Can adult children bring inheritance act claims?

Factual background

Kenneth was born in 1934.  He separated from Lynne’s mother, Jennifer in 1968 after which Lynne (whose evidence in this respect was accepted by the judge) had a difficult, even abusive relationship with her father.

In about the mid-1990s Lynne entered into a relationship with her former partner, Jon who had a young daughter, Leila by a previous relationship who Lynne treated as her own daughter. She is now in her early 30s. At about the same time, Kenneth entered into a new relationship with a woman called Audrey.

In 1998 Lynne gave birth to her son, James. At the time she enjoyed a good standard of living and had a reasonably well paid job. However, she was developing spinal degenerative disease and so in about 1999 she gave up work.  Following extensive testing, insurers accepted that she was unable to work. Since then she has lived principally on the proceeds of an income protection scheme.

In about 2004, Lynne and Jon separated. He continued to provide for James, including the payment of school fees.

In about 2011 Kenneth made a will leaving a life interest to Audrey and his residual estate to Lynne.  At about the same time, he also moved back to England having spent some years living in France.  He purchased a house in Lincolnshire near to where Ilva lived.

In March 2017 Kenneth made a further will leaving his residual estate to Ilva or Lynne if she pre-deceased him.  In April 2017 Audrey died.  Lynne and Kenneth were estranged during this time, although Lynne continued with her attempts at a reconciliation.

In September 2017 Kenneth made his final will making the dispositions as set out above. His solicitors advised that Lynne could make a claim under the Act. Kenneth acknowledged this but said that Lynne had had enough money from him over the years and keeps asking for more and he re-confirmed his wish not to leave anything to Lynne.

Despite this, Lynne gave evidence to the court, which evidence the court accepted, that in the last few months of his life her relationship with her father grew closer. Indeed, in July 2018 he telephoned her out of the blue and told her he loved her and she told him that she loved him too. Kenneth died on 14 August 2018.

The law

The Act provides (in the case of a child) that:

“1(1)    Where after the commencement of this Act a person dies domiciled in England and Wales and is survived by any of the following persons:
…..
(c)    a child of the deceased;
…..

that person may apply to the court for an order under section 2 of this Act on the ground that the disposition of the deceased’s estate effected by his will or the law relating to intestacy, or the combination of his will and that law, is not such as to make reasonable financial provision for the applicant.”

The Act goes on to state that, in the case of a child, reasonable financial provision means “such financial provision as it would be reasonable in all the circumstances of the case for the applicant to receive for his maintenance.”
Having determined that as a child of Kenneth Lynne had standing to apply to the court for an order, the Act required the court to determine two further questions.

Matters to be decided

1. Whether Kenneth’s estate has made “reasonable financial provision” for Lynne to receive “for her maintenance”.  These are words of an objective standard of financial provision to be determined by the court.  Subject to the court’s powers under the Act it remains a feature of English law that a testator is free to dispose of his own property in whatever way he pleases.  In order for the court to interfere with and reform those dispositions it must be shown that, looked at objectively, his disposition or lack of disposition produces an unreasonable result in that it does not make any or any greater provision for the applicant.  All cases which are limited to maintenance will turn largely upon the asserted needs of the applicant.
2. If the court is satisfied that reasonable financial provision has not been made, then what provision should be made? This is a discretionary exercise taking into account factors set out at Section 3(1) of the Act. The court considered each of these factors, insofar as they were relevant to the particular facts of this case and where a particular factor was of relevant the judge made, inter alia, the following findings and conclusions.

Lynne’s financial resources and needs

Lynne was the sole owner of a three bedroomed flat which was purchased in 2016 for £497,000.00. Her income was about £2,000.00 per month. At trial, she was cross-examined in considerable detail about her spending. Although there were some areas of confusion, the court was satisfied that Lynne’s spending was overall modest and reasonable. The court considered that she could live in reasonable but not luxurious comfort. However, the court heard that in January 2023 when she turns 60 Lynne’s entitlement to her income protection plan will cease.  At that point, she will suffer a significant drop in income. In fact between 2023 and 2030, when her State Pension entitled arises, her income will only be about £1,000.00 per year.

The court concluded for that 7 year period, Lynne would therefore have an annual shortfall of approximately £20,000.00 on her income (or £140,000.00 in total). In the judge’s view that shortfall was sufficient to engage Section 3(1)(a) and to meet the test identified by Mr Justice Oliver (as he then was) in Re Coventry [1980] that “looked at objectively the disposition or lack of disposition produces an unreasonable result”.

As to the period after 2030, the court was unable to conclude that factor 3(1)(a) was engaged. The court’s difficulty in this respect stemmed from the fact that it was not obvious what Lynne’s financial position was going to be beyond 2030 to enable the court to determine what her resources and needs were.  

Ilva’s financial resources and needs

The court considered Ilva’s financial position was reasonably comfortable. She owned her own house in Lincolnshire as well as an adjoining field of approximately three acres. She was aged 75 years and therefore was receiving income comprising a State Pension and a reasonable private pension. She had no dependants or foreseeable financial commitments. In this respect, the court considered factor 3(1)(c) had little weight. Indeed, any inheritance which Ilva would receive could properly be regarded as a “windfall”.

The size and nature of the estate

The judge considered this was clearly of importance. After allowing for the existing dispositions and legal fees the estate was worth about £190,000.00. Accordingly, it was therefore not going to be possible to make provision for Lynne in accordance with her resources and needs without effectively exhausting the estate. It was necessary therefore for any award to Lynne to reflect the modest size of the estate.

Any physical or mental disability of any applicant

Again, the judge considered that this was a very important factor in this case.  Lynne had been unable to work since the age of about 36.  At that time, she had a salary of about £30,000.00 per year plus commission and a car.  But for her poor health, she would, probably have been able to carry on working until at least the age of 60 and would have built up a much better pension pot.

As to her health, the court had uncontested medical evidence before it from Mr Sinar, a consultant neurologist, which confirmed Lynne suffered from significant spinal degenerative disease which meant she had had to rely on James to perform tasks such as carrying the shopping upstairs from the car and also cleaning of the flat. This was likely to persist and given the degenerative nature of the disease would worsen with the passage of time so that she would not get any better and likely would deteriorate over the next few years giving rise to a greater need to rely on others to help with housework and other daily tasks. Mr Sinar’s report concluded by confirming that it was unlikely Lynne would be able to work in any capacity in the future.

Any other matter, including the conduct of any applicant for an order under the said section 2 or any beneficiary of the estate of the deceased

When considering this factor the judge looked to the speech of Lord Hughes in the case of Ilott v Mitson [2018] which he said provided useful guidance as to the question of reasonable financial provision.

For this factor the judge bore in mind Lord Hughes’ observation that “in the case of a claimant adult son well capable of living independently, something more than the qualifying relationship is needed to found a claim.”  This said the judge obviously applied to adult daughters as well.

In this case, if Lynne had been able to carry on working until 60 or 65 in reasonable well paid employment she would have had little prospect of satisfying the statutory test. But she is not able to do so. In addition, as the judge found, Lynne had made every reasonable effort to keep in touch with her father despite him clearly being a difficult man and her unhappy relationship with him from childhood onwards. All this did, in the judge’s view, give Lynne something of a moral claim especially as she was Kenneth’s only child.

Court’s judgment

Having (a) heard evidence from Lynne and Ilva, both of whom were cross-examined at length and in respect of which the judge considered that Lynne was on the whole an impressive witness who gave honest and credible evidence with Ilva, on the other hand, being a much more calculating witness choosing her answers with care in order to advance her case and thus, a less satisfactory witness and (b) having regard to the matters set out above, the judge considered Kenneth’s will did not make reasonable financial provision for Lynne to receive for her maintenance.

As to the exercise of his powers under Section 2 of the Act, the judge concluded it was appropriate to make a lump sum award in Lynne’s favour. In this respect, he found the appropriate order was to award a lump sum payment of £85,000.00 to Lynne in addition to the existing disposition of £25,000.00. This figure reflected the judge’s views as to Lynne’s financial resources and needs, albeit that those needs far exceeded what could be met out of the estate. The amount awarded therefore reflected her needs but also the relatively small size of the estate.

Conclusion

The judgment does not make it clear why Ilva took the stance that she did or why she refused to accept offers that had been made by Lynne’s solicitors to resolve the matter without the need for trial (one of which was significantly lower than the award that the court ended up granting) but this case is a timely reminder, particularly as Ilva was also ordered to pay Lynne’s costs of the action, as regards the importance of trying to settle these claims at as early a stage as possible rather than run the gauntlet of the exercise of the court’s discretion at trial.