24/05/2011

Testamentary freedom – under attack

A recent landmark decision by the Court of Appeal in the case of Ilott v Mitson and Others has sent shockwaves through the legal community as it appears to limit the circumstances in which parents can disinherit their children and calls into question how much testamentary freedom we actually have.

Prior to the Court of Appeal’s decision, adult children who were not financially dependant on their parents at the time of their parent’s death had little or no prospect of getting a Court to give them more of their parents’ estate than was given (or not given) to them in their parent’s actual Wills.

The recent Court of Appeal ruling opens the floodgates for claims by adult children who are not in a financially strong position at the time of their parents’ death and have been given unreasonable provision in their parents’ Wills (irrespective of their parents’ actual wishes). Whether the provision was unreasonable is an objective test.

The case

Melita Jackson died on 10 July 2004, aged 70 and leaving an estate of £486,000. Aside from some small pecuniary legacies, Mrs Jackson left the balance of her estate to a number of animal charities.

Mrs Jackson was a widow and died leaving her only daughter and five grandchildren. Mrs Jackson was estranged from her daughter (Mrs Ilott) after she left home aged 17 to live with her boyfriend. Despite several attempts at reconciliation on the part of Mrs Ilott, this estrangement continued until Mrs Jackson’s death.

Following advice that a claim under the Act may be made by her daughter, Mrs Jackson prepared a letter of wishes which set out the reasons why she had not provided for her daughter in her Will (“because my daughter left me without any explanation and has made no effort to reconcile with me I feel as though I have no moral or financial obligation to provide for her”) and asked her executors to defend any claim that her daughter might bring against her estate.

Mrs Ilott, after leaving home aged 17, went on to marry and raise five children living largely on benefits in a housing association home. After her mother’s death when the contents of her Will became known, Mrs Ilott felt that her mother had treated her unfairly and applied to the Court for provision under the Act.

The first instance decision

At first instance, the Court decided that the combination of the daughter’s financial circumstances, the size of the estate, the absence of countervailing demands for financial help from other beneficiaries and the unreasonable conduct of the deceased towards her daughter meant that reasonable provision had not been made for the daughter and awarded her the sum of £50,000.

Mrs Ilott appealed against the lump sum ordered, seeking an even greater proportion of her mother’s estate, on the ground that she had five children and was living on benefits.

At this stage, the charity residuary beneficiaries decided to cross-appeal.

The first appeal

At first appeal, Eleanor King J allowed the cross appeal and dismissed Mrs Ilott’s claim, maintaining that the judgment of the district judge had been “plainly wrong” and that Mrs Ilott should not get anything from the estate.

The second appeal

At second appeal, the Court of Appeal ruled in favour of Mrs Ilott and allowed her claim. The Court of Appeal concluded that the district judge was entitled to make his own value judgment as to whether the provision made for Mrs Ilott was reasonable and, having concluded that it was not, what award should be made.

It was accepted by the Court of Appeal that a distinguishing factor in this case was Mrs Ilott’s modest means, her limited earning capacity and the fact that she was likely to continue to require assistance from the state for her basic living expenses.

So, where does this leave us?

In this case, Mrs Jackson had been well advised when preparing her Will – she had been advised of the Act and had signed a letter of wishes which set out the reasons why she had not made any provision for her daughter in her Will. This, she had hoped, would serve to robustly defend any claim made against the estate by her daughter.

In the event, this was insufficient. The Court of Appeal has now made it clear that the central question is not whether the testator has acted reasonably, but whether, when viewed objectively, the provision made (or not made) was unreasonable. It would appear that following the decision in this case, a testator only has testamentary freedom if they do not leave their children in a position of limited financial means. This needs careful thought and consideration.

This is a serious inroad into the right of testamentary freedom. Careful consideration has to be given when parents are drafting Wills that will not be making any (or limited) provision for ALL of their children and dependants. We can advise on this recent ruling and minimise the risk of litigation arising on their death – contact a member of our personal law team to get the right Will drafted.

If you are an adult child who have been left out of your parents’ Wills or received an amount that would be considered unreasonable then seek advice with our contentious probate team as to whether or not a remedy can be sought.