The decision this week to overturn a six-figure award to a woman who was left out of her estranged mother’s will should help to strengthen the rights of individuals to pass on their assets as they wish, lawyers say.
The judgment in the long-running dispute between the RSPCA, the RSPB and the Blue Cross and the daughter of a woman who had left them almost £500,000, ruled that the daughter was not entitled to a larger share of her mother’s fortune just because she expected to inherit it.
The case has been closely watched over the years because lawyers hoped it would help to define the rules on claims of grown-up children relating to inheritance and wills, especially where non-family members are involved.
Melita Jackson, who died in 2004, had written a letter explaining her decision to leave her £486,000 estate to the charities and instructing her executors to fight any claim from her estranged daughter, Heather Ilott. Mrs Ilott had left home with a boyfriend at the age of 17 and her mother had apparently never forgiven her.
Ms Ilott, who has five children, challenged the will under the Inheritance Act 1975, arguing that her mother had no relationship with the charities before her death and had not made reasonable provision for her, and she was in greater financial need.
Although the Supreme Court on Wednesday upheld an earlier judgment awarding Mrs Ilott £50,000 of the estate, it ruled that she was not entitled to a larger sum of £163,000. The ruling said that financial maintenance is an objective standard and does not extend to things which are “desirable to have”.
Experts say the decision provides much needed reassurance to individuals writing wills that they will be free to leave their estates to whomever they wish and that those final wishes will, in most cases, be respected.
Paula Myers, a will disputes lawyer at Irwin Mitchell, said: “This judgment could potentially make it more difficult for adult children to challenge their parent’s wills under the Inheritance Act and it may give people executing a will greater strength to resist any challenges”.
Others say the court’s decision leaves things slightly confused and that there is still a need for further guidance, or even legislation, around the circumstances in which adult children might be able to bring a claim for a more reasonable maintenance which is currently decided on a case-by-case basis.
“The purpose of the Inheritance Act was to make reasonable financial provisions so, while reducing the amount, still granting Ms Ilott part of her mother’s estate keeps the door open for other cases of a similar kind to progress,” said Rachael Griffin, tax and financial planning expert at Old Mutual Wealth.
To avoid a challenge, Ms Griffin recommends people to consider lifetime planning using trusts, which she says have both “tax benefits and offer the opportunity to gain greater control over the distribution of wealth on death”. She added that any distribution of trust assets against the terms of a trust would be a breach and could be legally challenged. “A bonus is trusts are confidential, so unlike wills they do not currently become public knowledge,” she added.
Lawyers and estate planners have long advised clients who wish to exclude relatives from their wills to write a letter explaining their decision. James Lister, senior associate at Stevens & Bolton, said it would be a mistake to assume that testamentary freedom in the UK means that your desired beneficiaries will receive what you want them to. He added that if a person plans to disinherit a child or dependent then they should set out the reasons why.
“Whilst the Supreme Court did not determine the issue, it was plainly influenced by the ‘two-way’ nature of the estrangement between mother and daughter. Consequently, recording the reasons why you have chosen to disinherit someone will be useful for your executors and beneficiaries when they come to deal with any claims that might arise.”
Disinheriting a child completely will remain difficult, however. “Mrs Ilott’s estrangement from her mother was near-absolute and she still succeeded in obtaining a small award, just over 10 per cent of her mother’s estate,” said Mr Lister.
“It is undoubtedly the case that Mrs Jackson’s decision to leave her estate to charity was a relevant factor here: had there been ‘living’ beneficiaries who could have put forward competing needs of their own, the outcome may have been very different and Mrs Ilott’s claim may not have succeeded at all.”
This case also highlights the importance of making a will. Sean McCann, a chartered financial planner at NFU Mutual, said: “For example, there are probably thousands of ex-spouses who are still listed as beneficiaries of life insurance policies and pension pots.”