Court of Appeal decision bad news for charities?

The Court of Appeal has awarded an estranged child £163,000 from her late mother’s estate. The decision was reached in the high profile case of Ilott v Mitson, which has rumbled on for a decade. The decision has attracted lots of media attention, but does it mean that the final wishes in a will could be more easily overturned by the court? Cambridge Solicitor James Marsh explains the case. 

The background

Melita Jackson became estranged from her only child, Heather Ilott (now 54) when she eloped with her boyfriend at the age of 17. Mrs Ilott subsequently lived entirely independently of Mrs Jackson and had no expectation of inheriting from her estate.

Mrs Jackson died in 2004 at the age of 70 leaving the lion’s share of her £486,000 estate to three charities with which she had no connection. Her will made no provision for Mrs Ilott. Together with her will, Mrs Jackson had signed a letter of wishes explaining why she had deliberately excluded her daughter.

Case history

Mrs Ilott subsequently sought provision from Mrs Jackson’s estate and brought a claim under the Inheritance (Provision for Family and Dependants) Act 1975 (hereafter ‘the 1975 Act’) on the basis that she was receiving state benefits and needed the money.

At the time of the application, Mrs Ilott – a mother of five – had not worked since the birth of her eldest son (her youngest son was then 10). In addition, her husband was unable to work full-time due to back problems.

In 2007, a district court awarded Mrs Ilott £50,000 after it decided that reasonable financial provision had not been made for Mrs Ilott from the estate. In reaching its decision, the court took account of Mrs Ilott’s financial circumstances, the size of Mrs Jackson’s estate and the absence of other demands on the estate. Mrs Jackson’s conduct was also considered (as well as that of Mrs Ilott).

Mrs Ilott was unhappy with the size of the award and appealed. The three charities cross-appealed and the award was subsequently disallowed by the district court.

Mrs Ilott then appealed to the Court of Appeal where the district court’s most recent decision was overturned. In the process, the Court of Appeal said it was Parliament's intent in passing the 1975 Act that an adult child should be able to bring a claim 'even if it was possible for him or her to subsist without making a claim on the estate'.

Mrs Ilott appealed again, once more on the basis that the award was insufficient. She argued that the capital sum would reduce her means-tested benefits pound for pound down to the £16,000 means-testing threshold. The exception to this means-testing rule is where capital is used to purchase a home. Mrs Ilott maintained that £50,000 was insufficient to buy her house from the housing association; however the Court of Appeal rejected her argument on the basis that the award could only be varied if the original district judge was wrong in law or been unreasonable.

The current decision

Mrs Illott appealed again and this time was successful in having her award increased. The sum awarded – roughly two thirds of the estate – will allow her to buy her house from the housing association, whilst also retaining her means-tested benefits.

Allowing the appeal, Lady Justice Arden stated:

‘[Mrs Ilott’s] resources, even with state benefits, are at such a basic level that they outweigh the importance that would normally be attached to the fact that ... [Mrs Ilott] is an adult child who had been living independently for so many years'. She dismissed the three charities’ objections to increasing the award on the basis that Mrs Jackson had no connection with them and so ‘they have not demonstrated need or expectation’.

What does the decision mean?

Some regard the Court of Appeal’s decision to make an aware at odds with Mrs Jackson’s express wishes as concerning. Others worry that it may set a precedent that charitable beneficiaries have no expectation of inheritance where the deceased had no obvious connection with them.

Others are sceptical about the significance of the case, stating that claims under the 1975 Act will continue to take account of all beneficiaries and their financial needs relative to the claimant (in other words, claimants will not automatically be favoured over a charity).

It should also be remembered that successful claims by able-bodied adult beneficiaries who are capable of working are very rare.

Although the Court of Appeal’s latest decision may have created doubt in the minds of charities and testators, one certainty remains: where there’s a will, there are relatives! To mitigate the risk of a challenge after you die, you should always seek professional advice when writing a will.

For help and advice on matters related to wills, please contact Cambridge wills solicitor James Marsh on 01223 411421. 

Tagged under:

Other Tags: