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Inheritance Act 1975: what property is available for financial provision?

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Posted by Anna Sutcliffe on 14 May 2015

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Anna Sutcliffe Senior Associate

A person making an application for financial provision under the Inheritance (Provision for Family and Dependants) Act 1975 (“the Act”) should first consider the value of the deceased’s net estate.

If the deceased was of limited resources any such claim should be advanced with caution, as  ultimately if a claim is successful then financial provision will be made from the deceased’s net estate. 

Meaning of net estate

The Act makes reference to the “net estate” meaning: “all property of which the deceased had power to dispose by his will….less the amount of his funeral, testamentary and administration expenses, debts and liabilities”.

There are particular assets which will not form part of the net estate and disputes can arise as to whether a particular asset falls within the estate. For the purpose of this article we focus specifically upon:

Dispositions intended to defeat applications for financial provision

Where an application is made for financial provision under Section 2 of the Act, an applicant may also apply for an order that certain assets disposed of specifically to defeat a claim under the Act should be taken into account in determining the estate available for distribution. The Court must be satisfied that:

a)             Less than 6 years prior to death, the deceased made a disposition with the intention of defeating an application for financial provision; and

b)            Proper consideration for that disposition was not given by the receiving person. 

If these criteria are met the Court may order the recipient of the disposition to provide a sum of money (or other property) for the purpose of making financial provision. 

In deciding how to exercise its powers the Court will have regard to:

  1. the circumstances in which any disposition was made;
  2. any consideration given;
  3. the relationship of the donee to the deceased;
  4. the conduct and financial resources of the donee; and
  5. all other circumstances of the case.   

A recent case where the Court had to consider whether an estate should be compensated for dispositions intended to defeat a claim under the Act is:

Ruanne Dellal -v- Guy Dellal & Others [2015] EWHC 907 (FAM)

This case concerned the estate of Jack Dellal (“Jack”) a well-known property dealer who died during October 2012. Jack’s widow (the Claimant and Jack’s second wife) received in effect the entirety of his estate under a Will made during 2006. The issue that arose however, was the extent of the Deceased’s estate. 

The disclosed assets amounted to £15.4m and the Claimant issued a claim for financial provision on the basis that there were additional assets due to the estate in the form of gifts made by the deceased prior to death, solely for the purpose of defeating a claim under the Act. The Claimant alleged that the disclosed assets were “an absurd presentation of the true scale of his personal wealth”. Reputable rich lists over the years had indicated that Jack’s personal wealth was closer to £500m and the Claimant believed that the estate should have been significantly greater upon his death. 

The Defendant sought an order for the immediate disposal of the claim on the grounds of both summary judgment and strikeout. Although there was some criticism of “the present poverty of the Claimant’s case” Mr Justice Mostyn was not prepared to go as far as saying that the Claimant’s case was “merely a speculative punt”. He found that the Claimant had “put up a strong prima facie case that at his death Jack had access to considerable resources”

Accordingly the Defendant’s application to dispose of the Claimant’s case was adjourned (with liberty to restore) on the basis that the Claimant should be given the benefit of disclosure to allow an informed decision to be made as to whether the claim is hopeless or realistic. 

Now

We now wait with interest to see whether following disclosure the Claimant will establish that the deceased’s actual estate is in reality significantly more valuable than originally declared and if so whether she is successful with her claim for financial provision. 

About the author

Anna Sutcliffe

Senior Associate

Anna specialises in inheritance disputes including claims under the Inheritance (Provision for Family and Dependants) Act 1975, disputes between executors and claims in respect of the validity of wills.

Anna Sutcliffe

Anna specialises in inheritance disputes including claims under the Inheritance (Provision for Family and Dependants) Act 1975, disputes between executors and claims in respect of the validity of wills.

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