Testamentary freedom is ingrained in UK culture and is considered an important personal freedom. No forced inheritance rules apply in contrast to most European countries.
However, the Inheritance (Provisions for Family and Dependants) Act 1975 (‘the Inheritance Act’) does significantly erode testamentary freedom. The courts have a wide discretion to redistribute assets to produce a fair result where they believe an individual has failed to make reasonable financial provision for their relatives or dependants.
Set out below is a summary of how the Inheritance Act operates.
Grounds for Bringing a Claim
The only basis on which a claim can be made is if a person who falls within one of the specified categories of claimants applies to the court on the ground that the disposition of the deceased’s estate has not provided them with reasonable financial provision.
The Categories of Claimants
The categories of claimants are:
- The wife, husband or civil partner of the deceased.
- A person who, during the whole of the period of two years before the date when the deceased died, was living
(i) in the same household as the deceased; and
(ii) as the husband or wife or civil partner of the deceased.
- A former wife, husband or civil partner of the deceased who has not remarried.
- A child of the deceased.
- Any person, not being a child of the deceased, who, in the case of any marriage or civil partnership to which the deceased was at any time a party, was treated by the deceased as a child of the family in relation to that marriage or civil partnership.
- Any person (not being a person listed in the categories above) who was being maintained by the deceased immediately before he died.
Reasonable Financial Provision
In the case of an application made by a surviving spouse, reasonable financial provision means “such financial provision as it would be reasonable in all the circumstances of the case for a husband or wife to receive, whether or not that provision is required for his or her maintenance”.
In the case of other applicants, it means “such financial provision as it would be reasonable in all the circumstances of the case for the applicant to receive for his or her maintenance”.
Matters the Court Takes into Account
If the court determines that reasonable provision has not been made for the claimant, it must consider whether and in what manner it should exercise its powers to make an award.
The factors that the court must consider by law when deciding these questions are as follows:
- The financial resources and financial needs which the claimant has or is likely to have in the foreseeable future.
- The financial resources and financial needs which any other claimant for an order under Section 2 of the Inheritance Act has or is likely to have in the foreseeable future.
- The financial resources and the financial needs which any beneficiary of the estate of the deceased has or is likely to have in the foreseeable future.
- Any obligations and responsibilities which the deceased had towards any claimant for an order under Section 2 of the Inheritance Act or towards any beneficiary of the estate of the deceased.
- The size and nature of the net estate of the deceased.
- Any physical or mental disability of any applicant for an order under Section 2 of the Inheritance Act or any beneficiary of the estate of the deceased.
- Any other matter, including the conduct of the claimant or any other person, which in the circumstances of the case the court may consider relevant.
Any application for an Inheritance Act claim should be brought within 6 months of the issue of the grant of probate and this time limit is strictly enforced. The court does, however, have discretion to allow for applications out of time.
Claims under the Inheritance Act are becoming more frequent and it appears as though there is a shift from testamentary freedom to the principle of fairness in respect of testamentary dispositions. The courts have very wide discretion in interpreting cases and it is often the case that the subjective view of the trial judge will be of fundamental importance. It is therefore very important to take legal advice in respect of Inheritance Act claims.