A widely-scrutinised legal ruling in London has prompted worries that wills will now be more easily overturned by children. Those concerns are largely unwarranted, the author of this article says.

A major ruling in London’s Court of Appeal a week ago, in which a woman’s desire to bequeath none of her wealth to an estranged daughter was overturned, has prompted worries that in England and Wales (a slightly different system operates in Scotland), future wills could be overturned in the interests of children, heralding a Napoleonic Code-style forced heir regime (for more on this story, see here). The author of the article below, Mark Lindley, associate at the private client and tax team at law firm Boodle Hatfield, argues that such concerns are exaggerated. The editors of this news service are pleased to receive such a detailed analysis and invite readers to respond. To do so, email tom.burroughes@wealthbriefing.com

Reports of the death of wills have been greatly exaggerated…or, as one broadsheet paper put it in their headline reporting on the recent Court of Appeal judgment in the case of Ilott v Mitson & ors [2015] EWCA Civ 797: "Your will can be ignored, say judges".

The decision in Ilott has received large amounts of press attention; lawyers have been summoned to television studios to opine and learned sound bites have been widely disseminated.

From one perspective, the flurry of excitement is a little hard to understand, given that Heather Ilott was first awarded a sum of money, £50,000, ($78,111) from her mother's estate, contrary to the terms of her mother's will, by a decision of the court first handed down in 2007. The question of whether the daughter should receive some provision at all when she had been deliberately disinherited by her mother was settled by a previous Court of Appeal decision in 2011.  

So, what are the real implications of the more recent judgment of the Court of Appeal that increased Heather's award from £50,000 to a sum in excess of £150,000, from an estate worth approximately £500,000?  

First, it is important to note that despite the recent excitement, the Court of Appeal was applying principles first laid down since the enactment of the Inheritance (Family Provision) Act 1938. That Act was repealed by the Inheritance (Provision for Family and Dependants) Act 1975 which, in its current form, was being applied by the Court in Ilott.

The interest in Ilott cannot be dismissed merely as sensationalism, however. The received wisdom, when advising in relation to potential claims for provision (or increased provision) by adult children under the 1975 Act, has tended to be that it may be difficult, firstly, to meet the "threshold test", namely that it was unreasonable for the testator not to have made any provision in their will for that child.  

The second issue with such claims is that, even if one could meet the threshold test, provision for adult children is limited to such that "it would be reasonable in all the circumstances of the case for the applicant to receive for his maintenance", as opposed, for example, to provision for surviving spouses who are entitled to reasonable provision "whether or not that provision is required for his or her maintenance". The provision actually ordered in favour of the adult child tended to be of a relatively small amount, therefore, meaning claims were financially prohibitive to pursue.  

Distinguishing factor

What appears to have distinguished Ilott, however, in the view of the Court of Appeal at least, was that she (and her husband) had limited earning capacity and were reliant on state benefits for support. She was, and had been, able to live without the support of her mother from whom she was estranged, but the Court held that it was not bound to limit maintenance provision to "mere subsistence level". By contrast, the beneficiaries under the will (several large charities) had no competing need for funds, as such. The main reason for the increase in Ilott's provision from £50,000 to an increased sum was to enable her to purchase the property that she and her husband lived in, thus removing their rent burden. Therefore, the decision of the Court of Appeal may, in certain circumstances, give an adult child in similar circumstances greater confidence in seeking an increased level of provision than might otherwise have been sought.  

Although Ilott received greater provision, the will of her mother was not overturned. The balance of the estate will pass, according to her original wishes, to the named charities. It was clearly better that she made a will that passed her estate to those charities, than not to have made a will at all, as the effect of the intestacy rules would have been that her estranged daughter, as the only child, would have received the whole estate.  

Some commentators have suggested that, for clients looking to "bullet-proof" their testamentary wishes, a lifetime trust may be the answer. The thinking appears to be that putting as much property in trust as possible (i.e. so that it does not form part of the estate at death) means that it will be beyond the reach of the Court, at least under the 1975 Act jurisdiction. Another option might be to gift as much property during your lifetime to your preferred beneficiaries.  

Both of the above are valid suggestions but caution must be exercised here. Gifts and trusts can give rise to their own complications and can come with significant administration and taxation burdens. Further, the 1975 Act itself gives power to the Court to negate the effect of dispositions made within six years of the date of the death with the intent to defeat a claim for financial provision. The Court is empowered to order that the recipient of such a disposition may be ordered to provide money or property to the claimant. Therefore, if a testator asks for advice on how to potentially defeat such a claim, any solution offered (particularly where there are no other good reasons to implement it) is already vulnerable. Another option is to include "no-contest" clauses in the will although there are difficulties with these also. Nevertheless, by putting further hurdles in the way of a potential claimant, this may be sufficient to discourage claims.  

Those drafting wills, as was the case before the most recent judgment in Ilott, advise clients in relation to potential claims against their estate including those under the 1975 Act. Very often, however, there is no easy way to address the issue and, given the intent behind the 1975 Act is to enable the Court, in certain circumstances, to rescue the financially stranded, we can expect judges to be vigilant against attempts to oust or defeat its jurisdiction to seek to achieve that aim. However, there is nothing in the judgment at all, in the view of this writer, that reduces the importance of making a will in the first place.