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15 September 2015

Estranged daughter wins £164,000 in will battle

The case of a woman who was awarded £164,000 from her late mother’s estate, despite being cut out of the will in favour of three charities, was widely reported when the Court of Appeal made its decision in July. Craig Williams, partner and expert on inheritance disputes, examines the facts.

Heather Ilott and her mother, Melita Jackson, had been estranged for 26 years. When Ms Jackson died in 2004, she directed that the majority of her estate, worth around £486,000, be split between the RSPCA, the RSPB and the Blue Cross, leaving nothing to her only child.

In addition to her will, she left a carefully-drafted letter of wishes and instructions for her executors to defend any claim brought by her daughter on the estate.

Ms Ilott went to court and, although she had never been maintained by her mother since she left home, she made a claim under the Inheritance (Provision for Family and Dependants) Act 1975, founded largely on the fact that she and her family had a very low income.

In 2007, she was awarded £50,000, but appealed for more and, at the same time, the charities cross-appealed, arguing that she should not have received any money from the estate.

The case continued back and forth through the courts, with Ms Ilott claiming that the capital award from the first court of £50,000 would actually make her worse off by reducing her means-tested benefits. This was because the award was greater than the cap of £16,000, which is exempt from means-testing. The only exception to this is capital used to buy a home.

In March last year, she unsuccessfully challenged the amount of the award, but she then returned to the Court of Appeal and in July this year, succeeded in having the amount increased to £164,000, around a third of the value of the estate.

The appeal judges said the original award was not “reasonable” for her maintenance and ordered that she should receive £143,000 - enough to buy her house from the housing association that let it to her, and an additional award of an option for her to take a further £20,000 capital sum.

The judgment was structured in such a way to allow Ms Ilott to preserve her means-tested state benefits.

Lady Justice Arden said: “The appellant'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 the appellant is an adult child who had been living independently for so many years.”

She dismissed the charities' objections to raising Ilott's award, because the deceased had no connection with them and so “they have not demonstrated need or expectation”.

Craig said: "Many will say that this judgment, and the underlying ruling in the case, further erodes the myth of testamentary freedom.

“It could result in an increase in the number of Inheritance Act claims issued at court, with some potential claimants thinking that the door has been pushed wide open to challenges by disappointed beneficiaries, regardless of whether the deceased had assumed any financial responsibility for them in their lifetime.”

Craig explained: "When making a will, the cautious testator will not only think about providing for their financial dependents but will also ask themselves: is my will fair? If its provisions are unusual or out of the ordinary, prospective claimants, and the court, might take interest when considering whether those provisions are reasonable.

"However, the facts of every case are different and it will still be an uphill struggle for adult claimants, with no financial ties to the deceased, to successfully pursue a claim under the Act based solely on this decision.”

Craig added: “This case also represents an interesting decision on how a court will take account of state benefit thresholds when calculating an award under the Act."

The three charities have said they may yet appeal to the Supreme Court.

To speak to Craig in confidence about an inheritance claim dispute call 01753 279037 or email your enquiry to disputes@bpcollins.co.uk.

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