In my last article entitled “Disinheriting Your Children” I talked about the abiding feature of English law that you a free to leave your estate to whomever you please. I questioned whether that meant that it is as simple as that to disinherit your own children or is there more to it? This article will hopefully enlighten you further.
As a reminder, in Banks v Goodfellow (1869-70) LR 5 QB 549, at 563, Cockburn C. J. stated
“The law of every civilised people concedes to the owner of property the right of determining by his will, either in whole or in part, to whom the effects which he leaves behind him shall pass …”
That remains good law, that is, the principle that to this day we have full testamentary freedom to leave our assets to whom we so choose.
The matter, therefore, seems settled – that we can very easily disinherit our children.
However...
Despite having full testamentary freedoms as I have stated above, there are conditions, or caveats that we must take into account.
Firstly, there is the matter of the Inheritance (Provision for Family and Dependents) Act 1975 (more commonly known as the ‘75 Act) which provides for, amongst others, children who were financially dependent on their parent prior to their death to claim for a reasonable financial provision.
Ilott v Mitson [2017] UKSC 17, which concerned an adult daughter’s claim under the ‘75 Act. The facts simply put were that a mother and daughter were estranged for nearly a quarter of a century, and the mother stated clearly in a letter of wishes her reasons for excluding her daughter from her Will.
In excluding her daughter from any benefit under her Will, the mother chose to leave her estate, worth just under half a million pounds, to three animal charities with which she had no particular connection during her life.
At the first instance case, Mrs Ilott was successfully awarded a sum of £50,000 for her claim of reasonable financial provision. On appeal, she was awarded a sum of £143,000 and the matter then went to the Supreme Court.
Mrs Ilott’s position was that the money she was awarded was simply not enough: it would deprive her of her means tested state benefits and that it wasn’t enough to buy the housing association property in which she lived with her family.
The Supreme Court disagreed and some ten years after the first instance decision, the Supreme Court reinstated Mrs Ilott’s original award of £50,000.
The Court said that the Court of Appeal was wrong to interfere with the judge at first instance and that the judge had made a value judgment based on the evidence in front of him and was perfectly entitled to come to the conclusion he did.
On the issue of maintenance, the Supreme Court said that this should
“…not extend to any and everything which it is desirable for the claimant to have…”
The test for reasonable financial provision is deliberately vague. For anyone other than a spouse, it means what is reasonable for their maintenance – so enough for them not to live in poverty, but necessarily not so much that they live in luxury. The court must consider a range of factors when deciding whether or not to make an award, including the financial resources and needs to the applicant, any obligations the deceased may have had towards them, and the financial needs of the other beneficiaries under the estate.
The Supreme Court’s decision in Ilott certainly preserves the principles of testamentary freedom, but as I said in my other article above mentioned, it MAY be more wise to leave some provision for those children you wish to disinherit rather than disinheriting them completely.
I suspect that there will be many, many more cases of this nature in the coming years.... so more clarity on these issues will hopefully be handed down by our senior courts. Time will tell.
Certainly, ignore the ‘75 Act at your peril.
The information provided in this article is not intended to constitute professional advice and you should take full and comprehensive legal, accountancy or financial advice as appropriate on your individual circumstances by a fully qualified Solicitor, Accountant or Financial Advisor/Mortgage Broker before you embark on any course of action.
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