Under Section 9 of the Inheritance (Provision for Family & Dependants) Act 1975 (“the Act”) the court has the power to order that assets transferred under rights of survivorship rights and therefore not part of a deceased’s estate should nonetheless be treated as assets forming part of the deceased’s estate. This was the issue that the court had to consider in the recent sad case of John V Shaw [2023].

Case background

Emily McDowell was the mother of two children, Sam and Jake aged 13 and 11 when she tragically died suddenly on 22 July 2020, aged just 33 years. The children had both been diagnosed with autistic spectrum disorder. The children were cared for by Emily, their father, Michael and Emily’s second husband, Jonathan, who she married in November 2015.

Emily had died intestate. Her assets at the date of her death comprised her interest in her home which she owned jointly with Jonathan and some other assets amounting to about £50,000.00. The property which was valued at a little over £500,000.00 was owned jointly by her and Jonathan as joint tenants and accordingly, passed to Jonathan by way of survivorship rights following her death. As such, it did not form part of her estate.

As a consequence, the net value of Emily’s estate was less than £270,000.00, resulting in Jonathan being entitled to inherit the entirety of her estate pursuant to the provisions of the intestacy rules.

Michael, acting as the children’s litigation friend, therefore brought a claim under the Act for an award out of the estate together with an order that Emily’s share in the jointly owned property should be treated as forming part of her estate. The claim was brought after the expiry of the primary limitation period, namely within 6 months from the date of the grant of probate. Accordingly, it was also necessary for an application for permission to bring the claim out of time to be made. That application was successful and is not considered further in this article.

Section 9 of the Act

Section 9 of the Act provides:

“Where a deceased person was immediately before his death beneficially entitled to a joint tenancy of any property, then, if an application is made for an order under section 2 of the Act, the court for the purpose of facilitating the making of financial provision for the applicant under this Act may order that the deceased’s severable share of that property shall, to such extent as appears to the court to be just in all the circumstances of the case, be treated for the purposes of this Act as part of the net estate of the deceased.”.

The parties’ submissions

Jonathan said that the house was purchased by him from his savings, an inheritance from his father, and was subject to a mortgage in his sole name. When he and Emily married, she signed a document (which was before the court) confirming that she had no interest in the property. Subsequently, however, in February 2019 Jonathan agreed to transfer the property into the joint names of him and Emily. He told the court that he had done so to give Emily financial security if he were to die, as he was older than her and had quite serious heart problems. He accepted that upon transfer Emily became a joint owner of the property but argued that in reality he remained the owner as Emily did not contribute to the equity, and he did not consider it fair that it potentially brings half of the equity into consideration for the purposes of this claim.

The judge stated it was true that if Jonathan had not transferred the property into joint names, the children would have no claim upon it. However, he did and accordingly, Section 9 therefore applies.

Michael submitted on behalf of the children that there was nothing in Section 9 to suggest that the origin of the deceased’s beneficial entitlement is of any relevance. He also submitted that it was open to Emily at any time after the property was transferred into joint names to sever the tenancy so that she and Jonathan held it on trust for themselves as tenants in common in equal shares. Jonathan would not have been able to prevent her doing so and if she had done that, she could then have disposed of her half share by testamentary disposition or that half share would have formed part of her estate on intestacy.

The judge did not agree with the submission as regards the relevance of the original of the entitlement. He confirmed that the court’s power to treat Emily’s severable share of the property as part of her net estate is subject to the proviso that it may do so “to such extent as appears to the court to be just in all the circumstances of the case”. The origin of the deceased’s beneficial entitlement in the property was, the judge said, part of the context against which he had to make a just decision.

As to the position regarding severance of the joint tenancy, the judge noted that the counterargument was that Emily did not sever the joint tenancy because she never intended that she should be able to dispose of that half to her children by will or otherwise. He went on to say, however, that this was all rather speculative in circumstances where it was clear Emily was not doing any estate planning. If she had been, she likely would have made a will and perhaps purchased life insurance. As such, the judge considered it very difficult for him to attribute intention to Emily.

Judge’s conclusion

Having considered what is just in all the circumstances of the case, the judge held that given the strength of the children’s case, their ages, their known and likely further needs and the very small value of the net estate without Emily’s share of the property, the justice of the case demands that the court should have recourse to the jointly owned property to provide for the children’s reasonable needs under the Act.

The judge acknowledged that this outcome may seem very tough on Jonathan, but the injustice to the children if the court did not find recourse to it demands that he does so. When Jonathan transferred half of the property to Emily, he gave it to her. Part of the risk he took in doing so was that things would not always go well.

The claim itself

As regards the merits of the children’s claim itself, the judge held that it was beyond doubt that reasonable provision for the children had not been made because no provision had been made. The court then went on to review the financial positions of Michael and Jonathan, as well as consider the children’s educational and financial needs before determining the value of the award to be made.

The children were now living with Michael in a two-bedroomed property. Both attended private fee paying specialist schools. Michael had already run up a substantial credit card debt in continuing to make payment of the children’s school fees following Emily’s death and it was clear he would be unable to continue to do so unless an award is made in the children’s favour from their mother’s estate.

Having considered the children’s educational and financial needs, the judge made the following conclusions and order:

  1. That the children should receive an award that enables them to live in a three-bedroomed property. Accordingly, he awarded the sum of £50,000.00, a sum which he considered should be sufficient for Michael to either build an extension to his existing property or put towards the purchase of a new larger property.
  2. That, for these children with their specific needs, it is reasonable for them to continue to be privately educated and that provision should therefore be made to enable them to continue to do so. Accordingly, he awarded a sum of £100,000.00.

The judge concluded by commenting that this would leave Jonathan with approximately three fifths of the equity in the property. He acknowledged that it was a difficult position for him but that there was no good result for anyone in the circumstances of the case, and that he hoped Jonathan appreciated he had done the best he could to be just to all the parties.

Conclusion

Whilst the award in this case, as is often the case with claims under the Act, was very fact specific, it does serve as a useful example of when the court will invoke the provisions of Section 9 of the Act to bring assets back into a deceased’s estate for the purpose of facilitating a financial award in the applicant’s favour.