Testamentary freedom

What is Testamentary Freedom?

In England and Wales we all have “testamentary freedom”. This means that we can leave in our Will what we want to who we want. However, we should be mindful of The Inheritance (Provision for Family and Dependants) Act 1975 which allows certain people to make a claim for reasonable financial provision from a deceased person’s estate, but only in certain circumstances.

What those circumstances amount to varies from case to case, but who can make a claim under the 1975 Act?

There are several classes of applicant:

Spouse/civil partner

The spouse or civil partner of the deceased person may make a claim under the 1975 Act.

Former spouse/civil partner

The ex-spouse or civil partner is also able to make a claim provided (1) they have not remarried or entered into a new civil partnership; and/or (2) there is no bar to them making a claim under the 1975 Act contained within the terms of the divorce.

Cohabitee

The cohabitee must satisfy a particular test in order to make a claim under the 1975 Act, namely they must have:

  • Lived in the same household as the deceased;
  • Lived as the husband or wife of the deceased; and
  • Had continuously cohabited for at least two years immediately preceding the death of the deceased.

Child of the deceased

A child is defined not only as a biological child of the deceased but also includes adopted children and, for deaths after 1 October 2014, any person who was treated as a child of the deceased.

This category can extend to adult children who have not financially relied on the deceased for many years.

Dependant of the deceased

A dependant is someone who was maintained by the deceased in whole or in part, immediately before their death.

What amounts to maintenance is infinitely variable. Minor maintenance will not be enough to satisfy the test and the deceased must have been making a substantial contribution in money (or money’s worth) towards the reasonable needs of the claimant. The deceased would typically have assumed a settled responsibility for the financial wellbeing of the claimant.

In a landmark case known as Ilott v The Blue Cross & Others the testator left her entire estate to Charities and nothing to her daughter. The daughter, Mrs Ilott, made a claim against the estate of her late mother.

The Supreme Court considered case specific issues as follows:

  • Long term estrangement is a significant relevant factor;
  • The deceased’s wishes and reasoning for the terms of the Will are relevant and need to be given suitable weight;
  • For adult children, reasonable financial provision is limited to “maintenance” and does not extend to everything that would be desirable for the claimant to have;
  • Reasonable financial provision can include the provision of housing, but ordinarily by creating a life interest (i.e. the right to reside in a property for a lifetime) rather than awarding a capital sum. By doing this you are not depriving the intended original beneficiary of the capital asset as they will receive this once the life interest has ceased;
  • State benefits are to be treated as a resource of any claimant and a Court must consider whether they will continue to be received; and
  • A claim cannot be decided by comparing the needs of the beneficiaries and the claimant. A beneficiary under a Will does not have to justify their entitlement.

In the end the Court awarded Mrs Ilott £50,000 out of an estate valued at £486,000.

If you wish to not provide for someone who fits into one of the claim categories, there are procedures that you can follow which may well assist in defeating (or at least reducing) a claim. Casey & Associates can give advice on this point.

If you would like to meet one of our Consultants and discuss any of the issues raised in this article or any other Estate Planning topic, please telephone 01732 868190 or click here.

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