The Court of Appeal has decided a vitally important question of law under the Inheritance (Provision for Family and Dependants) Act 1975. Lady Justice Arden, giving judgment in Ilott v Mitson  EWCA Civ 797, pronounced that the Court can, and should make reasonable financial provision for the appellant for her maintenance so that her living expenses are relieved without affecting the state benefits on which she relies.
Ilott v Mitson is a case that will be familiar to many family and contentious probate practitioners because of Ms Ilott’s unusual circumstances. Several factors purported to weigh against her: she is a healthy, adult, financially independent child, and was estranged from the deceased. District Judge Millon held at first instance that these characteristics were not a bar to her claim. He held that she had met the threshold test, namely, that financial provision had not been made for her in her mother’s Will.
DJ Millon awarded Ms Ilott a sum of £50,000 from her mother’s estate. Ms Ilott was in receipt of means tested state benefits, including housing benefit. DJ Millon assumed the award would affect her state benefits, but he did not address or consider how.
The practical effect of the award of £50,000 was to disentitle Ms Ilott to housing benefit. The award of £50,000 was less than she would have been entitled to from the state. Ms Ilott appealed to the High Court in 2011, but her appeal was dismissed by Justice Rimer.
She appealed to the Court of Appeal. Lady Justice Arden held that DJ Millon, and by implication Justice Rimer, had erred in law by making a ‘working assumption’ of the impact of the award on Ms Ilott’s state benefits. She found that the financial evidence submitted by Ms Ilott was sufficient to demonstrate her straitened financial circumstances. The question of the effect of state benefits is a matter of law which the Judge ought to have determined with assistance of the parties’ Counsel and the relevant state benefit regulations. The Court of Appeal held that the Judge’s failure to verify the impact of the award on the state benefits undermined the logic of the award in the first place.
The Court of Appeal therefore held that the evidence that had been before the trial Judge was sufficient to enable to the Court of Appeal to exercise its discretion to quantify the correct award for Ms Ilott. The Court of Appeal had to weigh the factors in section 3 of the 1975 Act.
Under the catch-all category of ‘Any other relevant matter’ in section 3(1)(g) of the Act the Court set out points of principal which practitioners should have regard to. In summary:
- Existing means are not conclusive as to the appropriate level at which the claimant is entitled to be maintained.
- The amount awarded in state benefits is not the ceiling for the need. The amount of benefits paid by the state is not analogous to reasonable financial provision for an applicant’s maintenance.
- The Court’s powers to only award maintenance for a child of the deceased strikes the balance with respecting the deceased’s testamentary wishes.
- It is notable in this case that there was no suggestion that Ms Ilott wanted to be estranged from the deceased.
- Ms Ilott’s resources were straitened. Even with the assistance of state benefits, her resources were at such a basic level that they outweigh the importance that would normally be attached to the fact that she is an adult child who has been living independently for many years.
- The same logic applies to an applicant who has extra expenses because of age or disability to a case where the applicant has extra needs because he/she relies on state benefits which must be preserved.
The Court of Appeal awarded Ms Ilott a lump sum of £143,000 to acquire a property. The Court held that the provision of housing was required to maintain Ms Ilott for the future, and would enable her to continue to receive non-means tested benefits (tax credits). The Court wholly rejected the suggestion that Ms Ilott should quickly spend the £50,000 so that she could go back to claiming benefits. Lady Justice Arden captured the Court’s overarching concern at paragraph 42: “To be within the 1975 Act, the award had to be for the appellant’s future maintenance, not for an immediate, major spending spree”.