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March 24, 2017
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Ilott v the Blue Cross and others – The Right to Reasonable Maintenance

The recent case of Ilot v the Blue Cross and others has raised important questions for English inheritance law. 

The Supreme Court’s decision largely upholds the rights of taxpayers to bequeath their assets as they see fit, however the judges also stressed that competing obligations can arise in such cases and the law provides little guidance on how the Courts should balance them.

Background

  • Mrs Jackson (“the mother”) died in July 2004 after a long estrangement with Mrs Ilott (“the daughter”) and left the bulk of her £486,000 estate to charity, deliberately disowning her daughter in the process.
  • The daughter had lived independently from her mother for over 25 years and currently lived with her husband and four children.
  • The daughter’s household was dependent on a variety of state support to sustain their extremely modest family life.  This included housing benefit, council tax benefit, and living in a housing association property.
  • The daughter challenged her mother's will on the grounds that it did not make reasonable provisions for her maintenance.

The Current Law

Normally when a taxpayer dies their estate is distributed according to their will (if they left one) or the rules of intestacy which stipulate a strict order of precedence for surviving kin.

The Inheritance (Provision for Family and Dependents) Act 1975 (“the 1975 Act”) allows certain classes of people to request that a court overrule a will/intestacy where there is a failure to make “reasonable financial provisions” for them.

If the deceased did not make reasonable financial provisions then, in the case of children, the court may order what would be reasonable for a claimant’s “maintenance”.

In deciding whether reasonable financial provision has been made and what is necessary for maintenance, the court may consider a number of matters including: the financial resources and needs of the claimant and other beneficiaries, the obligations and responsibilities of the deceased, the size and nature of the estate, and any other matters including conduct of the parties concerned.

The Case

At the initial hearing for this case, District Judge Million only awarded the daughter £50,000 despite the daughter's solicitors submitting a claim for more than her mother's actual estate.  The judge noted that both the estrangement and the ongoing availability of state benefits were factors in reaching his decision (housing benefit and council tax benefit are restricted if savings exceed £16,000).

The Court of Appeal overturned the prior decision increasing the overall payment to £163,000.  This higher figure was arrived at assuming it would allow the daughter to purchase the family home and thereby make available income that would otherwise be paid as rent.

The Court of Appeal also criticised the District Judge Million for placing too great an emphasis on the estrangement and failing to provide an estimate of the award that would exist if it had not occured.

The Decision

The Supreme Court rejected the Court of Appeal’s findings and restored District Judge Million’s original £50,000.

The Supreme Court reiterated that the payments for maintenance are not designed to be spending sprees.  The daughter had submitted an extensive list of dilapidated whitegoods and furniture that were in need of replacement and the Supreme Court found that £50,000 to replace these essential household goods was within the concept of maintenance.

Moreover, the Supreme Court noted that any income savings from the purchase of the home would be small given that the bulk of the rent was paid for by housing benefit.  £50,000 was therefore an appropriate amount towards the daughter's maintenance that preserved other state benefits.

The Supreme court also rejected the Court of Appeal’s criticism that the District Court Judge had not provided a hypothetical headline figure before adjusting it for the various relevant factors.  The 1975 Act requires all the relevant factors to be considered in the round when determining a figure.

However the Supreme Court specifically highlighted the unsatisfactory state of the current law in that the 1975 Act provides no guidance on how to evaluate or balance the relevant factors and claims.

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