A victory for charities and testamentary wishes
22nd March 2017
On Wednesday 15 March 2017, the Supreme Court ruled on the landmark Ilott v The Blue Cross and others case (otherwise known as Ilott v Mitson).
Mrs Ilott, who was estranged from her mother, Mrs Jackson, brought a claim pursuant to The Inheritance (Provision for Family and Dependants) Act 1975 (the “1975 Act”) after Mrs Jackson excluded Mrs Ilott from her Will and left her estate, worth approximately £500,000, to four charities: The Blue Cross, RSPCA, RSPB, and the BBC Benevolent Fund, the latter only receiving a small gift of £5,000 and the only charity Mrs Jackson had any purported connection to.
In 2007, the Court found that Mrs Jackson’s Will failed to make reasonable financial provision for Mrs Ilott who was subsequently awarded £50,000. Mrs Ilott appealed on the basis that the award was too low and the matter was heard by the Court of Appeal in July 2015.
The Court of Appeal awarded Mrs Ilott £143,000 to purchase the home in which she was living and an option to receive a sum of £20,000 in either one or more instalments, which was a significant increase on the amount initially awarded.
The rationale behind the Court of Appeal’s award was to ensure that any such award would not impact on the benefits Mrs Ilott received. The Blue Cross, RSPCA and RSPB chose to appeal the Court of Appeal’s decision.
What did the Supreme Court decide?
The Supreme Court unanimously found in favour of the charities and overruled the Court of Appeal’s decision.
Does that mean Mrs Ilott received nothing from Mrs Jackson’s estate?
No. By overruling the Court of Appeal’s decision, the Supreme Court reinstated the initial decision in 2007, i.e. an award of £50,000 for Mrs Ilott.
Why did the Supreme Court overrule the Court of Appeal’s decision?
The Supreme Court overruled the Court of Appeal’s decision for a number of reasons. The judgment emphasises that reasonable financial provision is limited to what would be reasonable for a person to receive for maintenance only – the 1975 Act is not designed to entitle a claimant to be gifted a ‘spending spree’; rather it is for the maintenance of daily living.
The Court of Appeal’s finding that the award of £50,000 was of little to no value to Mrs Ilott due to this impacting on the benefits she received was therefore rejected as it was held that it was up to Mrs Ilott to decide how to use the £50,000.
If this was used to replace old and worn out household equipment in order to make the household function properly, this would fall within the concept of ‘maintenance’.
Therefore, provided sufficient of her award were used to replace household items thereby reducing her capital to below the £16,000 threshold, it would minimise the impact on Mrs Ilott’s benefits.
The Supreme Court also found that in making the original award, the Judge was entitled to take into account the fact that Mrs Ilott had been estranged from Mrs Jackson for 26 years and that the Court of Appeal’s decision gave little weight to Mrs Jackson’s wishes – which was for her estate to be left to the charities. The wishes of the testator must be considered under the 1975 Act.
Does this mean a person is free to leave their estate to whoever they wish?
The decision certainly strengthens this view as the judgment recognises the freedom of individuals to dispose of their assets by Will after death in whatever manner they wish.
The Court of Appeal’s failure to take into account Mrs Jackson’s wishes when making the award to Mrs Ilott was criticised and it was held that a person’s testamentary wishes did not cease once a qualifying Claimant (i.e. in this case Mrs Ilott as an adult child) could show financial need.
However, whilst the decision has been referred to as a ‘victory for testamentary freedom’, the fact that Mrs Ilott was awarded £50,000, despite being excluded from Mrs Jackson’s Will, shows that there are still limitations that apply to a person’s testamentary wishes. The 1975 Act remains good law and serves a very important purpose; in simple terms it is there to make financial provision for a relatively narrow group of Claimants where it would be unreasonable not to do so.
What effect does this have on charities?
The decision has been described as a ‘welcome relief for charities’ as the judgment recognises that charities depend heavily on testamentary bequests for their work.
Charities do not need to justify their claim to a portion of an estate by need or expectation and they will not automatically be excluded, when named as a beneficiary of a Will, on the basis that a testator had no connection with them. The fundamental point is that these charities were the chosen beneficiaries of Mrs Jackson.
And finally, has the Supreme Court decision changed the law with regard to making claims pursuant to the 1975 Act?
In her judgment, Lady Hale said the case highlights “the unsatisfactory state of the present law, giving as it does no guidance as to the factors to be taken into account in deciding whether an adult child is deserving or undeserving of reasonable maintenance. I regret that the Law Commission did not reconsider the fundamental principles underlying such claims when last they dealt with this topic in 2011”.
The Supreme Court decision therefore re-affirms the current law, as opposed to changing it and only time will tell whether this case will be the instigator for reform in the future.
How can Ward Hadaway help?
Please note that this briefing is designed to be informative, not advisory and represents our understanding of English law and practice as at the date indicated. We would always recommend that you should seek specific guidance on any particular legal issue.
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