English law is famous for enshrining the principle of testamentary freedom, which means that people can leave their wealth on death to whomever they want. Most people assume that a valid will is final. However, this is not absolute as English law recognises that certain people should not be left without reasonable financial support simply because a will (or the intestacy rules) fails to provide for them.
The Inheritance (Provision for Family and Dependants) Act 1975 (often called “The 1975 Act”) allows eligible individuals to apply to the court for financial provision from as estate where reasonable provision has not been made.
What Is a 1975 Act Claim?
A 1975 Act claim is not a challenge to the validity of a will, which is a separate category of claim explored in the following article: How to Challenge a Will. The will may be perfectly valid and still give rise to a claim under the 1975 Act.
Instead, the Act allows the court to intervene where the outcome of an estate is financially unfair to certain people the law considers deserving of protection.
The court’s focus is on ‘reasonable financial provision’, not equality or moral entitlement. Therefore, merely being disappointed beneficiary is not enough to establish a claim, although many such persons might be able to bring a claim under the Act.
Who Can Make a Claim?
Claims can only be made against estates where the deceased died domiciled in England and Wales.
Only certain categories of people are entitled to bring a claim under the Act, including:
- A spouse or civil partner
- A former spouse or former civil partner (provided they have not remarried and were not excluded by a clean break order)
- A cohabiting partner who lived with the deceased for at least two years immediately before death
- A child of the deceased (including adult children)
- A person treated as a child of the family
- Anyone who was financially maintained by the deceased immediately before death
If you fall outside these categories, then you may not be able to make a claim under the 1975 Act. However, it is always recommended to seek professional advice on your potential standing to make a claim and whether alternative claims such as a will challenge might be suitable.
What Is “Reasonable Financial Provision”?
The crucial question for the court to decide is: has the estate made “reasonable financial provision” for the applicant? However, there are two different standards of reasonable financial provision, which depend on the category of applicant:
- For a spouse of civil partner, the court can consider what would be reasonable in all the circumstances, which would be something akin to a divorce settlement.
- For all other claimants, provision is limited to what is reasonable for their maintenance.
The former is much more generous than the latter and ‘maintenance’ is strictly limited to reasonable:
- housing costs;
- living expenses; and
- basic financial security.
Maintenance does not usually extend to luxury or windfall inheritances, unlike claims made by spouses and civil partners. In particular, where adult children are able to provide for themselves, maintenance claims for reasonable financial provision under the 1975 Act are likely to be weak.
When Might a Claim Arise?
Common situations include:
- A long-term partner or spouse is left nothing under a will
- A minor child is excluded despite financial need
- A dependent is left without housing or income
- An estate passing entirely to distant relatives or charities
More complex situations include wills which establish a life interest trust for the surviving spouse with the remainder passing on their death to children of a previous marriage. These structures are good in theory as they can provide for a surviving spouse whilst keeping wealth within the deceased’s natural family. However, they often encounter problems in practice where:
- relations between different branches of the deceased’s family break down, such as between stepmother and step-children; and/or
- there are insufficient income producing assets to provide the surviving spouse with reasonable financial provision.
The Private Wealth Disputes Team at Quastels is adept at advising clients who feel trapped within post-death trust structures and often obtaining for clients the clean break and lump sum payment that they need to move on with their lives after a significant family bereavement.
Time Limits for Bringing a Claim
The 1975 Act claim must normally be issued within six months of the grant of probate or letters of administration. However, this is not a hard deadline like civil limitation periods, and the court has a wide discretion to allow out of time applications. However, this is far from guaranteed and should not be relied upon.
Given the short window for bringing a claim under the 1975 Act, early legal advice is essential to protecting your potential claim.
What Will the Court Consider When Assessing Claims?
The court takes into account a range of factors, including:
- The claimant’s financial needs and resources
- The size and nature of the estate in dispute
- The needs of other beneficiaries
- The deceased’s obligations and responsibilities
- Any physical or mental disability
- Any other relevant circumstances
The court does not simply rewrite the will but aims at fairness and can be swayed by strong moral claims. Each case turns heavily on its own facts and judges have a wide discretion to make awards.
However, how you present your case can be very important to its outcome and for this reason professional advice should be sought from early on to ensure a strong and consistent case is put forward from the start.
What Can the Court Order?
If a claim succeeds, the court may order:
- Lump sum payments
- Regular maintenance payments
- Transfer or occupation of property
- The sale
- Variation of trusts
- Sale of estate assets
The above notwithstanding, the court will usually be persuaded to order a clean break where relations between family members have broken down, meaning parties can expect to receive significant lump sum payments.
It is worth noting that the 1975 Act does not give the court jurisdiction to alter pensions benefits, although these can and often are taken into account when the court makes an award for reasonable financial provision.
Do Claims Always Go to Court?
1975 Act claims are particularly suited to alternative dispute resolution by way of early settlement negotiations or mediation. The majority of cases settle out of Court. Parties should seek professional advice at an early stage to ensure they understand the likely value of their potential claims, which will allow them to enter into realistic negotiations with the other side.
Quastels specialise in providing strategic advice to clients so that they can maximise their chances to settle early and avoiding the costs and stress of court.
