Deserving or undeserving adult children?

Judgment in Ilott v Blue Cross [2017] UKSC 17 was given by Lord Hughes, but Lady Hale added to it to highlight the unsatisfactory state of the present law, which gives no guidance on the factors to take into account in deciding whether an adult child is deserving or undeserving of reasonable maintenance in a claim under the Inheritance (Provision for Family and Dependants) Act 1975.

Mrs Ilott brought her claim against the estate of her mother, Mrs Jackson, who left everything to charities with whom she had no previous connection, directing her executors to resist any claim from her daughter. Ilott, estranged from her mother for 26 years, lived in difficult financial circumstances. At first instance, she was awarded £50,000. After appeal and the Court of Appeal sending the case back to the High Court, which upheld the original order, Ilott appealed to the Court of Appeal, which made its own evaluation and awarded her £143,000 to buy a house plus a further £20,000 in instalments. This was then appealed.

The test for a claim under the Act is whether the will or intestacy makes reasonable financial provision for the claimant, not whether the deceased acted reasonably. While the reasonableness of the deceased’s decisions and conduct are capable of being a factor for consideration under section 3, the danger of applying this was noted as the test would be wrong. There may be cases where the deceased acted unreasonably but it doesn’t follow that the will failed to make reasonable financial provision. There are two questions that must be considered: did the will or intestacy make reasonable financial provision for the claimant? If not, what reasonable financial provision ought to now be made for the claimant?

The court noted that most cases have a large overlap between these two stages and the factors to be considered under section 3 apply equally to both.

The court made clear that a claimant’s need plus the relevant relationship is not always enough for a successful claim. A broad-brush approach to all the circumstances was needed. A long estrangement may, on assessing the facts, mean that needs are not enough to justify a claim.

The court strongly endorsed English law’s recognition of testamentary freedom: individuals can dispose of their assets by will however they wish. The Act imposes a limited qualification. The court cannot ignore the fact that any award would be at the expense of those the testator intended to benefit. Needs are not necessarily the measure of the order a court might make. Competing claims of others may restrict the practicality of meeting the claimant’s needs, however reasonable, and the relationship may affect what is a just order.

A qualifying claimant with a demonstrated need for maintenance does not mean the testator’s wishes cease to have any effect. They may be overridden but they are part of the case’s circumstances, falling to be assessed in the round with all other relevant factors.

The two dominant factors here were estrangement and Ilott’s straitened financial circumstances. The judgment noted some judges might legitimately have concluded the very long estrangement meant the deceased had no remaining obligation to provide for her independent adult daughter. As it was, the judge at first instance was perfectly entitled to reach his conclusion, namely that there was a failure of reasonable financial provision but that what was reasonable was coloured by the nature of the mother-daughter relationship.

Reasonable financial provision for an adult child is for maintenance, not simply at subsistence levels but by the standard appropriate to the circumstances. While this can be provided by lump sum, the court confirmed the importance of remembering the power is to provide maintenance, not to give capital. If housing is to be provided as maintenance, a life interest rather than a capital sum is more appropriate.

The Supreme Court rejected the Court of Appeal’s suggested process for working out reasonable financial provision, noting this should be simply a single assessment by the judge as to what reasonable financial provision should be in all the circumstances of the case. It set aside the Court of Appeal decision, restoring the first instance award of £50,000.

It is interesting that all of the judges recognised that a legitimate outcome could have included dismissal of the case as the claimant had been self-sufficient, albeit largely dependent on public funds for many years, and had no expectation of inheriting from her mother, but equally could have encompassed the granting of the order that was made at first instance, which was reinstated.

The difficult question for practitioners, both when advising a claimant and when defending a claim, is whether this needy but independent adult child is deserving or undeserving of reasonable maintenance from the estate in all the circumstances.

Margaret Windram is an associate at Irwin Mitchell

@irwinmitchell www.irwinmitchell.com