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Married v Unmarried: Wills and inheritance claims

Everybody with assets should make a will tailored to their circumstances. And ultra-high-net-worth people, especially those with a complicated private life, are no exception. Discover how the Inheritance (Provision for Family and Dependants) Act aims to clear up the validity of a will when the ‘beneficiaries’ are numerous.

Since it was enacted in 1975, the family provision legislation, also known as the Inheritance (Provision for Family and Dependants) Act, has generated a large amount of press coverage. As a result of claims based either on a valid will which, a disappointed ‘beneficiary’ asserts, produces an unreasonable result or on an intestacy (occurring when a person dies without leaving a valid will).

When a person (let’s call him Arthur) dies, certain people can claim against his estate on the ground that his will, if he died testate (having made a valid will), or the default intestacy provisions, if intestate, fail to make ‘reasonable financial provision’ for them.

For current purposes, these include Arthur’s wife of twenty-five years (let’s call her Beryl), from whom he was separated, somebody who was living with Arthur ‘as if’ (but not in fact) married to him for at least two years before his death (let’s say Deidre, for whom he left Beryl five years earlier), or somebody not living with him at all, but whom he was maintaining by making a substantial contribution to her reasonable needs, in this instance a free flat (introducing Gloria, whose existence came as an unwelcome surprise to the others following Arthur’s unexpected death).

Worse, Arthur had done the dirty on them all by leaving his £5 million estate to charity. Had Arthur died intestate, Beryl (and any children he had) would have received the entire estate, leaving Deidre and Gloria nothing.

What is ‘reasonable financial provision’? Notwithstanding their separation, Beryl would be entitled to an assessment based upon ‘such financial provision as it would be reasonable in all the circumstances of the case for a wife to receive, whether or not that provision is required for her maintenance’ and the court must specifically consider what she would have been entitled to on a hypothetical divorce (assuming that no financial agreement was reached as part of the separation).

Conversely, Deidre and Gloria would be limited to ‘what is reasonable in all the circumstances’ for them to receive for their ‘maintenance’ only.

In Ilott v Mitson, the UK Supreme Court said that maintenance does not extend to “any or everything which it would be desirable for the claimant to have”, but nor is it limited to “subsistence”; it implies provision to meet the recurring costs of living.

And what factors will the court consider? Some – like the length of any marriage or quasi-marriage, standard of living enjoyed during the deceased’s life and contribution to the family – are applicant-specific. Others are general and include the current and foreseeable financial resources and needs of any applicant or beneficiary, the deceased’s ‘obligations and responsibilities’ to such people, the size and nature of the net estate, any physical or mental disability of any applicant or beneficiary and any other matter, ‘including the conduct of the applicant’ which the court may consider relevant.

Given the broad discretion afforded to judges and the fact that no two cases are ever the same, even the numerous decisions under the 1975 Act in the law reports do not permit certainty assuming the above facts. This is especially so in the case of an ultra-high-net-worth (UHNW) individual like Arthur, because where there are sufficient funds to meet everybody’s needs and maintenance, any claim is likely to settle before trial, with the result that it will not be reported and the settlement terms themselves will remain confidential.

Extrapolating from the more-often reported lower-value cases, where there is often not enough money to go around, is probably unhelpful. There may well be the appearance of broad equality of treatment between those married and unmarried, with both being limited to needs and maintenance – but this is because of the size of the estate, which guides and dictates the outcome in cases where the spousal test ‘…whether or not it is required for her maintenance’ produces no benefit because the extra money to fund it simply isn’t there.

As regards Arthur’s estate, the most that can be said is that Beryl is unlikely to wind up with less, in value terms, than half the combined assets of Arthur and herself. She could well receive somewhat more. Subject to their value, both Deidre and Gloria may be able to retain their respective flats, with Deidre likely receiving a lump sum in addition to permit her to fund the standard of living she and Arthur had enjoyed, at least for a substantial period if not the rest of her life. Gloria will only receive a lump sum reflective of the costs Arthur incurred in providing her use of the flat.

The charity will have to make do with whatever is left; but this could mean properties at the end of the lives of Deidre and Gloria.

Finally, everybody with assets should make a will tailored to their circumstances and UHNW people, with or without complicated personal lives, are no exception. Pending divorce and any financial settlement, Arthur’s will should have provided substantially for Beryl, as well as for Deidre and Gloria – maybe a life interest in their flats – with perhaps the provision (often overlooked) that this gift would fail if the will were challenged, including by way of an application under the 1975 Act, thus throwing the risk on anyone seeking enhanced provision.

About the authors:

John Melville-Smith, Partner at Seddons
John is a Partner in Seddons’ Dispute Resolution team. He has more than 20 years’ experience, particularly in challenges to wills, contested probate and inheritance disputes, commercial partnership and contract disputes, professional negligence, insolvency and debt recovery.

Amy Berry, Barrister of New Square Chambers
Amy’s practice is focused on trusts, wills, estates, equitable remedies and related professional negligence. She has litigated in the European Court of Justice, Court of Appeal, High Court, first-tier tribunals, arbitrations, adjudications and County Courts.

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