Ilott v The Blue Cross and others: Inheritance Act claims by adult children

The Supreme Court’s 2017 decision in Ilott v The Blue Cross and others highlights the limits of claims under the Inheritance (Provision for Family and Dependants) Act 1975 and the uncertainty that still surrounds them.

We acted for Mrs Ilott in the Supreme Court proceedings, giving us a direct perspective on a case widely seen as a test of how far the courts will go in making provision for adult children.

However, it offered less clarity than many had hoped, highlighting ongoing uncertainty in the law.

So, was this really the landmark case it was expected to be?

Background

Mrs Ilott and her mother, Mrs Jackson, had been estranged since 1978, when Mrs Ilott was 17. Despite attempts at reconciliation, they didn’t resolve their differences before Mrs Jackson’s death in June 2004. Mrs Jackson’s will made no provision for her daughter, instead leaving most of her £486,000 estate to three charities: the Blue Cross, the RSPB and the RSPCA, with which she had no previous connection.

At the time, Mrs Ilott and her family were living on a net annual income of just over £20,000, largely made up of state benefits. She brought a claim under the 1975 Act against Mrs Jackson’s estate and the three residuary charities.

We were instructed by Mrs Ilott to challenge the appeal brought by the residuary beneficiaries of Mrs Jackson’s estate before the Supreme Court, following her claim for reasonable financial provision.

The 1975 Act

The 1975 Act allows family members and dependants to claim reasonable financial provision from a deceased person’s estate where they have been left out of a will, not left enough or where the intestacy rules don’t make sufficient provision.

Unlike its predecessor, the Inheritance (Family Provision) Act 1938, it allows children of any age, not only minor children, to bring a claim.

For children of a deceased parent, reasonable financial provision is limited to maintenance. This is defined as “such financial provision as it would be reasonable in all the circumstances of the case for the applicant to receive for his maintenance”.

The court must consider two questions:

1. Whether the will makes reasonable financial provision for the applicant (the ‘threshold question’)
2. What provision should be made if the will doesn’t make reasonable financial provision for the applicant (the ‘quantum question’).

In exercising its powers, the court must consider a broad range of factors set out in section 3 of the 1975 Act, including the applicant’s financial resources and needs, the deceased’s obligations towards them, the size of the estate and any other relevant circumstances.

The case through the courts

The case passed through every level of the English court system, with inconsistent results.

At first instance, District Judge Million awarded Mrs Ilott a lump sum of £50,000 for her maintenance. Mrs Ilott appealed, arguing that the award was insufficient as it would affect her means-tested benefits. The defendants cross-appealed, arguing no provision should be made.

In the High Court, King J found in favour of the defendants on the cross-appeal. The Court of Appeal reversed that decision on the threshold question and, on a further appeal, increased Mrs Ilott’s award to £143,000 to purchase her housing association home, plus £20,000 to supplement her income.

This led to widespread commentary suggesting that it had become more difficult to disinherit an adult child.

The Supreme Court’s decision

The three charities appealed to the Supreme Court to seek clarity on the court’s power to interfere with testamentary wishes under the 1975 Act. The case was heard on 12 December 2016, and judgment was handed down on 15 March 2017.

Giving the leading judgment, Lord Hughes held that District Judge Million had been entitled to reach his conclusion and that neither of the two errors identified by the Court of Appeal were, in fact, errors.

Key principles established from the judgment include:

• Reasonable financial provision for children under the 1975 Act is limited to maintenance, unlike for spouses and civil partners
• Provision of housing can amount to maintenance, but is more appropriately provided through a life interest in a trust fund rather than an outright capital payment
• The court doesn’t have an unrestricted right to amend a deceased’s will; long periods of estrangement may be an example of where needs alone are not enough to justify a claim
• The relevant date for assessing the facts is the date of the hearing, not the date of any appeal
• A testator’s wishes should still be considered as a relevant fact, and whether those wishes were themselves reasonable may properly form part of that consideration
• The court should carry out a single assessment of reasonable financial provision under section 3 rather than starting with a fixed standard.

The Supreme Court allowed the charities’ appeal and reinstated the original order of £50,000.

Lady Hale’s comments

In a notable concurring judgment, Lady Hale identified the broader issues raised by the case, including the nature of family obligations, the role of the state and the extent of property owners’ freedom to dispose of their assets as they see fit.

She highlighted that the 1975 Act provides no guidance on how much weight should be given to each of the section 3 criteria, which inevitably leads to inconsistent outcomes.

Lady Hale expressly wrote her judgment to “demonstrate what, in [her] opinion, is the unsatisfactory state of the present law, giving as it does no guidance as to the factors to be taken into account in deciding whether an adult child is deserving or undeserving of reasonable maintenance”.

Conclusion

Opinions differ on whether this was a landmark case. The law itself hasn’t changed and the original order was ultimately restored.

However, the different outcomes at each stage highlight both the breadth of the court’s powers under the 1975 Act and the lack of clear guidance on how those powers should be exercised. The decision reflects the court’s reluctance to legislate through the back door.

It may now fall to the Law Commission to consider whether reform is needed to provide greater clarity.

Our Disputed Wills, Trusts and Estates team has extensive experience of dealing with claims under the 1975 Act, including acting for adult children, minor children represented by a litigation friend, spouses and co-habitees. We also acted in the only other 1975 Act case to have been before the Supreme Court, Hirachand v Hirachand.