Many people are unaware that keeping their Will up to date is just as important as writing one. More often than not, Wills are written, stored in a safe place, and then forgotten about. However, if your Will does not reflect your current wishes or significant events have taken place since drafting the original Will, it may cause unnecessary contention between your loved ones following your passing.
Even if there has been no significant change to your circumstances, we recommend that you review your Will every five years, as changes to legislation and inheritance tax may impact the effectiveness of your Will. It is even more important to review your Will following any significant change in circumstance for you or the people mentioned in your Will, which can include the following:
If your financial situation significantly changes – you may wish to increase bequests left in your Will or reduce the amount left to beneficiaries to reflect your change in financial position.
If you have more children or grandchildren – you may want to ensure that all your children and grandchildren are included and not just those alive at the date of when your Will was written.
Family relationship breakdown.
If you get married/ enter a civil partnership – it is important to be aware that this will revoke any existing Will, unless prepared in contemplation of marriage.
Divorce or dissolution of a marriage/ civil partnership – in this instance, your Will is not revoked; however, your ex-spouse will be treated as though they had died when your divorce had been finalised. It is therefore important to determine whether you have made substitute provisions.
If you sell your property or move house – If your Will makes specific provision in relation to your property, this will need to be updated.
The cost of making a new Will is usually quite modest, and is money well spent to ensure your hard-earned estate goes exactly where you want it to.
If you have any further questions or wish to update your Will, please feel free to give us a call on 01782 652300 or email lawyers@tinsdills.co.uk to book an initial appointment with a member of our Wills, Trust and Probate team.
A trust is created when assets are transferred to other parties to hold and safeguard for the benefit of others. There are a number of different types of trust but this guide deals only with discretionary trusts.
The main parties involved with a trust are as follows:
Settlor
This is the person who establishes the trust and transfers the assets into the trust. This can be done during the Settlor’s lifetime through establishing a Trust Deed, or upon the Settler’s death through a Will.
Trustees
Trusts are typically administered by between 1 and 4 trustees who are initially chosen by the Settlor. The trustees hold the trust assets, decide on distributions of income and/or capital to the potential beneficiaries, and they are also responsible for the management of the trust assets, record and account keeping and tax compliance. The trustees must act within the terms of the trust, as set out in the Trust Deed, and should act impartially.
In a discretionary trust, the trustees have significant responsibility attached to their role and therefore great care should be taken in selecting trustees to ensure that they will carry out their duties correctly and with integrity.
Modern trust and tax law can be complex, and many people are reluctant to become involved in decisions that require not only a technical understanding, but also an independent detachment from family dynamics, and this means that independent or professional trustees are often chosen.
The trustees are often guided by a Letter of Wishes left by the Settlor of the trust to give some guidance about the objectives the Settlor had in mind when establishing the trust, and some principles to apply to the exercise of their discretion. The trustees are not bound by this Letter of Wishes and are able to exercise their discretion as circumstances require.
Beneficiaries
In a discretionary trust, no beneficiary has any right to a particular share of the trust fund. Instead, the Settlor creates a class of potential beneficiaries who can benefit from the trust, and it is up to the trustees to decide which beneficiaries receive funds from the trust, how much and when.
A discretionary trust can provide flexibility, control and protection from a variety of potential third party threats to beneficiaries, for example, poor decision making, relationship breakdown, financial difficulties, premature death and undue influence from third parties.
Inheritance Tax
Discretionary trusts come within the HMRC definition of “Relevant Property Trusts” which means that they are subject to inheritance tax, even during the Settlor’s lifetime.
A gift into a discretionary trust, when added to any previous gifts in relevant property trusts, that exceeds the nil rate band (currently £325,000.00) will cause an immediate charge to inheritance tax on the excess over the nil rate band. The charge is 20% if the tax is paid by the trustees of the trust or 25% if paid by the Settlor.
Once the value of the discretionary trust is in excess of the nil rate band then the trust is also subject to 10 year anniversary charges. The trust assets would be valued on the 10 year anniversary and a tax charge of a maximum rate of 6% of the trust is levied on the value over the nil rate band.
There can also be time apportioned “exit” charges on capital distributed out of the trust, again when the value is in excess of the nil rate band.
Due to the complexity of the tax regime that relates to trusts, we strongly recommend that you seek accountancy advice and assistance when dealing with a trust.
Income Tax and Capital Gains Tax
The trustees are responsible for paying any tax payable on income that is received by the discretionary trust. The discretionary trust pays income tax at the additional rate of 45% (38.1% for dividend income) once the standard rate of £1,000.00 of income has been exceeded. Any income falling within the standard rate band of £1,000.00 is taxed at the basic rate of 20% (or 7.5% for dividend income).
Any income that is distributed to beneficiaries carries a 45% tax credit and some or all of it may be available for a tax reclaim by the beneficiary.
The trustees may also have to pay capital gains tax if they make a chargeable disposal of trust assets.
Discretionary trusts have an annual exemption for capital gains tax, however this is usually capped at 50% of the capital gains tax allowance for an individual.
Changing Trustees and adding Beneficiaries
When setting up the trust, the Settlor will normally retain the ability to decide how changes to the trustees are dealt with, and also whether beneficiaries can be added or removed.
Each Settlor will reach their own conclusions as to the best way of setting up their trust. It is quite common for the Settlor of the trust to retain the ability to appoint additional trustees during their lifetime, and also add or remove potential beneficiaries from the trust. After the death of the Settlor, the trustees will usually have the power to appoint new trustees, but they may or may not be given the power to add and remove beneficiaries.
The detail in relation to these questions will be decided by the Settlor and will be contained within the trust deed itself.
The Probate Registry is the court body that deals with Grants of Probate and Letters of Administration (collectively called Grants of Representation), which are required in most cases for dealing with the assets and liabilities of someone who has died. The process to apply for a Grant of Representation has recently gone through a number of significant changes.
Until relatively recently applications were made by submitting a sworn statement called an Oath, but this process was replaced in November 2018 by a two page Statement of Truth (that contained broadly the same information as the Oath), which must be signed by the executors or administrators and sent to the Probate Registry alongside the relevant Inheritance Tax forms.
Further change was brought into effect in April 2020 with the introduction of a 23-page application form in place of the two page Statement of Truth. The need for a new form, and the level of information contained in the form was both questioned and criticised by professionals, given the time and cost burden this would have when administering an estate.
In the wake of the coronavirus pandemic, yet more changes to the applications have been introduced, in what appears to be an attempt to centralise the system before eventually adopting a completely online application process.
One of the major concerns legal professionals faced at the start of the pandemic was the obtaining of ‘wet signatures’ for Grant applications, whilst still maintaining social distancing. In response to this, the Probate Registry allowed the temporary acceptance of electronic signatures on the new application forms, which was a welcome announcement for professionals keen to ensure that applications could continue to be submitted during the COVID-19 pandemic, without unreasonable delays.
Shortly after the introduction of the new forms, it was announced that there would be a move to online applications, and in November 2020 it became mandatory for professionals to submit probate applications online, unless certain criteria were met. The Law Society, who regulates solicitors in England and Wales, advised against the government making the online process mandatory until there were assurances that the online systems worked effectively, and sufficient guidance had been released to assist in situations where the system could not be effectively used. Whilst literature was released on the use of the online process, the advice of the Law Society appears to have been largely ignored and unfortunately, practitioners attempting to use the new system faced a number of teething problems, resulting in the applications becoming more time consuming to complete, and causing delays to clients.
Rather frustratingly, the online application process did away with the recently introduced forms, and instead produced a two page Legal Statement, not dissimilar to the previous Statement of Truth, to be signed by the executors and sent in to the Probate Registry alongside the Inheritance Tax forms. Given all documents still needed to be sent in their paper form to the Probate Registry, the question of whether there is in fact a benefit to the new system is one many professionals are asking. From the point of view of the legal professional, the process seems to add to the workload, for the same end result.
Although there have been issues with the online process, as the dust settles and some of the initial problems are ironed out, it is a welcome relief that online applications for Grants of Representation are now being processed faster than at any point since the changes started to be introduced. While, for the sake of clients and their families, we hope that the change to online probate applications will result in a permanent reduction in the time it takes to receive the Grants, it remains to be seen how the new process will cope as more online applications are submitted.
If you have a child that is under the age of 18, you may wish to appoint a legal guardian to look after them should you die before they reach the age of majority.
A guardian will look after your child’s everyday needs, make important decisions about their education and health and often manage their financial assets. The guardian will acquire parental responsibility for the child and will be required to take parental decisions in your absence.
If no guardian is appointed, and a child’s parents die, it will be for the court to decide who should care for the child, and this may not reflect your wishes, and in extreme circumstances may result in your child being placed in the care of the Local Authority should no appropriate carer be identified.
Who can appoint a legal guardian?
Any person with parental responsibility can appoint a guardian. A child’s birth mother will automatically have parental responsibility for the child. Further, if a person is married to or in a civil partnership with the child’s mother at the time of the child’s birth, they will automatically acquire parental responsibility, as would being registered on the child’s birth certificate.
If the above circumstances do not apply and parental responsibility is not automatically acquired, there are a number of ways in which parental responsibility can be obtained, including, but not limited to:
Marrying or forming a civil partnership with the child’s mother after the birth;
entering into a parental responsibility agreement;
through a court order; or
by becoming the child’s guardian
Whilst it is recommended that an agreement is reached between parents as to who should be appointed as guardian in the event of both parents death, in cases where parents are separated, this can not always be achieved. If more than one guardian is appointed and both parents die, the guardians will have to make joint decisions in respect of the child’s upbringing. If no agreement can be reached between the guardians, the court may be required to step in.
What if I have children from a previous relationship?
In circumstances where a parent has children from a previous relationship as well as a current one, difficulty can arise where the parent wants all of their children to remain together should they die.
In this case, if the parent of a previous relationship is alive and is the only remaining person with parental responsibility, the legal guardianship will not come into effect and, unless there are good reasons why the other parent should not care for the child, the child of that relationship will be placed in their care.
Should it be the case that you wish for your new partner to have responsibility for all of your children, provided you are married or in a civil partnership, it is possible for them to acquire parental responsibility for the children from a previous relationship in two ways:
by entering into a parental responsibility agreement. This will require the consent of everyone who has parental responsibility for that child; or
through an order of the court.
Provided parental responsibility of the step-parent is acquired, should you die, parental responsibility will be shared between your current partner and the child’s other parent. If parental responsibility is not acquired, your new partner will have no legal right to make decisions in respect of the child, unless they were to obtain a court order to that effect.
Who should I appoint as the guardian?
There are a number of important factors to consider in deciding who you should appoint as a guardian to deal with the eventuality of your death.
It is important to discuss the appointment with a prospective legal guardian to ensure they understand what the responsibilities are and that they are happy to take on such an important role in your child’s life. Provided they are happy to take on the responsibility, it is worth considering the following to assess their suitability:
whether the prospective guardian have children of their own and how would this impact upon their care of your child;
whether the guardian’s family share similar beliefs to your family;
location – does the guardian live close, i.e would the children need to move school and would they be able to see other family members on a regular basis;
the health and age of the guardian – consider whether the prospective guardian has the physical and mental ability to care for your child;
Financial stability – it is important to consider whether the prospective guardian has the resources to care for another child
It is also important to note that a guardian can appoint another individual to take their place as the child’s guardian upon their death. This may be something that you wish to discuss with the guardian prior to their appointment.
How do I appoint a guardian?
Appointment of a guardian is done by appointing a guardian in your will. If more than one person has parental responsibility for your child, you should agree on who you should appoint as guardian and both appoint that same person.
The guardian can then be appointed by either creating your will or updating your current will.
When does the appointment of a guardian take effect?
The appointment of a guardian will take effect immediately on the death of every party with parental responsibility for the child. The appointment of a guardian will cease automatically when the child reaches the age of 18.
If a Child Arrangement Order was in force, which provided that the person appointing the legal guardian was who the child was to live with, the appointment of the guardian will take effect immediately on this person’s death, but parental responsibility will be shared between the guardian and any surviving parent.
Contact us
If you would like to discuss the appointment of a guardian or wish to create or update your will, please do not hesitate to contact Tinsdills Wills, Trusts & Probate department. Alternatively, if your query relates to the parental responsibility of your children or an application to Court regarding this, please contact Tinsdills Family department.
Losing a loved one is a difficult and sensitive time for any family. It is hard enough to cope with bereavement without the added stress of having to deal with the inevitable paperwork that follows. When someone passes away, it is crucial that their estate is dealt with by the distribution of their assets and the settling of any debts, known as ‘estate administration’. At Tinsdills, we provide a sympathetic and efficient service to try to make the process of estate administration as stress-free as possible. That is why we have created the following guide to help walk you through what to expect.
Is there a Will in place? a) If the deceased left a Will, the first step is to locate the Will, check that it is valid and that it has been correctly executed (a valid Will names the Executors, who are responsible for administering the estate on behalf of your loved one). b) If the deceased did not leave a Will – i.e. a Will has not been created, the estate must be administered in accordance with the rules of intestacy. These rules are very rigid and govern who is entitled to administer the estate, known as the Administrators, and how the assets of the estate will be divided. c) The Executors or Administrators are known as the Personal Representatives of the estate.
Valuations a) A valuation of the estate’s assets and liabilities will now need to be obtained. This will include writing to investment companies, banks, building societies and estate agents etc. to determine the exact assets and liabilities of the estate at the date of death of your loved one.
Preparation of Documents a) Now that a valuation of the estate has been obtained, a HMRC Inheritance Tax return will need to be completed to report the value of your loved one’s estate to HMRC. The estate will either have Inheritance Tax to pay or it will be what is known as an ‘excepted estate’, where Inheritance Tax is not due. b) At the same time, the relevant application form needs to be completed, which brings together the information collected in relation to your loved one and the Personal Representatives of the estate, as well providing general details regarding the estate. c) The Inheritance Tax return and probate application form then need to be signed by the Personal Representatives. If there is a valid Will in place, the application to the probate registry will be for a Grant of Probate. If there is not a Will in place, the application to the probate registry will be for Letters of Administration.
Filing of Documents a) Once signed by the Personal Representatives, the Inheritance Tax return and application form need to be filed at the probate registry, along with the original Will, two copies of the original Will (if applicable) and your loved one’s death certificate. There will also be a fee due to the probate registry for them to process the application. b) If Inheritance Tax is due on the estate, the application form will generally be submitted once the Inheritance Tax has been paid or an arrangement has been agreed with HMRC regarding payment.
Issuing Grant of Probate or Letters of Administration a) Once the Grant of Probate or Letters of Administration has been granted by the probate registry, the Personal Representatives will have the formal authority to administer the estate.
Settling the Estate a) The Personal Representatives must now collect in the assets of the estate and pay any remaining debts or other expenses. b) All money from assets such as insurance policy claims, balance of bank and building society accounts and proceeds from the sale of shares or property should be collected in. c) When all assets have been collected in, any remaining debts of the estate should then be paid. d) The Personal Representatives should then prepare the estate account. This account should include a breakdown of the total assets, liabilities, fees and administration expenses of your loved one’s estate.
Distribution of the Estate a) Once all debts of the estate have been paid, the Personal Representatives should now distribute the estate in accordance with the terms of the Will or the rules of intestacy. b) Once the Personal Representatives can confirm that all monies have been accounted for within the estate, the estate administration is complete.
Tinsdills are highly experienced in estate administration matters and can deliver expert advice on your next steps. No matter what the circumstances, we will help you throughout this process.
If you would like to discuss estate administration matters in any further detail, please do not hesitate to contact Tinsdills’ highly experienced Wills, Trusts and Probate solicitors who will be pleased to assist you.
2020 has certainly been the year of change; many long-established business practices have had to be adapted in order to keep businesses and services going.
In a recent announcement it was revealed that the Government will introduce a temporary change in the law that allows Wills to be witnessed using video conferencing such as Facetime, Zoom and Skype during the coronavirus pandemic.
The temporary law is set to come in to force in September but will be back dated to include Wills executed from 31 January 2020 and the change is proposed to remain in place until 31 January 2022.
But is this too little too late, or is it something that will genuinely assist the most vulnerable during these unprecedented times?
This change in law has created a system that accommodates those who are shielding or unable to attend a Solicitor appointment, and gives clients peace of mind that they are able to create, amend or even execute their Will during these troubling times.
However, like any other new system, legal or otherwise, this change does not come about without practical implications that all legal practitioners should take into account. The legal requirements for creating a valid Will still rely heavily on the rules set out in the Wills Act 1837, which require the Will maker to sign their Will ‘in the presence of’ at least two independent witnesses. Only now, the new legislation allows for witnesses’ ‘presence’ to be physical or virtual, meaning that in order for a Will to be valid during a virtual Will signing certain criteria must be met:
The quality of the sound and video must be sufficient for the Will maker and witnesses to see and hear what is happening
The video-link must be in real-time, i.e. the witnesses cannot watch a pre-recorded video of the Will maker signing the Will
The witnesses must be able to see the Will maker actually sign the Will, so if for example the video only shows the Will maker’s head and shoulders, the Will cannot be valid
The witnesses must each sign the Will also via a video conference(s) (the guidance recommends that this should be done within 24 hours)
All signatures must be ‘wet’, remote electronic signatures will not be accepted
Ideally, best practice would advise that the meetings are also recorded, and the recordings kept for evidence.
Further implications then arise when considering how those who are self-isolating will actually get the Will to the witnesses. They would either need to go out to post the Will themselves or ask someone to collect it from them, in which case an arrangement to have the Will witnessed in person at a distance or through a window might well have been a simpler and arguably less risky solution in legal terms.
Additional consideration must also be given to circumstances where the Will is lost in transit or the Will maker dies before the witnesses have been able to sign it. Furthermore, there are arguments to suggest that the current requirements for witnessing Wills offer greater protection, making it harder for someone to be influenced to make a Will against their wishes; this protection may not necessarily be as robust during a video conference.
The Law Society argues that the Will reforms will “help alleviate the difficulties that some members of the public have encountered when making Wills during the pandemic”, but the society makes it clear that the government needs to ensure the legislation is drafted in a way that will “minimise unintended consequences and ensure validity.”
Making a Will is an important step and unfortunately the pandemic has created situations that mean the practicalities of having a properly executed Will can be both problematic and a matter of urgency. This new legislation will provide a temporary solution to those most at risk during the pandemic to ensure that their Wills can be executed properly and safely.
However, great caution should be taken if you are considering signing and witnessing a Will via video-conferencing before the legislation is published in September, and even then Wills should ideally be made in the physical presence of witnesses wherever possible to eliminate any room for doubt, leaving video witnessing as an absolute last resort.
Let’s face it, there are more cheerful things to think about than what happens to our assets when we die, and the thought of making a Will can seem quite a daunting process.
However, making a Will creates clarity and peace of mind both for you and those you leave behind, and with the right help the process can be simple and stress-free.
If you’re looking to write a Will, here are ten things that you should definitely consider:
1. What are your assets?
Before making your Will, you should take some time to consider and write down what the assets of your estate are, and their values. For example, this could include property, savings, investments, life policies and personal possessions. This exercise can be very helpful ahead of a meeting with your solicitor, as some financial or tax planning needs to be carried out as part of the Will making process. It will also help you to consider whether you want to make specific gifts or other arrangements relating to individual assets.
2. Who do you want to benefit under your Will?
This will depend upon your personal circumstances, but you need to consider whether any potential beneficiaries might need special consideration due to their age, vulnerability or other circumstances. It is also possible to grant rights over your assets for one beneficiary, but then have the asset pass to another beneficiary when those rights end. This can be particularly useful for property arrangements.
3. Who do you want to deal with your estate?
The Executors that you appoint in your Will are responsible for the administration of your estate and carrying out your wishes. You need to think carefully about who you appoint to this role as your executors need to be trustworthy and reliable, in order to guarantee that your wishes are properly carried out. If your estate is likely to be difficult or contentious, you may need to consider independent or professional executors. If you are leaving any part of your estate to someone who could be under 18 at the date of your death, or any other trust provision, you need to consider appointing at least two trustees to hold those assets in the terms of your Will.
4. Guardians
Although we all hope that it will never be necessary for Guardians appointed in our Will to act in said role, it is crucial to note that the decision of who to appoint is arguably the most important in writing your Will.
If you have children who could be under the age of 18 at the date of your death, then you should appoint guardians to look after them after your death until they reach the age of 18. The Guardians appointed under your Will take on parental responsibility for your children and therefore you need to consider this role and responsibility very carefully.
5. Inheritance tax
Once you have provided details of your assets, your solicitor will be able to advise you on whether there will be inheritance tax payable on your estate and if so, what you can do to reduce the tax bill.
6. Third-party threats
When you leave any part of your estate to a beneficiary, that inheritance then becomes part of the beneficiaries’ own estate for all purposes. This can leave the inheritance vulnerable to third-party threat, for example, from divorce, bankruptcy, poor decision-making, etc. If you are concerned about these third-party threats then it may be possible to safeguard part of your estate through the use of trusts.
7. Changes in circumstances
Are there any foreseeable changes to your circumstances that might alter the terms of making a Will? If so, you might need to build some flexibility into the Will, and trusts are often used to provide protection and flexibility.
Marriage and remarriage will automatically revoke (cancel) your Will unless it specifically states intentions to the contrary. A divorce won’t automatically revoke your will, but it can alter the terms of any will you have in place.
8. Proper signing and witnessing
Your Will isn’t valid until it is properly signed and witnessed. A Will that hasn’t been signed and witnessed correctly may be invalid or open to challenge.
9. Let people know
Once you have made your Will, and in particular if you have appointed someone to the role of Executor, Trustee or Guardian, then it would be sensible to let those people know that you have made a Will, where it is kept, and what role you have given them. It is also important that you keep your paperwork in good order so that your Will and estate assets can be easily identified after your death.
10. Review your Will
It is important that you review your Will periodically to ensure that it continues to reflect your current wishes. It is particularly important to review your Will if you (or any of your beneficiaries, Executor, Trustee or Guardian) have any significant change of circumstances. Even if the circumstances haven’t changed significantly, it is still worthwhile reviewing your Will periodically to keep up to date with changes in the law that might affect you.
The process of making a Will is much easier than you think. If you’re looking to create a Will, we recommend you contact us to have a chat about how we can make the process as simple and stress-free as possible for you. You can telephone us on 01782 652300 or email us at lawyers@tinsdills.co.uk right now.
[vc_row][vc_column][vc_column_text]We all hope to live out our days in relatively good health and independence. However, we also know that this isn’t guaranteed. If you become incapable of managing your own affairs due to ill health, you need to ensure that you have appointed somebody trustworthy to manage your affairs on your behalf. This Lasting Power of Attorney guide will help you towards doing exactly that.
It is always preferable that you decide who makes decisions for you in the event that you become incapable to make those decisions yourself later down the line. This is known as creating Lasting Powers of Attorney (LPA).
What is a Lasting Power of Attorney?
A Lasting Power of Attorney (LPA) is a document by which you can give another person or persons the authority to act/make decisions on your behalf if you are no longer able to do so.
What are the different types of LPA?
There are two types of LPA, one for property and financial affairs, and another for health and welfare. You can create an LPA for either one or both of these categories.
Property and Financial Matters: this type of LPA allows your Attorney(s) to deal with your financial affairs including decisions on:
Buying or selling property
Property management
Opening and closing bank accounts and investments
Receiving your income to use on your behalf
Paying your bills (including income tax)
Making investment decisions
Health and Welfare: this type of LPA allows your Attorney(s) to make decisions on your behalf about your health and welfare including:
Your day-to-day care, including diet and dress
Who you have contact with
Consenting to, or refusing, medical treatment
Assessments for the provision of care
Participation in social or leisure activities
How to make an LPA
Making an LPA is relatively straightforward, as each type of LPA is made using a specific form. The form itself is simple to fill out, but before you complete the form it is imperative that you have taken the time to carefully consider the following:
Who you wish to act as your Attorneys
Do you want to specify any guidance or instructions about how your Attorneys act for you?
If appointing more than one Attorney, how will decisions be made?
Do you wish to appoint replacement Attorneys in case one or more of your Attorneys can’t act for you?
People you wish to notify before your LPA is registered
Who will act as your Certificate Provider (an impartial person who is qualified to provide a certificate for the LPA)
Finally, once you have carefully considered the above, your LPA must be correctly signed and witnessed by all parties and then registered at the Office of the Public Guardian before your Attorneys can use it.
Who to appoint as Attorneys
An Attorney should be someone who is trustworthy, competent and reliable and they should have the skills to carry out the necessary tasks.
Attorneys can be appointed to act on their own, jointly with other Attorneys, or jointly and separately with other Attorneys (which means that they can act both independently or together). Attorneys can also be appointed jointly for some matters, as well as jointly and separately for others.
If you appoint more than one Attorney then you will need to think about their ability to work together, and also practical considerations like where the Attorneys live and how they are able to deal with the practical side of making decisions and managing your affairs.
If our Lasting Power of Attorney Guide has not answered all of your questions, feel free to give us a call on 01782 652300 or email lawyers@tinsdills.co.uk today.[/vc_column_text][/vc_column][/vc_row]
We reported back in 2015 on the Court of Appeal’s decision in the case of Ilott –v- The Blue Cross & Others.
The detailed background is set out in the previous report but, in brief, the case related to a claim made by Heather Ilott that the will left by her mother, Melita Jackson, failed to make reasonable financial provision for her. Mrs Ilott, now in her fifties, had left home with her boyfriend at the age of 17 and had been estranged from her mother since then. The will had left nothing to Mrs Ilott and had instead made various bequests to animal charities.
The claim was made under the provisions of the Inheritance (Provision for Family & Dependents) Act 1975, which gives power to the court in certain circumstances to vary the terms of a will if it fails to make reasonable financial provision for a surviving spouse, child or someone who has been maintained by the deceased during their life.
The Court of Appeal had substantially increased the amount awarded to Mrs Ilott by the District Judge at first instance, from £50,000 to £163,000. The charities sought to appeal the decision of the Court of Appeal to the UK’s highest appeal court, the Supreme Court.
Handing down their judgment on 17th March 2017, the seven Supreme Court justices unanimously agreed that the Court of Appeal’s decision should be reversed and the original ruling to award Mrs Ilott £50,000 restored.
Giving the main judgment, Lord Hughes said the decision of the Supreme Court confirms existing case law that an appeal would not succeed unless the judge made an error of principle. He commented that “Neither side can make the appellate court start again from scratch. This is a general rule that applies to this case and many others”.
Interestingly, and quite unusually, Lady Hale – the Deputy President of the Supreme Court – added a separate supplemental judgment of her own, even though she had agreed with the main judgment of the court. She commented that she had done so “only to demonstrate what, in my view, is 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.”
Highlighting the uncertainty created by the law as it stands, Lady Hale pointed out that it would have been entirely open to the District Judge who heard the case originally to have reached one of three widely differing decisions, each of which would have been legally correct and difficult to challenge even though they were very different in their effect on Mrs Ilott:
he could have declined to make any order at all. Mrs Ilott was self-sufficient – albeit largely dependent on benefits – and had been so for many years. She had no expectation of inheriting anything from her mother. She had not looked after her mother. She had not contributed to the acquisition of her mother’s wealth.
he could have decided to make an order which would have the dual benefits of giving Mrs Ilott the financial security that she needed and sought and in doing so also saving the public purse the most money. That is in effect what the Court of Appeal sought to do, by ordering the estate to pay enough money to enable Mrs Ilott to buy the rented home in which she lived, and a further lump sum of £20,000 to draw down as she saw fit in due course.
he could have done what in fact he did, for the reasons that he did. He concluded that an income of £4,000 per year would provide her with her “share” of the household’s tax credit entitlement and capitalised this in a rough and ready way, taking into account some future limited earning potential, at £50,000.
Each of those would have been a perfectly proper exercise by the District Judge of his discretion on the evidence available to him at the original hearing, despite the very difficult outcome as far as Mrs Illot was concerned.
Lady Hale went to lament the fact that the Law Commission – the statutory independent body created to keep the law of England and Wales under review and to recommend reform where it is needed – had failed to reconsider the fundamental principles underlying claims of this type such as this when it last looked at the law in this area in 2011.
The Supreme Court’s decision is regarded by many as a victory for the general principle of testamentary freedom – or in other words, the right to leave whatever you want in your will to whomever you want. That right however can never be absolute, and it was for that reason that the Inheritance Act was passed in the first place – in order to ensure certain safeguards were put in place to allow the courts to make provision for immediate family and those who had been dependent on the deceased.
However, it does seem to support the general propositions that there should not be an automatic assumption that an adult child should always expect to inherit all or even the bulk of their parents’ estate, and that the Inheritance Act should not and will not be allowed by the courts to be used as a basis for disgruntled adult children to challenge their parents’ testamentary freedom, just because they consider the provisions of the will to be unfair.
In the meantime, pending a further review of the law in this area, it will remain the case that it is not always straightforward to advise an adult child on whether they might have a claim in circumstances where they believe that a parent’s will fails to make reasonable provision for them.
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