Inheritance Act: Reasonable Financial Provision

Following the recent decision in Ilott v The Blue Cross and others [2017] UKSC the High Court has recently had the opportunity to consider the issue of reasonable financial provision in Thompson v Ragget and others [2018] EWHC 688 (Ch), this time from the point of view of a cohabitee.

The Facts

The claimant, aged 79, had lived with the deceased ‘as his wife’ for 42 years on his death on the 4th February 2017, the claimant and her son having moved in with the deceased in the 1970s. She initially moved into a caravan on his farm, and later into the farmhouse, where the deceased’s mother also lived, and whom the claimant helped to care for two to three years prior to her death. The claimant also worked on the deceased’s farm and in his caravan site business without pay. The claimant had been financially dependant on the deceased throughout their time together.

The deceased’s estate included the farm, a caravan park, a bungalow and an adjoining cottage, known as Elidyr cottage. The net value of the estate was £1,535,060, which included liquid assets of £168,000. The Deceased’s last will, of 19th December 2016, made no provision for the claimant, leaving his estate, after deduction of costs and expenses, to two of the tenants of one of the deceased’s properties; they had been tenants since early 2015. Prior to his death the deceased had been the claimant’s main carer, she having had a serious stroke and heart problems. Within his letter of wishes the deceased explained his decision not to provide for the claimant, or her children, by saying that she had her own finances and was financially comfortable, believing that the claimant would not be able to remain living independently and would need to go into a home. The deceased did not trust the claimant’s children, believing them to have taken monies from him during his lifetime. The court was therefore tasked with determining whether the claimant was entitled to reasonable financial provision and if so, what provision.

The court found the deceased’s will did not make reasonable financial provision for the claimant, who fell within the Inheritance (Provision for Family and Dependants) Act 1975, under either s 1(1)(ba) as a cohabitee or s1(1)(e) as a dependent. As such the claimant was entitled to reasonable financial provision for her maintenance. The court could not establish the basis upon which the deceased believed the claimant to be financially comfortable as this was not the case, her savings being minimal. The court believed the deceased’s primary motivation for not providing for the claimant to be that he did not wish her children to benefit from his estate. Whilst the court opined this intention should be given appropriate weight, it determined it should not hinder the reasonable financial provision for the claimant’s maintenance, which the court found to be the error the deceased made in his letter of wishes.

The court considered all of the factors, including the length of cohabitation, the claimant’s contribution to the deceased’s family, including his mother’s care, and the length of time and basis on which the deceased had maintained her. The court did not believe it to be reasonable for the claimant to be required to move out of the farm as it had been her home for 42 years and she wanted to continue to live there. The court believed that it was reasonable for the claimant to be accommodated in Elidyr cottage as that had been the reason it had been purchased. As such, the basis upon which she would reside in the cottage then fell to be decided, i.e. whether it be by way of outright transfer or provision of a life interest with power of advancement. The Judge ultimately decided that the cottage, worth £225,000, should be transferred outright to the claimant. The claimant was also awarded a further £23,154.76 per annum for her future maintenance and care plus £28,845 to renovate the property.

Guidance

When determining a case of this nature, one of the main issues to consider is the basis upon which provision of accommodation can be achieved, specifically, determining whether this should be by way of life interest or transfer of property, whilst also balancing that against the principle of testamentary freedom. This case supports the view that there is no absolute rule that there should be a life interest as opposed to a capital transfer. Factors that the court will consider include the length of the relationship, the level of financial dependency and, certainly in this case, the need to seek permission to renovate the property in the event of a life interest being conveyed.