge who made the original decision in 2007 made a mistake when quantifying the award to Mrs Ilott. The decision the Court of Appeal has reached was that the judge did make a mistake in that, due to Mrs Ilott’s severely straitened financial circumstances (Mrs Ilott and her husband were and remain almost fully dependent on tax credits and benefits), any capital amount that would be awarded to her would necessarily have a consequential impact on her ability to continue to claim State Benefits. The District Judge who decided the case in 2007 was incorrect in this belief and by carrying that belief forward in making the calculations for the amount to be awarded, the District Judge placed an artificial limit on what could be awarded. That was decided on Monday to have been wrong.
The 2007 award of £50,000 did not really help Mrs Ilott at all. Under the laws relating to State Benefits, such a cash injection would mean that her benefits would have been cut until such time that she had spent most of the award and only after that would she be able to claim benefits again. Therefore, Heather Ilott’s financial circumstances would not have been improved to any measurable degree other than for a very brief window whilst the award was spent. In this latest judgment, the Court of Appeal has confirmed that this was not the purpose of the 1975 Act. Lady Justice Arden has stated that “to be within the 1975 Act, the award has to be for the Appellant’s future maintenance, not for an immediate, major spending spree”.
In reaching its decision on Monday, the Court of Appeal concluded that the only way to provide for Heather Ilott’s future maintenance was to provide sufficient money for her and her husband to purchase their council house. By doing so, this would not affect their entitlement to continue to claim State Benefits which were and remain vital to fund their normal living expenses. The court felt that this would have a real impact on their life in that it would free up the rent that they had been paying until now, which they could then use to fund their other living expenses.
Accordingly, the judgment released by the Court of Appeal on Monday is more of an adjustment to the original quantification of Mrs Ilott’s award from 2007, to make it more effective and remedy the defects contained in the original decision. Having now had the opportunity to review the Court of Appeal’s Judgment in some detail, my view that it has certainly not created ‘open charter’ for children to challenge their parents’ Wills, which some commentators in the media may have been rather too quick to pronounce in the press yesterday.
There are some important points from the judgment that may well affect the future claims of adult children for reasonable financial provision under the 1975 Act. Lady Justice Arden confirmed and clarified that it is no longer the law that for an adult child to be successful in such a claim, a claim has to involve special circumstances or a moral obligation on the part of the deceased. That is not the case and it remains necessary for the courts to assess each case on its own specific facts and weigh up certain criteria specified within the 1975 Act before making a decision.
Lady Justice Arden also confirmed that just because Heather Ilott and her husband were managing to live within their means, that is not to say that they were fully capable of maintaining themselves and therefore did not require any extra from the estate. The judge took into account that Mrs Ilott’s lifestyle was far from extravagant, relying on second hand clothes and the fact that she and her husband had never been on a holiday. Lady Justice Arden agreed that the existing means within which Heather Ilott and her husband were living were not conclusive as to the appropriate level at which she should continue to be maintained in the future. Therefore, just because a potential Claimant has been ‘making do’, does not mean that they should be expected to continue to do so for the foreseeable future.
In my view, the critical factor behind the court’s decision was that Mr and Mrs Ilott’s financial position was so straitened that the court felt compelled to make an Order that would actually make a difference, but in doing so the court was mindful not to go too far. Lady Justice Arden stated in her judgment that “the court’s assessment should not be motivated by a desire to provide an improved standard of living as opposed to a desire to meet appropriate living needs. Nor on the other hand is the court bound to limit maintenance to a mere subsistence level. In my judgment, the Appellant’s present income is not reasonable financial provision for her maintenance in the context of this application… the provision of housing would enable her both to receive a capitalised sum and to keep her tax credits”.
In conclusion, rather than opening the floodgates, the judgment in this case has given encouragement to what would be a limited pool of potential Claimants, ie adult children who find themselves in particularly straitened financial circumstances who feel they have not been provided with sufficient or reasonable financial provision by their deceased parents. It remains the case that adult children who have their own reasonable income and ability to generate future income are very unlikely to be able to present a claim that has any realistic prospect of success. Having read some of the comments left by members of the public on message boards decrying that there is no longer any point in making a Will, I could not disagree more. If anything, the decision makes it more important to make a full and detailed Will drafted by experienced professionals. For further information on inheritance disputes and to find out how we can help you, please contact our Will and Trust Disputes Team on 01279 755777 or get in touch with Daniel Winter, Associate Solicitor.