Inheritance Act Claims - FAQs for Universities
Our Legacy Protection team answer some of our most frequently asked questions surrounding Inheritance Act claims and their impact on higher education institutions (HEIs).
In our previous article, our Legacy Protection team explored some of the legacy protection issues that most commonly crop up for HEIs and identified Will disputes as a key area of concern.
We highlighted the case of Knipe v British Racing Drivers Motor Sport Charity & Others, involving a claim brought by the deceased's partner under the Inheritance (Provision for Family and Dependants) Act 1975 (Inheritance Act).
We now turn our focus to this particular type of claim, known as an 'Inheritance Act claim', and explore how it can affect gifts in Wills to HEIs.
Who can bring an Inheritance Act claim?
The class of claimants is clearly defined as:
- spouses and civil partners including former spouses and civil partners
- children, including adult children and those treated as a child of the family by the deceased
- cohabiting partners of the deceased as long as the cohabitation lasted two years or more and continued right up to the deceased's death; and
- anyone else, who need not be a family member, but who was financially dependent upon the deceased up to the deceased's death
These are all automatically eligible to bring a claim.
Does that mean a claimant will automatically succeed?
No. An eligible claimant will still have to demonstrate that they are not adequately provided for under the deceased's Will.
In cases where a claimant has been left some of the deceased's assets in their Will, a claimant may still succeed in being awarded more of the estate than had been provided for them in the Will if they can demonstrate that the Will does not adequately provide for them. This will be easier for a claimant to establish in cases where no provision was made for them in the Will.
Doesn't a valid Will trump a claim?
Sadly for HEIs, if they are beneficiaries of the Will, it is not quite that simple. Certainly, the starting point for courts when considering these claims is the principle of testamentary freedom, which permits people making their Will in England and Wales to leave their assets to whomever they choose and to exclude family members or dependants entirely if they wish to.
But the Inheritance Act acts as a form of safety net for eligible claimants if they can demonstrate to a court that financial provision should nonetheless be made for them from the deceased's estate.
It is understandably a common concern for HEIs, when claims of this type are brought, that the deceased's wishes to benefit his/her chosen institution appear to have been disregarded.
Whilst it is true that the deceased's wishes will not be the paramount factor in the court's consideration they can, and often are, taken into account alongside the other factors (referred to below) which will determine the outcome of the claimant's claim.
The importance of charities and their status as beneficiaries of a Will when compared with family members and the importance of testamentary freedom was endorsed by the Supreme Court in the 2017 case of Ilott v Blue Cross & Others. This involved a Will which left the deceased's entire estate to animal and bird charities, excluding the deceased's estranged adult daughter. Despite the deceased's clear wish to benefit the charities over her daughter, the daughter was awarded just over 10% of the estate by the court.
How much will typically be paid to a claimant if successful?
There is no set percentage or sum that will be paid out to a successful claimant. Outcomes in these cases are highly dependent upon the individual facts of each case.
Eligible claimants may receive nothing if they fail to evidence their financial need satisfactorily or if other factors considered under section 3 of the Inheritance Act outweigh the claimant's needs. Equally, whilst it is not typical for a claimant to successfully claim the whole estate, it is feasible they could, if the court were to determine that this was the proper outcome. In deciding, the section 3 factors that the court will consider are:
- the financial needs and resources of the claimant and those of any other claimants, (in some cases there is more than one claim)
- any physical or mental disability affecting the claimant
- any obligations or responsibilities which the deceased had towards the claimant or the named beneficiaries
- the financial needs and resources of the named beneficiaries in the Will
- the size and nature of the net estate - the amount available in the estate overall and the form the assets take is vital, particularly where consideration for housing for the claimant is to be taken into account
- the conduct of the claimant or any other matter which is reasonable in all the circumstances for the court to take into account (which generally can include the deceased's wishes when making their Will)
Whilst it is usually not possible to pinpoint a precise figure that a claimant is likely to receive, we can typically advise clients of a range of likely outcomes, having assessed the individual facts of a case.
Can these claims be settled out of court?
Absolutely. It is relatively rare for Inheritance Act claims to be decided at a contested trial as the courts encourage parties to settle these particular types of claims wherever possible through Alternative Dispute Resolution. This most commonly takes place at a one-day mediation where all parties attend either in person (where this is possible) or increasingly commonly, remotely by video link.
Is there a time limit on bringing these claims?
Claimants have six months from the date of the Grant of Probate to issue their claim at court. After which, they have a further four months to serve the claim on the executors and beneficiaries. So a claim could be waiting in the wings for up to ten months following the Grant of Probate. Claimants are, in some cases, able to issue a claim after the six month limit has passed but will have to obtain the permission of the court to do so, which may not be granted.
Will the estate pay for the legal costs of defending the claim?
No. The executors of the estate should remain neutral in such claims and are not permitted to use funds from the estate to defend a claim on behalf of beneficiaries. Beneficiaries defend such claims on a personal basis and costs are therefore payable by the beneficiaries.
However, if the claimant is unsuccessful at court, the court will typically (although it is at the court's discretion in each case) order the losing party to pay the majority of the winning party's costs.
Can multiple defendant institutions have the same legal representative to reduce costs in defending a claim?
Yes, as long as there is not a conflict of interests created by the same legal representative acting for both and as long as the beneficiaries agree on a joint approach as regards defending the claim.
What should we do if our institution is notified of a claim relating to a legacy?
Act quickly in seeking specialist legal advice. Claimants are required to provide a detailed Letter of Claim to the executors and beneficiaries before they issue proceedings at court. In most cases, with expert advice, the strengths or weaknesses of a claim can be readily assessed allowing swift action to be taken which can potentially prevent court proceedings being issued by a claimant. This can save costs for the defending beneficiaries in the long run.