The outcome of a further appeal in Ilott -v- Mitson provides major food for thought for charities left legacies in a will. The recent decision handed down on 27 July 2015 also provides some guidance as to how the Court should treat awards made to applicants that may have an impact on the receipt of their state benefits.
The case concerns the estate of Mrs Jackson, who died aged 70 in 2004. Her will made in 2002 left no provision for her only daughter, Heather Ilott. Instead, her estate was to be distributed between three animal charities to which Mrs Jackson had no connection. Mrs Jackson and her daughter had been estranged for over 20 years. The Court heard how Mrs Jackson had acted in an unreasonable manner towards her daughter, albeit that the Court accepted that there was fault on both sides for the failure to properly reconcile. Mrs Ilott has five childen and lives with her husband in a house rented from a housing association. She is in receipt of various means tested state benefits.
This case has been before the Court on several previous occasions and this was the second time before the Court of Appeal.
Mark Terrar an Associate Solicitor at The Wilkes Partnership explains the legal issues at hand in the most recent appeal:-
“The issue before the Court of Appeal was whether the original award to Mrs Ilott of £50,000 was appropriate or whether the Court should re-exercise its discretion and make a more substantial award. The crucial question was whether financial provision should be made to Mrs Ilott that relieved her everyday living expenses without affecting her state benefits.”
The Court decided that the award to Mrs Ilott should be increased from £50,000. The sum awarded was the sum required by Mrs Ilott to purchase her property where she currently lives, which was valued at £143,000. She was also awarded a capital sum of up to £20,000 to provide a small amount of immediate additional income.
The Court made this award on the basis that it would relieve Mrs Ilott’s living expenses without affecting the state benefits on which she relies. The Court was also mindful of the fact that Mrs Ilott could provide herself with a pension in due course by way of an equity release, for example.
Mark Terrar explains:-
“This decision is interesting as the Court provided some helpful guidance on how awards should be considered insofar as state benefits are concerned. The Court concluded that the initial award of £50,000 simply replaced Mrs Ilott’s benefits and arguably was actually of less worth to her than continuing to receive those benefits. Providing her with a capital lump sum to purchase a property removes Mrs Ilott’s expenditure on rental, provides her with the potential for her to raise a pension pot and further, does not impact upon her benefits.
The Court had determined that it was unreasonable of Mrs Jackson to have made no provision for her daughter and that the charities had no competing claim to the estate. To them, any funds received because of the will are a windfall. The Court explained that it is not constrained to limit reasonable financial provision to the existing state benefits that an application is receiving. In short, the fact that the state has determined the level of benefits that is appropriate does not in any way impact upon the Court’s function of determining what constitutes reasonable financial provision”.
This case has impacted upon the charities greatly. They will no doubt be concerned at the amount of the award given to Mrs Ilott, which constitutes a significant proportion of the estate. Additionally, the charities will have expended a significant sum on legal fees in dealing with the initial case and all the subsequent appeals.
Mark Abrol, head of the contentious probate department, sympathises with the charities:-
“I have no doubt that legacy officers at charities will be concerned to hear about this successful appeal. Legacy income is vital for charities and this decision is an example of how the Court is prepared to step in and interfere with an individual’s testamentary decisions. All is not lost for charities, however, as these cases do revolve around their individual facts. It is essential that a charity whose legacy is under threat takes immediate advice from a contentious probate specialist at the very outset”.
At the Wilkes Partnership, we have one of the leading Will disputes and Contentious Probate teams in the region, with nationally recognised, leading individuals. For further information, contact Mark Abrol or Mark Terrar on 0121 233 4333.