To recap, the landmark case of Ilott v Mitson made its way in front of the Supreme Court judges in December 2016.
Mrs Jackson died in 2014 and by her Will left the majority of her estate to charities. No provision had been left for her only child, Mrs Ilott, and a detailed letter explaining this decision was left with the Will.
The mother and daughter became estranged many years ago when Mrs Ilott left home at a young age. Several attempts were made for reconciliation but failed. Mrs Ilott lives with her husband and five children, all of whom are adults and are financially reliant upon state benefits.
Mrs Ilott made an application under the Inheritance (Provision for Family and Dependents) Act 1975 (“the Act”) for reasonable financial provision from her late mother’s estate which in particular would allow her to purchase her council house.
A key two-fold test for a Court to consider under the Act is whether the Will makes reasonable financial provision for the applicant, and if not, what the reasonable financial provision would be in the circumstances. Under the guidelines provided by the Act, the Court would give regard to the financial needs and resources of the applicant, the financial resources and needs of other family members or beneficiaries under the Will, the size and nature of the deceased’s estate, any other responsibilities owed by the deceased to the applicant and any other matter which the Court deems relevant.
It was undisputed that no financial provision had been provided to Mrs Ilott under the Will and in consideration of the above factors, an award of £50,000 was made to Mrs Ilott with the remainder of the estate passing to the charities.
Mrs Ilott appealed stating that the effect of this large lump-sum award would deprive her of her means-tested state benefits and in any event would not be sufficient to purchase her council house. After three failed appeals, the Court took into account Mrs Ilott’s extreme lack of financial provision and finally awarded £143,000 to purchase her council house plus the reasonable professional expenses for doing so, in addition to a lump-sum of up to £20,000 structured in a way that would allow Mrs Ilott to preserve her state benefits.
The Court of Appeal deemed it irrelevant that the parties were estranged and it was rejected that Mrs Ilott should not have had any expectation to receive a gift from her mother’s estate. Whilst Mrs Jackson had a lack of responsibility for her daughter, she had even less responsibility for the beneficiary charities. It was said that the charities could not have had any competing financial need and, in doing so, the judge found Mrs Jackson’s conduct to be “harsh and unreasonable”
Further, the Court of Appeal held that the District Judge made the initial award without considering the effect it would have on Mrs Ilott’s state benefits, some of which were subject to a means test, and would not be payable if Mrs Ilott had savings in excess of £16,000.
This decision by the Court of Appeal resulted in a further appeal to the Supreme Court led by the charities.
In handing down the judgment, Lord Hughes began by recognising that the jurisdiction of England & Wales provides freedom of testamentary disposition. The Act does, however, allow a Court to modify a Will if it is satisfied that the Will does not make reasonable financial provision.
The Act does not allow a Court to make an order if it judges the deceased acted unreasonably. Indeed, the deceased may have acted reasonably at the time the Will was made, but the applicant’s circumstances may have altered, for example by chronic illness or incapacity. The Supreme Court found that although Mrs Jackson left her estate to charities with which she had no particular connection with during her lifetime, English law recognises the freedom of individuals to dispose of their assets by Will after death in whatever manner they wish. Further, the Court acknowledged the aspect of public policy insofar as charities rely heavily on income from legacies.
For an applicant other than a spouse or partner, reasonable financial provision is limited to what it would be reasonable for the applicant to receive for maintenance only and this is assessed on a case-by-case basis. The concept of maintenance in the Act is broad, but cannot extend to anything or everything which the applicant may desire to have. The Court therefore limits this to such provision that would meet everyday expenses of living. In this matter, the Supreme Court noted that Mrs Ilott is an adult child who has lived independently of her parent for many years without any expectation of benefit from the estate but who is in straitened financial circumstances.
The Supreme Court reinstated the decision made at the first hearing and made an award to Mrs Ilott in the sum of £50,000 which the Supreme Court deemed represents such financial provision as is reasonable in all the circumstances of the case for her maintenance whilst ensuring that the testamentary wishes under the Will are also upheld.
The Court of Appeal’s criticism that a large lump-sum was of little or no value to Mrs Ilott was deemed unjustified. The Supreme Court suggested that a large 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 would fall within the provision of maintenance for daily living provided by the Act, and as such, would avoid Mrs Ilott retaining capital above the £16,000 threshold in respect of her means-tested benefits.
Lord Hughes added that the provision of housing awarded by the Court of Appeal would in nature provide Mrs Ilott with a capital and inheritable sum. This would exceed the maintenance allowance provided under the Act.
Lady Hale went on to provide a supplementary judgment and called for the Law Commission to conduct a review of the Act, which in its current form, “[provides] no guidance as to the factors to be taken into account in deciding whether an adult child is deserving or undeserving of reasonable maintenance”. However, whether we can expect to see reforms in the near future is questionable with more pressing issues concerning Brexit likely to be taking priority in the government’s legislative programme.
Until then, it will be for the Courts to assess the individual facts of each matter.