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Charities Triumph in ‘Reasonable Provision’ Test Case

The importance of charitable bequests and everyone’s freedom to leave their worldly wealth to whomsoever or whatever cause they wish have been underlined by a landmark Supreme Court ruling.

The case concerned a woman who had bequeathed the majority of her estate, which was worth around £500,000, to various charities and not a penny to her daughter, from whom she had been estranged for 26 years. The woman had decided to cut out her daughter many years before her death. The latter was aware of that and had not expected to inherit anything under the will.

After her mother’s death, the daughter, who has five children and lives in straitened financial circumstances, launched proceedings under the Inheritance (Provision for Family and Dependants) Act 1975, seeking reasonable provision from the estate. Her claim was upheld by a district judge, who awarded her £50,000.

That award was subsequently increased by the Court of Appeal, which directed that £143,000 be paid to the daughter out of the estate so that she could purchase her rented home. She was also awarded £20,000, to be received either as a lump sum or by instalments. Those orders were made on the basis that the original lump sum award would be of little or no value to her in that it would result in the withdrawal of means-tested benefits on which she relied.

In upholding an appeal brought by a number of charities that benefitted under the will, the Court restored the original award. The district judge had taken all relevant factors into account and his reasoned conclusions as to the daughter’s maintenance needs could not be faulted. The award would enable her to replace old or worn out household equipment and, when her capital fell below a threshold level, her entitlement to benefits would resume as before.

The Act revealed a deliberate legislative choice that awards in respect of reasonable provision for dependants should extend to income-based maintenance, not to capital. That in turn reflected a balance between testamentary freedom and the needs of dependants. The district judge had fully addressed the impact of the award on the daughter’s benefits and the Act did not envisage that those in her position should receive all that they might consider desirable.

Commenting on the unsatisfactory state of the law in the field, the Court noted that the Act gives no guidance as to the factors to be taken into account when deciding whether an adult child is deserving, or undeserving, of reasonable provision. Such decisions inevitably involve the making of problematic value judgments in respect of issues on which there is a wide range of both public and judicial opinion.

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