Inheritance TaxMar 15 2017

Supreme Court ruling makes it difficult to challenge wills

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Supreme Court ruling makes it difficult to challenge wills

In 2007 estranged daughter, Heather Ilott challenged her mother Melita Jackson’s will after discovering she had left it entirely to charities. 

She left her estate worth around half a million pounds to the RSPCA, RSPB and Blue Cross animal charities.

In July 2015, the Court of Appeal granted Ilott an award of more than £143,000 of her mother’s estate to buy the rented home she was living in and a further £20,000 in cash as additional income which was an increase from the £50,000 she was given at the High Court.

Ms Ilott had left home with a boyfriend at the age of 17 and her mother had apparently never forgiven her and excluded her from her will making it clear she did not want her daughter to inherit anything.

However the Court of Appeal judges ruled Ms Ilott, who has five children, was not given a reasonable provision from the estate for her future maintenance as she was on benefits and had no pension. 

They also added that Mrs Jackson had 'no connection' with the charities during her lifetime.

The charities then challenged the decision and took the case to the Supreme Court who heard the case on 12 December 2016. 

This morning (15 March) the Supreme Court decided to overturn the appeal and said the entire six-figure sum should be left to the charities.

The Supreme Court unanimously overturned the Court of Appeal decision and re-instated a District Judge’s award of just £50,000.

It may also give people the peace of mind for people writing a will that their wishes will be followed.Paula Myers

Paula Myers, will disputes lawyer at Irwin Mitchell, said this judgment could potentially make it more difficult for adult children to challenge their parent’s Wills under the Inheritance Act and it may give people executing a will greater strength to resist any challenges. 

Ms Myers said: “It may also give people the peace of mind for people writing a will that their wishes will be followed, and children can still be disinherited, unless certain criteria are met by the challenging party.

“The judges did give some clarity on what is considered to be a reasonable maintenance for non-spouses and felt that in this particular case there were no grounds for overturning the original order of £50,000 made by the district judge, dismissing the Court of Appeal decision to award £163,000. 

“They outlined that reasonable provision could include a life-interest for provision of housing, rather than a large capital sum.”

Jonathan Fowles, barrister from Serle Court, said the judgment would be a welcome relief for charities.  

Mr Fowles said: “Donations on death represent a very large section of charitable income in England and today’s ruling goes some way to protecting that income from potential claims.

“The court also acknowledged the significance of Mrs Jackson’s choice of charities, even though she had no connection with them during her lifetime.  

“For those who desire to make a charitable gift on death, this aspect of the judgment support their freedom to choice regardless of any previous involvement with those causes.”

What to do for your clients

Rachael Griffin, tax and financial planning expert at Old Mutual Wealth, said the decision shows the limit of the Inheritance (Provision for Family and Dependants) Act 1975 and - reduces the likelihood of more cases of grown-up children challenging inheritance and wills. 

Ms Griffin said: “Some other countries such as France have the concept of ‘forced heirship’ where certain heirs receive priority or specified shares.  

“One of the cornerstones of English law is the principle of testamentary freedom – the Supreme Court’s judgement reinforces the importance of this.

“However, this case has highlighted that wills can be contested and the decisions are not set in stone. 

“People should consider lifetime planning using trusts, which have both tax benefits and offer the opportunity to gain greater control over the distribution of wealth on death. 

“A scenario such as the Ilott case is also unlikely to occur as the 1975 Act does not apply to lifetime planning. 

“Plus, distribution of trust assets against the terms of a trust would be a breach and could be legally challenged. A bonus is trusts are currently confidential, so unlike wills they do not become public knowledge. 

“The distribution of wealth upon death has become more complicated in recent years. It is important to carefully plan for how you wish your money to be divided upon your death and seeking financial advice is the best place to start.”

Need for action

Amy Proferes, barrister from Serle Court, said Lady Hale’s short judgment was a call for action by Parliament in the field of inheritance disputes.  

She said: “The 1975 Act raises complex social questions about family obligations and ‘family wealth’ that are not answered by the legislation itself.  

“The law is currently quite unpredictable and this judgment only confirms that those thinking about bringing a claim should think carefully about the risks involved.  

“Settling such claims on agreeable terms might prove a more secure option.”

emma.hughes@ft.com