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Claims For Reasonable Financial Provision Beyond The Grave
Date: 20/11/2023 Type: Articles Topic: Private Client | Investment and HNWI’s |This was the question posed in the recent judgment of The Estate of Neil Douglas Archibald (deceased) and others v Stewart and others [2023] EWHC 2515 (Ch). Claims under the Inheritance (Provision for Family and Dependants) Act 1975 (the 1975 Act) were brought by the deceased claimant’s estate, and his surviving wife, respectively. The court held that the estate of the first claimant could not continue his claim on his behalf; that the second claimant had not been treated as a “child of the family”; and that the circumstances could not justify the court exercising its discretion to allow any of the claims to be brought out of time.
This case provides important guidance on: when a claimant’s requirement for reasonable financial provision ends, the high bar a son/ daughter-in-law needs to reach to prove that they have been treated as a “child of the family” for the purposes of a 1975 Act claim, and when the court may exercise its discretion to allow a 1975 Act claim to be brought out of time.
Key takeaways
- Claims brought under the 1975 Act die with a deceased claimant;
- Claimant daughters/ sons-in-law have a high bar to overcome to prove that they were treated as a child of the family, rather than as a son or daughter-in-law;
- Claimants should not try to ‘ride two horses’ and make a 1975 Act claim out of disappointment at how Trustees exercise their discretion;
- Private Client practitioners should look out for any circumstances where it may be appropriate to advise that their client considers making a 1975 Act claim, as they may otherwise expose themselves to professional negligence proceedings.
Background
The Claimants were Neil and Julie Archibald, respectively, the son and daughter-in-law of Rosemary and Malcolm Archibald, both deceased (the Testators). The Defendants were Alistair Stewart and George Jordan, the Personal Representatives of the Testators’ estates.
Under the terms of their Wills, the Testators placed the majority of their estates on discretionary trusts, to provide for one another, their children and remoter descendants, and the spouses of their children and descendants. Rosemary also executed a codicil, expressing the wish that all of the income of her Discretionary Will Trust was to be paid to her husband during his lifetime. The Testators also had a joint letter of wishes, which expressed that the Trustees should make an initial capital payment to their sons, but that the majority of the income, and remaining capital, should fund the education of their grandchildren, and ultimately pass to their grandchildren outright, upon them reaching the age of thirty.
Rosemary died in 2014, by which time Malcolm was suffering from dementia, and his previously executed Enduring Power of Attorney was registered. The Defendants ultimately moved him to a nursing home, which was funded by the income provided by Rosemary's Discretionary Will Trust. The Claimants disliked the level of control exercised by the Defendants in this regard, and that maintenance payments had been made to Neil’s brother. Neil eventually requested that the Defendants pay his family's share to him, for him to administer directly.
As the Defendants did not acquiesce to Neil’s request, Neil briefly engaged the services of a firm of solicitors to challenge their actions and their fees, but there was never any suggestion that Neil or Julie planned to bring any claim under the 1975 Act.
The Defendants ultimately suggested splitting the Trust equally, providing a separate fund for each family. Neil’s family fund would provide him with a limited source of income but would predominantly be used to make capital payments to his children. The Claimants were disappointed that this proposal would provide them with no capital provision.
Neil died in June 2023, and Julie issued the present claims, on behalf of his estate, and on her own behalf.
Did Neil's claim under the 1975 Act survive his death?
During his lifetime, Neil could have brought a claim against the estates under S1(1)(c) of The 1975 Act, as he was a child of the deceased. He could apply for "such reasonable provision as it would be reasonable in all the circumstances of the case for the applicant to receive for his maintenance". To determine what “reasonable financial provision” would be, the court must consider the personal circumstances of the claimant and take into account the facts known to them at the date of the hearing. The court considered that Neil no longer had any maintenance requirements, as these had ceased upon death. As a matter of construction of the 1975 Act, any claim thereunder can only be pursued during the applicant's lifetime.
The court considered various authorities[i] which relied on S1 Law Reform (Miscellaneous Provisions) Act 1934, which in certain circumstances, operates to override the common law rule that causes of action do not survive the death of the claimant. In each of the authorities referred to, the court held that the right to bring a claim under the 1975 Act was not a cause of action in itself, but a “mere hope or contingency,” that an order will be made in support of their claim for reasonable financial provision. However, the recent case of Unger[ii] brought this reasoning into examination, given the “paradigm shift in judicial attitude”ii towards financial order claims, which are now seen as a matter of right, not of “mere hope or contingency”i.
However, the Defendants argued that these decisions made before Unger also relied on a second strand of reasoning which remains unaffected this decision. On proper construction of the 1975 Act, a claim thereunder is one purely personal to the claimant and is, therefore, incapable of being pursued beyond the claimant’s death. This applied to Neil’s estate’s claims.
Did Julie have standing to bring a claim under the 1975 Act?
Julie also brought claims under S1(1)(d) of the 1975 Act, claiming that she was a person treated by the Testators as a child of the family. The court considered various authorities[iii] on this question, which emphasise the required quality and intensity of the support provided by the parent-figure to prove that a claimant had been treated as a quasi-child, and that certain behaviours could indicate the existence of this type of relationship, namely, where:
- the deceased plays a key role in the lives of the claimant’s children;
- the deceased invests a great deal of trust in the claimant in relation to their property and financial affairs;
- the claimant plays a key role in caring for the deceased.
However, the mere display of affection, kindness or hospitality will not be indicative of a quasi-parental relationship and cannot place the testator‘s estate under a potential liability to provide for the claimant; there must be a clear sharing of the privileges and duties of people in a parent-child relationship.
Julie submitted that her relationship with the Testators exhibited this level of familial attachment: Julie had been estranged from her own mother for many years; the Testators provided financial support for the Claimants via a £30,000 house deposit, holidays, and cost of living-related payments; the Claimants supported the Testators towards the end of their lives; Julie was a discretionary beneficiary under both Wills, and Julie’s son was bequeathed a legacy of £3,000 in Malcolm's Will, described there as a step-grandchild.
The court disagreed and held that there was nothing in the Testators’ relationships with Julie which went beyond the usual display of affection, kindness and hospitality between parents-in-law and their daughter-in-law. The financial support given by the Testators spoke more of parents supporting their son, and his wife by extension; the end of life support Julie provided went no further than that expected of a daughter-in-law. These relationships were warm and supportive but did not indicate parent-daughter relationships.
The court drew specific attention to the submissions regarding the Will provisions and stated that, had a specific provision been made for Julie (beyond a generic, discretionary beneficial interest), and had the value of the bequest left for Julie’s son matched the value of those left for Malcolm’s own grandchildren, these submissions may have been more persuasive.
Had the claims been capable of continuation, should permission be granted under S4 to bring the claims out of time?
The claims against the Testators’ estates were brought out of time by seven and a half years, and ten months, respectively. In such circumstances, the court may exercise the discretionary power under S4 of the 1975 Act and allow claims to be brought out of time and must have regard to the various factors set out in Berger v Berger[iv] when determining if this is appropriate. The court must not be disciplinary when deciding whether to exercise this discretion but must evaluate whether the claim has a real prospect of success.
Julie submitted that these claims had been brought out of time for a number of reasons, including that:
- the Claimants wanted to respect Rosemary’s wishes, in directing that the income from her Discretionary Will Trust be applied for Malcolm’s benefit during his lifetime; they were content to inherit via Malcolm’s Will, upon his death;
- family dynamics were 'profoundly awry' with 'skulduggery’;
- the Claimants 'felt bullied’ by the Defendants;
- the Discretionary Trusts were 'flimsy, scant and vague,’ which had provided the Defendants with 'loopholes' for absolute legal control;
- the Claimants were poorly advised by their solicitors, who did not advise them on The 1975 Act.
The court held that the Claimants:
- had no “substantial grounds” to bring the claim, on the basis that they are now disappointed by how the Defendants intended to exercise their discretionary powers. Claimants may not seek “to ride two horses in this way [and] expect the sympathy of the court”; the “1975 Act is not a bargaining tool, nor […a] fall back” for disappointed beneficiaries;
- had no explanation as to how family dynamics were “awry” or how this impacted on their ability to bring a claim, nor any evidence to substantiate allegations of “skulduggery” on the part of the Defendants;
- could not substantiate the claim that they felt "bullied," nor establish a causal relationship between this allegation and their failure to bring the claims any earlier.
The court explained that it was not appropriate to exercise its discretion under S4 of the 1975 Act in respect of these claims, but that further consideration should be given to the allegations of professional negligence against the solicitors Neil instructed, if Neil truly was not advised of his ability to bring a 1975 Act claim whilst he was still within time to make a claim.
[i] Whyte v Ticehurst [1986] Fam 64; Re Bramwell deceased [1988] 2 FLR 263; Roberts v Fresco [2017] EWHC 283 (Ch)
[ii] Unger v Ul-Hasan [2023] UKSC 22
[iii] Law Commission's report Intestacy and Family Provision Claims on Death (Law Com. No 331); re Callaghan (deceased) [1985] Fam 1; re Leach, (deceased) [1986] Ch 226
[iv] [2014] WTLR 35 at [44]
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