Standstill agreements and Inheritance Act claims

At the moment the law provides a person with six months in which to make an application for financial provision from a deceased’s estate under the Inheritance (Provision for Families and Dependents) Act 1975 (the Act).

Sometimes this does not provide people with enough time to negotiate a settlement, so people often enter into a ‘standstill agreement’, to provide a longer period for negotiation.

In the recent case of Cowan v Foreman 2019 EWCA Civ 1336, the judge of the lower court denied Mrs Cowan’s application for permission to bring a claim under the Act, which was made 17 months after the deadline set by the Act. This was despite the parties having previously entered into a standstill agreement. The judge viewed the use of the separate stand-still agreement as an abuse of process which should not override the Act.

This judgement was subsequently reversed by the Court of Appeal, who highlighted that the purpose of standstill agreements was to provide protection to personal representatives when distributing the deceased’s estate. In this case, the deceased’s estate had not been distributed when Mrs Cowan made her application.

Whilst the Court of Appeal agreed in part with the previous judgment, the higher court stated that, if it was to refuse to honour standstill agreements, it could in fact undermine the very purpose of the agreements, which is to encourage parties to reach a negotiated settlement without intervention from the court, avoiding the costs of litigation.

In summary, standstill agreements are likely to be endorsed by the court where the deceased’s estate is yet to be distributed and there is a reasonable explanation for the delay in issuing formal proceedings.