Family matters

Non-contentious practitioners may need to consider the Inheritance (Provision for Family and Dependants) Act 1975 (IPFDA 1975):

• when taking instructions for a will, and
• when dealing with the administration of an estate where a claim is threatened.

In both situations you need to assess the chances of a claim succeeding. This article examines some recent cases and identifies some common threads. First, a quick reminder of the way the IPFDA 1975 works.

The statutory framework

1. Applicants must be within one of the categories listed in sections 1(1) or (1A) 

The most usual applicants are: 

• a spouse or civil partner of the deceased 
• a person who for the period of two years ending immediately before the date when the deceased died, was living in the same household as the deceased, and as if that person and the deceased were a married couple or civil partners, or
• a child of the deceased.

2. No reasonable financial provision made for applicant

In order to succeed, the applicant must show that the disposition of the deceased’s estate did not make “reasonable financial provision” for them.

There are two standards. For surviving spouses and civil partners, it is such financial provision as it would be reasonable in all the circumstances for them to receive. 

Applications by others are limited to provision for maintenance, significantly reducing the chances of success. 

There is no statutory definition of maintenance but in Re Dennis [1981] 2 All ER 140, Browne-Wilkinson J (as he then was) said: “In my judgment the word ‘maintenance’ connotes only payments which, directly or indirectly, enable the applicant in the future to discharge the cost of his daily living at whatever standard of living is appropriate to him. The provision that is to be made is to meet recurring expenses, being expenses of living of an income nature.”  

An applicant who is not a spouse or civil partner and can provide adequately for their own needs will not succeed. In Ilott v Blue Cross [2017] UKSC 17, at [14] Lord Hughes said that while the concept of maintenance was broad: “It cannot extend to any or every thing which it would be desirable for the claimant to have. It must import provision to meet the everyday expenses of living.”

Several recent cases (see below) begun by adult children have failed because they could provide appropriately for their own maintenance. 

3. The matters the court is required to take into account

Section 3(1) of the IPFDA 1975 contains matters which are relevant to all categories and section 3(2) contains factors specific to particular categories. 

In particular, under section 3(1) the court must consider the financial resources and financial needs of the applicant and balance other competing interests. In Ilott, Lord Hughes at [46] stated that the beneficiaries of the will are chosen by the deceased. Any variation is at the expense of those whom the testator intended to benefit and the applicant must prove this is appropriate in the circumstances.

Under section 3(2) the special factors for spouses and civil partners are very significant. The court must consider the age of the applicant, the duration of the relationship, the contribution made by the applicant to the welfare of the family of the deceased and, importantly, the provision which the applicant might reasonably have expected to receive if the marriage or civil partnership had been terminated by a decree of divorce or dissolution rather than death.

Since the House of Lords decision in White v White [2001] 1 AC 596, awards on divorce are not approached on the basis of what the less wealthy spouse needs but on a fair division of the marital assets. This has been of significance in several recent cases under the IPFDA 1975.

Assessing the risk of a future claim

It is difficult to advise a client of the chances of an application against the estate succeeding. Cases are hugely fact specific. In Ilott, Lady Hale said: “A respectable case could be made for at least three very different solutions.” Three solutions offered by different judges during the protracted litigation: £0, £143,000, £50,000. Not encouraging for professional advisers. However, some things are clear. 

In relation to surviving spouses and civil partners, where the first to die owns the bulk of the couple’s assets, the survivor who receives no capital outright but is simply provided with an income and/or inclusion in a class of discretionary beneficiaries will have a good chance of success in a claim. See Berger v Berger [2013] EWCA Civ 1305 and Cowan v Foreman [2019] EWCA Civ 1336, in both of which the Court of Appeal took the view that a widow left without capital had a strong arguable case. 

However, in Hendry v Hendry [2019] EWHC 1976 (Ch), leave for the widow to apply out of time was partly refused on the basis that her claim was not strong. She had entered into a pre-nuptial agreement that, if the marriage broke down, she would receive £10,000 and a ticket home to the Philippines. Master Shuman said at [55] that the existence of a pre-nuptial agreement entered into on proper advice was something that a divorce court would consider and was therefore relevant to the IPFDA 1975 claim. 

Where wealth is held unequally, it may be sensible for the wealthier party to make some capital provision for the other.

What about the situation where the client does not want to make provision for their children, perhaps because of estrangement or because the client feels those children have already had sufficient?

Remember that children are entitled only to reasonable provision for maintenance, so if they can meet their own maintenance needs, they will not succeed. See for example Wellesley v Wellesley & Ors [2019] EWHC 11 (Ch), where Earl Cowley, who died with an estate of £1.3m left only £20,000 to his estranged daughter, the remainder going into trust for various family members and his fourth wife. The court found that the £20,000 was reasonable as she could live within her own means (including the availability of state benefits).

In Miles v Shearer [2021] EWHC 1000 (Ch) a claim by two adult daughters on their late father’s estate was refused. The father had previously advised each claimant in writing that he could not make any further financial assistance following a substantial gift in 2008. Neither claimant demonstrated needs that they could not meet with adjustment to their lifestyle. 

In such cases, documenting reasons for the provision made or not made will always be helpful.

Dealing with threatened claims

Don’t let costs build up. Often, the costs become the obstacle to a settlement, if neither side can afford to settle for anything less than a win. Where an application succeeds, the court may take into account the fact that the applicant entered into a conditional fee agreement requiring them to pay a success fee. The Courts and Legal Services Act 1990 section 58A(6) provides that costs orders cannot require the payment by one party of all or part of a success fee payable by another party under a conditional fee agreement.

However, in IPFDA 1975 cases courts have treated the success fee as relevant to the issue of financial needs. See SH v NH [2020] EWHC 1134 (Fam).  

Where there is merit in the application, it is in everybody’s interests to try for a negotiated settlement. Not only does it keep down costs but failure to mediate may carry a costs penalty. In Rochford v Rochford [2021] WTLR 184, a disabled daughter, in poor financial circumstances, who had been left £25,000 by her father made an application. The bulk of the estate (approximately £193,000) was left to the deceased’s sister, described as comfortably off. 

The daughter was awarded a further £85,000, while her sister was ordered to pay costs on the punitive indemnity basis, plus interest and a further penalty of 10% of the judgment amount. 

The judge said at [54] and [55]:

“It seems to me that what is essentially a family dispute of this kind with a relatively modest estate, it was clearly very much in the interests of all concerned that there should be a mediation at the earliest possible opportunity… The defendant did not take that course and it seems to me that she must bear the costs consequences of it.”

This case serves as a warning that parties should attempt to mediate at the earliest opportunity, particularly when dealing with small estates, to avoid the accumulation of costs. 

However, beneficiaries should not feel held to ransom. The courts are willing to dismiss ‘absolutely hopeless’ claims. In Shapton v Seviour [2020] Lexis Citation 200, Deputy Master Lloyd said in his opening remarks of the costs judgment: “The application never stood a reasonable prospect of success.”

The application was made by the deceased’s daughter from his first marriage. She was 32 and married with two children. She and her husband both had relatively well-paid jobs but she claimed they needed a larger house (estimated cost £350,000) and help with credit card debts. Master Lloyd’s view was that an award of that nature was never on the cards. By contrast, the deceased’s second wife, Maria – who had been bequeathed the entire estate of £268,000 – had been diagnosed with motor neurone disease during the deceased’s lifetime and by the time of the application was wheelchair bound and dependant on her daughter and carers.