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4-08-2015

This week we have received the Court of Appeal decision in the case of Illot v Mitson. Being a highly publicised case, it has caused some concern about the right to exclude people in your Will under the testamentary freedom principle in England and Wales. So, what is the case all about?

Melita Jackson died testate. Apart from one small legacy, her Will left her estate in equal shares to three charities. This was despite having a daughter, Heather Illot. They had been estranged for 26 years and Heather knew her mother was not making provision for her in her Will.

On the death of her mother, she made a claim against the estate under the Inheritance (Provision for Family Dependents) Act 1975, with the estate at that time having a net value of £486,000.

The first question to be dealt with was whether Heather was entitled to make a claim under the said Act, meaning the question had to be asked if the Will made reasonable financial provision for her.

The Court has decided it did not. Heather lives in a property rented from a housing association with her husband and there are five children of this marriage. She and her husband have very low incomes (approximately £7,000 per annum) and rely on means-tested tax credits and benefits such as housing and council tax benefit. She has no pension.

Deciding on quantum the Court had to decide whether her current living standard was sufficient; what are her resources and needs. The Court could not be desirous of creating an improved standard of living and balance the claims on the estate fairly. The charities did not make a case for any resources and needs as money from the estate for them would be a windfall.

The Court has therefore awarded the sum of £143,000, the cost of acquiring the property via a right to buy scheme, plus the reasonable expenses of acquiring it. That removes the need to pay rent though some of that money may be required for meeting the expenses that Heather will have as owner.

Having the property would enable her to raise capital (by equity release) when she needs income in the future. However, to avoid equity release a further sum of £20,000 was awarded (with a view to it being invested) to produce a small additional income to supplement her state benefits. This is not a large amount because of the factors which did weigh against Heather’s claim, particularly the fact that she is an adult child living independently, Mrs Jackson’s testamentary wishes and to a small extent Heather’s estrangement from Mrs Jackson.

So, should we be worried about the loss of testamentary freedom?

Given the facts of this case and the amount of the financial award given it is not likely to open the floodgates to litigation as is being reported.

However, if you are intending to exclude someone from your Will who could be in a position to make a claim under the said Act, it is imperative this is discussed with your solicitor at the time of making your Will for the appropriate advice to be given.

This is intended for general information only and should not be considered as giving advice in relation to any individual case nor be taken as applying to any particular case. No liability is accepted for any such use of the information contained here.

TESTIMONIALS

Standout firm known for its personal insolvency work for clients including private companies, individuals and governmental institutions. Frequently acts for insolvency practitioners, assisting with the realisation of assets, both in the UK and abroad.

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