Yesterday the Supreme Court heard
Facts – Mrs Jackson died in 2004, leaving the majority of her estate to three animal charities (Appellants). Having been granted nothing, her estranged daughter, Mrs Ilot (Respondent), made an application under The Inheritance (Provision for Families and Dependants Act) 1975 for ‘reasonable’ financial provision from her mother’s will. In 2007 she was awarded £50,000, which she appealed against. In July 2015, the Court of Appeal allowed her appeal and awarded her £143,000 plus costs to enable her to purchase her council home, along with structured payments up to £20,000 in a manner through which she could continue to receive state benefit.
- Was the Court of Appeal wrong to set aside the original award in the first instance of £50,000?
- Was it wrong for the Court to structure the respondent’s (Ilot) plan in a way that enabled her to maintain her state benefit?
- Did the Court make an error in approaching the Act; specifically regarding calculating ‘maintenance’ and applying the ‘balancing exercise’ required by the Act.
This case has the potential to cause a significant increase in claims brought by disinherited adult children against charities. Moreover, the decision will have a considerable effect on legacy gifts as a whole. The Supreme Court are discussing the meaning of ‘reasonable’ (in the context of what is ‘reasonable’ for a parent to provide their child with) as well as the concept of inherited wealth altogether. This is where it gets interesting.
The District Judge’s award of £50,000 in the first instance was based on Mrs Illot’s ‘lack of expectation’, meaning that the money was capped because of her existing financial circumstances and lack of resources. The effect of this decision meant that she would lose more in state benefits than she would gain from the money itself. These were deemed to be adequate grounds for an appeal.
According to the case summary, the Court of Appeal had to decide:
‘whether [Ilot’s] living standard was sufficient and that assessment should not be motivated by a desire to provide an improved standard of living as opposed to a desire to meet appropriate living needs.[…] The court could and should make reasonable financial provision out of the mother’s estate for X’s maintenance so that her living expenses were relieved without affecting the state benefits which she relied upon.‘
The Appellants (the charities) argue that their claim seeks to “affirm the importance of testamentary freedom and secure crucial guidance for the future” and “to obtain essential clarity from the Supreme Court regarding the scope of the court’s power to interfere with a person’s testamentary wishes using the 1975 Act”
The Supreme Court’s decision will no doubt be significant for the charity sector and the future of legacy gifts. Charities such as Blue Cross owe half their income (in this case over £17m last year) to legacies. In fact, about £150 of every £1,000 received by British charities comes from legacies. It is vital that their interests are protected as well as those of individuals. We rely on charities to protect and defend those who are not capable of doing so themselves. Let’s hope the Court ensures their right to legacies.