Ilott v Mitson – the implications for charities and their benefactors

The case of Ilott v Mitson has been ongoing since 2007. The Court has changed its mind on how to approach this claim on several occasions, but the recent Court of Appeal decision has found that an estranged adult daughter of a Deceased’s mother’s estate was in fact a successful claimant to an Inheritance Act claim.

The initial reaction to this case is to curse and consider that the right to testamentary freedom of disposition is dwindling in England and Wales, thus increasing litigation and 1975 Act claims. However, one needs to step back, consider the unusual facts of the case and wait to see whether an appeal is made to the Supreme Court…

What are the facts of the case?

Mrs Heather Ilott, from Hertfordshire brought a claim against her mother’s estate on the basis that she did not receive reasonable financial provision under her mother’s will.

Mrs Ilott’s father died before she was born and she spent the first 17 years of her life with her mother, Melita Jackson. When she turned 17, Mrs Ilott eloped with her boyfriend, whom she eventually married. Her actions caused a family fallout and the relationship with her mother broke down completely. Mrs Jackson executed a will in 2002 whereby she excluded Mrs Ilott from benefiting from her estate and instead left the residue of her estate to three charities: the RSPCA, the RSPB and Blue Cross (with whom she had little connection). Mrs Jackson also signed a Letter of Wishes, which contained a direction that her executors fight any challenge to the terms of her will.

Mrs Jackson died in 2004, at the age of 70. Her estate was worth approximately £486,000.

Mrs Ilott first brought a successful claim against Mrs Jackson’s estate in 2007 whereby she was awarded a £50,000 inheritance by a District Judge who had concluded that she was “unreasonably excluded” by Mrs Jackson.

This ruling was then reversed on appeal however on a subsequent appeal the Appeal Court Judges ruled Mrs Ilott was entitled to a share of the estate.

Mrs Ilott then appealed the quantum of the award, she wanted sufficient funds to purchase a property and an additional capital sum. The effect of the original award of £50,000 was that she would lose her state benefits and would be in a worse financial position than prior to the award.

In March 2014, Mrs Ilott’s appeal was dismissed. Mrs Ilott appealed again arguing that the District Judge had made a fundamental error in not considering the effect of the award on her financial position.

Lady Justice Arden, sitting with Lord Justice Ryder and Sir Colin Rimer, recently ruled that Mrs Ilott should receive a sum of £143,000 plus the costs of and expenses to fund the purchase of her home and an option to require the executors to pay her an additional sum not exceeding a further £20,000. The payment of the additional sum could be requested in instalments so that her benefits would not be affected.

What does this mean for charities who are residuary beneficiaries to a claim by a disgruntled and disinherited adult child?

There is scope to conclude that this decision could have far reaching consequences for 1975 Act litigation by adult “disinherited” children to challenge the terms of their parents wills and seek to claim greater sums. However, as we all know the ability to bring a claim in this manner has always been there pursuant to the 1975 Act and this case does not open the floodgates.

The facts of this case are unusual and the decision very much turns on those facts. On the question of whether she should be a successful claimant, Counsel representing Mrs Ilott ran the argument that she was “on the breadline” and that she could not afford things like holidays for the family, or brand new clothes for her children. She pulled on the heart strings of the court and was successful against the backdrop that those charities benefiting under the will had no connection to the Deceased and therefore like Mrs Ilott, had not expected to inherit anything such that what they were getting was a windfall.

On the question of quantum, counsel for Mrs Ilott successfully argued that the award for Mrs Ilott should be increased and the Appeal Judges determined that it was necessary to exercise the court’s discretion in a way that would not ultimately make Mrs Ilott’s financial position worse, thus resulting in the court awarding a sum to purchase a property, and a sum which could be drip fed in order to keep within the disregards and capital thresholds for means tested benefits.

The decision does not however change the law that one has freedom of testamentary disposition which allows one to disinherit estranged children. This is a testator’s right. However, it does increase the likelihood of satellite litigation being embarked upon by adult children to try and get an award in their favour.

Clients seeking to disinherit their children in favour of charities are being advised of the risk of litigation for their estate and their beneficiaries.  In addition, they are being advised to provide a detailed explanation in a side letter to their will explaining why they are excluding their children and to build their connection to those to whom they intend to leave their estate particularly if they wish to benefit charity rather than their children.

Charities should consider reviewing the ways that they engage with benefactors and whether there is a need to keep in regular contact with benefactors other than merely as a means to increase fundraising. In addition charities should ensure that their internal records of engagement are up to date should such evidence be called upon, particularly where there is an awareness that the testator has children.

As ever Charities continue to walk the tightrope of considering reputation and commerciality in seeking settlement with the reality that in the days post Jackson, when one is faced with a litigant in person, a commercial approach may never be enough and a trial may become inevitable.

Further information

To discuss the implications of this ruling further, please do not hesitate to contact Gaynor Jackson.