Two daughters have failed in an Inheritance Act claim against their late father’s estate.
Anthony Shearer (the Deceased) died in October 2017. The Deceased’s two adult daughters, Juliet Miles (40) and Lauretta Shearer (39), made a claim for reasonable financial provision from his estate under the Inheritance (Provision for Family and Dependants) Act 1975 (the 1975 Act). Under his last will, dated 2 February 2015, the Deceased left his entire residuary estate to his second wife. Under the Will, no provision was made for Juliet or Lauretta.
Under the 1975 Act, cases turn on their own facts. However, in claims other than those brought by spouses or civil partners, reasonable financial provision is limited to such provision as would be reasonable for the applicant to receive for maintenance.
The Court dismissed the claim, finding that neither Claimant was able to establish a need for maintenance from the estate.
The Deceased was married to Juliet and Lauretta’s mother, Jennifer Shearer for 34 years prior to their separation in June 2006 and subsequent divorce in 2007. The Deceased married his second wife, Pamela Shearer, in March 2007.
In 2008, the Deceased made gifts of £177,000 and £185,000 to Juliet and Lauretta respectively. Pamela adduced evidence to show that, following these payments, the Deceased wrote to Juliet and Lauretta to express that they should expect no further financial provision from him. Despite subsequent requests, Juliet and Lauretta received no further financial support from the Deceased prior to his death.
The Will made no provision for Juliet, Lauretta or their children (the Deceased’s grandchildren). The principal beneficiary of the Deceased’s estate was Pamela.
In the event that Pamela pre-deceased the Deceased, the Will contained substitutionary provisions which provided that the estate would pass as to 25% each for two of Pamela’s friends, 25% to Juliet and 25% to Juliet’s children. As such, even in the event that the substitutionary provisions came into effect, Lauretta would not benefit from the Deceased’s estate.
The Court assessed the Claimants’ claims with reference to the factors set out in Section 3 of the 1975 Act.
Lauretta’s claim had two elements. Firstly, Lauretta sought a payment of £244,000 to enable her to convert her current interest-only mortgage to a repayment mortgage. Amongst other considerations, the Judge found that, in principle, a payment to convert Lauretta’s mortgage to a repayment mortgage at a lower level could not properly be described as ‘maintenance’ within the meaning of the 1975 Act.
The second element of Lauretta’s claim was for a payment of £105,000 to buy out her estranged partner’s equity in their shared property. Lauretta would only be able to discharge this liability in 2034, when her son turned 18. The Court found that this also could not be described as a financial need which Lauretta “has or is likely to have in the foreseeable future” within the meaning of the 1975 Act. The Judge commented that Lauretta was a relatively young woman with prospects of “advancing her career” such that her position may be altered in 13 years’ time, at the time of discharging the liability.
In comparison, Juliet’s claim focussed on her alleged precarious financial position. Juliet produced a schedule of expenditure to illustrate deficit in income to establish a need for maintenance. Following cross examination, it became apparent that some of the listed expenditure was in fact her husband Keith’s, which cast doubt on the veracity of the claim.
Juliet’s claim also included provision for the needs of her youngest daughter who suffered from autism. Whilst one of the factors to be considered under section 3(1)(f) of the 1975 Act is “any physical or mental disability of any applicant for an order under the said section 2 or any beneficiary of the estate of the deceased”, the Judge confirmed that this particular section did not encompass the disability of the dependent of an applicant; as grandchildren of a deceased do not qualify as eligible applicants under the 1975 Act. This element of Juliet’s claim was not wholly disregarded insofar as the Judge considered the effect that Juliet’s daughter’s autism had on Juliet’s earning capacity.
In relation to the needs of both Claimants, it was relevant that both had received financial assistance from Jennifer in the years following Jennifer’s divorce from the Deceased. The Court found that Jennifer had assumed obligations and responsibilities towards her adult children following her divorce and this had positively impacted the financial position of the Claimants.
The financial resources of Pamela as principal beneficiary of the estate
Pamela declined to answer questions about her financial affairs, electing to keep her financial affairs private and asked that the Court’s consideration of her financial resources should stay neutral.
The Claimants argued this proposal was inherently unfair, on the basis that doing so would allow a wealthy beneficiary to resist a claim by refusing to disclose details about their wealth. The Judge agreed with the Claimants on this point and said that, although a beneficiary was entitled to elect not to disclose details of her finances, the Court must infer that the financial needs of the beneficiary in question can be met by resources other than by the estate.
The size and nature of the net estate
The size of the net estate was just short of £2.2 million. As above, the Judge proceeded on the basis that Pamela’s needs were met by resources other than the estate. Therefore, the Court found that in the event the Claimants had been able to demonstrate a need for maintenance, the estate would have been sufficiently large to meet those needs (which totalled £1,226,145). However, in any event, the Claimants were required to establish a need for maintenance and the Court was not persuaded that either Claimant was able to demonstrate such a need.
Any obligations and responsibilities which the Deceased had towards the Claimants
In accordance with the section 3 factors, the Court assessed the obligations or responsibilities the Deceased had towards either claimant, if any, at the time of his death in 2017. In this regard, the Judge placed emphasis on the age and earning potential of the Claimants, finding that Lauretta was in a well-paid job and was stated to have earning potential for a further 20 years or more. The Judge commented that, whilst Juliet’s earning potential was considered to be constrained by her daughter’s autism, she was still potentially able to earn in her capacity as a dog behaviourist.
It was also relevant that Juliet’s principal financial support was provided by Jennifer, rather than by the Deceased. Juliet and her children lived in a property purchased by Jennifer and Jennifer paid the school fees for Juliet’s eldest daughter.
A further consideration was the provision he Deceased had made for both Claimants in 2008 (£177,000 to Juliet and £185,000 to Lauretta). The Judge found that the Deceased had made it clear that both Claimants were expected to be financially independent following these gifts.
The Judge ultimately dismissed the claims, finding that neither Claimant was able to demonstrate a financial need for maintenance which could not be met, if necessary, by adjustments to their lifestyles.
This case will be a useful authority for the principle that, should a beneficiary elect not to disclose details regarding their financial affairs, the Court will infer that their needs are being met by resources other than from the net estate. Unfortunately for the Claimants, Pamela’s refusal to do so was not sufficient to make out their claim.
This case provides another example of the difficulty for adult children to bring a successful claim under the 1975 Act. Of importance were the Claimants’ ages, their earning potential and their maintenance needs. The circumstances of this case were particularly stark; the Court was persuaded by evidence adduced to show the Deceased’s clear and explicit intentions for his adult daughters not to receive any further financial provision from him, in lifetime or following his death.