The recent case of Illott v Mitson
has taken the media by storm with one broadsheet headline dramatically warning readers “Your Will can be ignored”. Some commentators are saying that this case wholly undermines the longstanding principle of testamentary freedom (ie, that you can leave your estate to whoever you like). However, perhaps more accurately, others are saying that the level of press attention this case has received has been disproportionate and the effects of the ruling greatly exaggerated. So what are the real implications of this decision and what does it mean for the future of testamentary freedom?
Firstly, it is important to understand the principle of testamentary freedom and its limitations. The English Courts, unlike many other jurisdictions, uphold as an important principle that a person is free to leave his estate to whoever he wishes. There is no so-called forced heirship rule (as exists in many European countries) whereby a parent must leave a specified share of their estate to their spouse and/or children. Given that the media has perhaps misunderstood the impact of this case, it is important to realise that the principle of testamentary freedom still stands in this country.
A key piece of legislation in this area is the Inheritance (Provision for Family and Dependants) Act 1975. This provides that spouses and certain other categories of people (such as children and dependants for example) can bring a claim against the estate of the deceased if there has not been “reasonable financial provision” made for them under the Will, or in the absence of a Will, under the intestacy rules. Since its inception this legislation has effectively been overruling the wishes of the deceased in cases where claimants have not been reasonably provided for.
Prior to Illott v Mitson, it was generally accepted within the legal community that adult children would have an uphill struggle succeeding in a claim unless they were suffering from a disability or the deceased had a moral obligation to provide financial support. One of the key features in Illott was that the claimant was an adult child who was in no way dependent upon her deceased mother.
Illott v Mitson
In this case, the deceased bequeathed her entire £500,000 estate to three animal charities as she had been completely estranged from her daughter for many years. The deceased left a letter of wishes to accompany her Will detailing why she had decided to completely cut her daughter out of the Will. She had also written to her daughter informing her of her wishes. The daughter had been struggling financially for many years, living in Housing Authority accommodation, receiving state benefits and supporting five children.
Shortly after her mother’s death, the daughter brought a claim against the estate under the 1975 Act claiming she had not been adequately provided for under her late mother’s Will. The daughter’s claim was essentially for the sum of £143,000 which would enable her to purchase her rental accommodation from the Housing Association.
The Court initially found in the daughter’s favour and held that she had been unreasonably excluded from her mother’s Will and she was awarded the sum of £50,000. The daughter appealed this decision claiming that the award was insufficient. The charities also appealed on the basis that no provision should have been made for the daughter at all.
A further four hearings have since taken place, with the most recent decision being from the Court of Appeal. They awarded the daughter the full sum of £143,000 to enable her to purchase her rental accommodation from the Housing Association. The Court held that there was no need to show that a moral obligation existed between the deceased and the applicant in order to succeed in a claim against the estate for reasonable provision. The Court did not find a sufficient connection between the mother and the charities to override the needs of the daughter.
Although Illott v Mitson is not as ground-breaking as it may first appear, there is no doubt that the media interest in the case cannot be overlooked.
Does Illott introduce some new ground-breaking law? No; adult children have always been able to make a claim under the 1975 Act, sometimes successfully. The ruling relied heavily on the circumstances of the parties in the case, specifically that the daughter’s financial needs were considered to be so great that they could not be overlooked.
Even so, the mother’s Will was not overturned. The balance of her estate (if there was anything left after costs!) should be distributed in accordance with her original wishes and shared between the three named animal charities. Whether the charities appeal the decision remains to be seen but I suspect all parties may have had enough.
What can we learn from this case?
It must of course remain best practice to make a Will rather than simply choosing not to do so fearing a claim being brought against the estate. Making a Will should help to ensure that the estate largely passes as envisaged by the testator.
Another key message is to have a letter of wishes to accompany the Will, which sets out with detailed reasons why the testator intends to leave someone out or equally to introduce someone under the Will. Following Illott, this could be particularly pertinent if the testator wishes to leave money to a charity. This letter (or the Will itself) should show a connection between the testator and the charity, particularly where he has shown no particular support to that charity during his lifetime. Although such letters are not legally binding and cannot prevent a claim, they can stand as contemporaneous evidence of the testator’s wishes and therefore can be helpful in dealing with any claim brought.
Another option is to make use of lifetime gifts. Subject to seeking professional advice regarding tax implications and any time restrictions, this option could allow for assets to be outside of the testator’s estate at the time of his death. This can allow a testator’s wishes to be followed during their lifetime. This option is of course subject to the testator feeling comfortable with their financial position that they can afford to give away assets in this manner.
If it is likely that someone who is to be excluded from inheriting under the Will might make a claim against the estate, then that person could be left a token gift under the Will to discourage them from bringing a claim. A no-contest clause could accompany that gift (ie, if the person contests the Will they forego the gift). Or alternatively, including a discretionary trust in the Will could allow individuals specifically chosen by the testator (the trustees) to negotiate a solution and settle any potential claims before they are brought. These options are of course compromises as individuals the testator wishes to exclude from his Will could end up inheriting something from the estate; however this inheritance could be significantly less than an award following a successful claim to Court under the 1975 Act.
Unless there is a further successful appeal to the Supreme Court in Illott, it will be difficult to say now with certainty that an adult child can be disinherited under a parent’s Will where they are in difficult financial circumstances.