Life interest rather than lump sum? – Inheritance Act 1975 claims

Banfield v Campbell [2018] EWHC 1943 (Ch)

Practitioners will be aware that brining a claim under the Inheritance (Provision for Family Dependants) Act 1975 (“the Inheritance Act 1975”), does not require a subjective assessment of the merits of the Claimant’s case. Rather the question is whether or not the Will (or the intestacy) failed to make reasonable financial provision for the Claimant in all the circumstances of the case, according to the standard applicable to that Claimant. This assessment must be viewed objectively.

It is wrong to approach the operation of the Inheritance Act 1975 from the point of view of whether or not the Deceased was morally right or wrong in the way they disposed of their estate. What is required is an objective assessment of the financial provision afforded and, having carried out this assessment, what provision to make, where reasonable financial provision has not been made.

The two-stage approach is detailed in the famous case of Ilott v Mitson and others [2011] EWCA Civ 346:

“in many cases, exactly the same conclusions will both answer the question whether reasonable financial provision has been made for the claimant and identify what that financial provision should be … There can be nothing wrong, in such cases, with the judge simply setting out the facts as he finds them and then addressing both questions arising under the Act without repeating them. Nor should there normally be any occasion for a split hearing.” (Ilott v The Blue Cross [2017] UKSC 17, Lord Hughes at paragraph 24.)

This question of financial provision is central to an Inheritance Act 1975 claim and it is often argued that a lump sum is required from the estate of the Deceased to purchase a property for the claimant. It is perhaps not as simple as this?
The facts of Banfield v Campbell are that the Claimant was the partner of the Deceased who had cohabited with them for 20 years after the Deceased’s spouse had passed away. The Claimant sought reasonable financial provision under the Inheritance Act 1975 from the deceased’s estate.

When assessing the claim, the Judge awarded the claimant a life interest over half of the net proceeds of sale from the deceased’s home rather than a lump sum. The reasoning for this is that as the Deceased and the Claimant had no children but there were indeed children from an earlier relationship, a life interest rather than a lump sum was more likely to be appropriate to avoid capital passing to the Claimant’s rather than the Deceased’s family on the Claimant’s death.

It is important to note that in coming to this decision, the Judge gave due consideration for fact the deceased had indicated, in a letter of wishes, that she wanted her son to get the bulk of her estate. Further, where a claim involved 50% or more of estate capital, it was much more likely to be appropriate to make provision for housing for the claimant by way of a life interest.

Although, as with all Inheritance Act 1975 claims, this case was decided on its own the facts, it suggests a principle that cohabitants will face difficulties in getting a lump sum award if they have no children from the relationship and there are children from an earlier marriage.

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