Can adult children bring inheritance act claims - Part 2?

The family background and will

The claimants were the adult daughters, Juliet and Lauretta, of the late Anthony Shearer (“Tony”) who died on 12 October 2017, aged 68, having been diagnosed the previous year with an aggressive brain tumour. Juliet was 40 years old and Lauretta 39 years. Tony and the daughters’ mother, Jennifer had divorced in 2007, having been married for some 34 years.

By his late will dated 2 February 2015 Tony made no provision for Juliet or Lauretta or their respective children. The principal beneficiary of the will was his second wife, Pamela whom he had married in 2007 shortly after the dissolution of his first marriage. Save for two small legacies, Pamela inherited the residuary estate. The net value of Tony’s estate in the United Kingdom was just short of £2.2m. He also had foreign assets in France valued at about £3,500.00. Tony and Pamela also jointly owned a flat in Kew, London and a property in Provence, France in which they were living at the time of his death. These properties were not included in the net value of his estate.

The law

In accordance with the provisions of Section (1)(c) of the Act Juliet and Lauretta applied for an order under Section 2 on the ground that their late father’s will was not such as to make reasonable financial provision for them. In accordance with Section 1(2) of the Act “reasonable financial provision” for Juliet and Lauretta meant “such financial provision as it would be reasonable in all the circumstances of the case for the applicant to receive for his maintenance”.

In considering whether or not the deceased’s will has made reasonable financial provision for Juliet and Lauretta, the court has to have regard to the factors set out in Section 3(1) of the Act. Below I explore some of the more salient factors which the court considered in the particular circumstances of this case.

Juliet’s financial resources and needs

After dropping out of university Juliet had forged a career in arts and the theatre but had taken a career break following the birth of her two daughters with her former husband, Steve who she divorced in 2012. Juliet re-married in 2014 but by the time of the trial they had separated. Juliet and her second husband, Keith, an officer in the army did not have any children but Keith had two children from a previous relationship.

Juliet’s youngest child was severely autistic and had severe learning and developmental difficulties as well as pathological demand avoidance syndrome. Her disabilities were such that she will be unable to lead an independent life. Save for some assistance from her mother, Juliet was solely responsible for the extensive and complex needs of her youngest daughter which meant she was unable to work, at least full-time - she told the court she intended to re-train as a dog behaviourist which would mean she could work part-time. Potentially, on a part-time basis her income could be £22,000.00 per annum.

Juliet and Keith had initially lived together in army accommodation but by the time of their separation they were living with Jennifer in a large detached period property with extensive gardens and a swimming pool in Enford owned by Jennifer known as the Old Vicarage. Jennifer had bought the property in October 2017. Whilst Keith remained living at the property, he and Juliet shared the shared the expenditure on the property with Jennifer but following his departure Jennifer took over full responsibility for the same. Jennifer also continued to pay the school fees for Juliet’s eldest child, although with her own ongoing health difficulties she told the court she could no longer afford to continue to do so or to support her daughter and grandchildren on a long-term basis. She also stated that it was likely she would have to sell the Old Vicarage once her eldest granddaughter was at secondary school in September 2022.

For various reasons, Juliet did not receive maintenance from either of her former spouses and so her only income at the time of the trial related to rental income from a property that she owned jointly with Jennifer in Fulham. Juliet’s capital input into the property had been £300,000.00 with Jennifer contributing £400,000.00. Juliet’s share had come from the net proceeds of sale of her previous house in Suffolk which had in turn been purchased using funds gifted to her by Tony in the sum of £177,000.00, although Juliet tried to suggest to the court that she would be obliged to use some of her share in the equity to repay Jennifer for monies paid by her to Steve in respect of the financial order made in their divorce proceedings.

As regards her expenditure, Juliet had produced a schedule of annual expenditure showing a shortfall of about £16,000.00. She therefore sought an order sufficient to plug her shortfall in her income.

Lauretta’s financial resources and needs

Lauretta had initially chosen a career in public relations, although by the time of the trial she had switched careers and was working as a senior marketing manager for Sotherby’s, earning £57,000.00 per annum. She was separated from her husband, Mark. She and Mark had one child together, a son born in January 2016. Mark also had two children from a previous relationship.

In October 2014 Mark and Lauretta had purchased a property in Fulham Palace Road. Like Juliet, Lauretta had received monies gifted by Tony in 2008 in the sum of £185,000.00 which she had used to buy a property in Wimbledon. By the time of the trial, Laurette and Mark had separated and were in the throes of divorce proceedings. A financial order had already been made which entitled Lauretta to continue living at the Fulham Palace Road property until her son attained the age of 18 in 2034 when the property would have to be sold. Upon sale, the net proceeds of sale were to be split as to 89% Lauretta and 11% Mark. The property was subject to an interest only mortgage in excess of £400,000.00 for which Lauretta was solely responsible.

Lauretta therefore sought an order to enable her to convert her current interest only mortgage into a repayment mortgage which she could only afford to do at the level of £170,000.00 as opposed to the level of the current mortgage of just over £400,000.00. Without converting the mortgage, Lauretta’s concern was that she would be forced to sell the property in order to repay the capital sum. Secondly, she sought payment of a lump sum of just over £100,000.00 to buy out Mark’s 11% equity in the flat.

Tony’s obligations and responsibilities towards the claimants

There is no legal obligation on a parent to maintain an adult child as there is for a child under the age of 18. When considering Tony’s obligations in this regard, the Act is concerned with obligations and responsibilities which the deceased had immediately before death, not in the past.

Judgment

Juliet’s counsel had made much of the fact that her financial position was precarious. However, the judge concluded that this needed to be considered carefully for a number of reasons. Firstly, as regards capital, the judge considered it more likely than not that Jennifer would ensure Juliet received the full £300,000.00 of any sale proceeds of the London flat which would be sufficient for her to purchase a house in Wiltshire suitable for her and her children if she and Jennifer decided to set up separate households in the event the Old Vicarage was sold.

Furthermore, even if the Old Vicarage was sold, the judge considered this did not necessarily mean that Juliet and Jennifer would set up separate households as the sale proceeds could easily be used by Jennifer to purchase another smaller property for her and Juliet and her children to live in together. If this happened then it was likely that the London flat would not need to be sold.

Secondly, as to income and expenditure, the judge found that some of the expenditure Juliet had listed in her schedule was in fact expenditure for Keith and not her or her daughters. The schedule also did not take into account any salary that Juliet may be able to earn if she re-trained as a dog behaviourist.

The judge also noted that the schedule was produced on the basis of a lifestyle which Juliet had enjoyed since October 2017 whilst living with her mother in the Old Vicarage, a lifestyle which has been supported and sustained both financially and in other ways by her mother, neither of Juliet’s husbands being able to afford to maintain that lifestyle. The judge considered that the assessment of the standard of living appropriate for Juliet should be by reference to the standard that she had when married to Keith and living in Ministry of Defence accommodation rather than the more luxurious lifestyle she had enjoyed since her father’s death with the assistance of her mother.

Taking these factors into account the judge did not consider there was a shortfall on expenditure.

As to Lauretta’s claim, the judge doubted that the payment of some £244,000.00 to enable her to convert her mortgage to a repayment one at a lower level where she could afford to make the repayments could be properly described as “maintenance” within the meaning of the Act. When Lauretta and Mark bought the flat in October 2014 they did not do so in reliance of any assurance from Tony that Lauretta would inherit a substantial sum on his death. Indeed, on the contrary, Tony had made it clear in 2008 that after the gift of £185,000.00, Lauretta was on her own financially and should expect no more of her father. The judge accepted that it may be since the divorce Lauretta could no longer afford to stay in the flat but the solution to that problem would be to reduce her expenditure by moving to a smaller cheaper flat, the flat being worth about £900,000.00.

As to the lump sum payment to buy out Mark, the judge concluded that this could not begin to be described as a financial need which Lauretta “has or is likely to have in the foreseeable future”. She was still a relatively young woman in a good job with prospects of advancing her career at Sotherby’s and may well therefore be in a different and more advantageous earning position in 13 years’ time when she no longer had a legal obligation to maintain her son.

As to Tony’s obligations, the court concluded that he did not have any obligations or responsibilities towards either of the claimants at the time of his death. Whilst the claimants may well have enjoyed an affluent lifestyle until they were in their early twenties, when their parents divorced, they were not entitled to expect that standard of living indefinitely, nor did they in fact do so given the lifestyle choices they both made in terms of marriage and family were not dependent upon Tony’s financial support at the time or contingent upon his financial support in the future. Furthermore, Tony had made generous provision for both claimants with the gifts of money in 2008 which they were able to invest in property. He had made it clear at the time that they could not expect any further financial assistance.

In all the circumstances, the judge did not consider that either claimant could demonstrate a need for maintenance which they could not meet if necessary by adjustment to their lifestyles. Even if they could demonstrate such needs, the judge considered these were outweighed by other factors under Section 3 of the Act. Accordingly, the claimants’ claims were both dismissed.