7a. Inheritance Act claims - IPFDA 1975

Question 1

IPFDA eligibility:

Answer 1

1. jurisdiction
2. recognised category
3. claim to be made within time limit

Question 2

Jurisdiction under IPFDA

Answer 2

deceased died domiciled in England and Wales

Question 3

types of domicile

Answer 3

• Domicile of origin: This is determined at birth and is based on the father’s domicile if the parents were married or mother’s if they were not.
• Domicile of dependency: If the relevant parent changes domicile, the domicile of children under 16 changes too.
• Domicile of choice: An individual can choose to sever all ties with their domicile of origin (e.g. by emigrating with the intention of never returning to the UK). The intention to change domicile must be permanent.

Question 4

What are the grounds to make a claim to the court under the Inheritance (Provision for Family and Dependents) Act 1975 (Inheritance Act), and what is the effect?

Answer 4

The terms of a will can be set aside or an intestacy can be varied if the deceased was domiciled in England and Wales, recognised category and did not make reasonable financial provision for the applicant

Question 5

Within what time of what event must an application under the 1975 Act be made?

Answer 5

Within 6 months of the grant being issued to the PRs

or

Later, with court permission

Question 6

How to find out the date of the grant?

Answer 6

Search government probate records online

or

Apply for a standing search by lodging the application and fee at Probate Registry (application can be renewed at the end of 6 months for a further fee)

Question 7

Choice of court

Answer 7

County Court or High Court

If High Court, consider whether to use Family (spouse, CP, cohabitee with no complex issues) or Chancery (other cases)

Question 8

What are the 6 recognised categories of people who could make a claim under the 1975 Act? (does not equal success)

Answer 8

1. Surviving spouse/CP
2. Former spouse/CP
3. Cohabitee for entire 2 years before death
4. Child of the deceased (bio, adopted etc)
5. Child of the family (incl. step child)
6. Someone being maintained by the deceased

Question 9

When might a former spouse be precluded from making a claim under the 1975 Act?

Answer 9

If they agreed to a clean break divorce

Question 10

Although children are a category who can make a claim, when will adult children be unlikely to be successful?

Answer 10

If they are able-bodied and in full employment

Question 11

For a person who was being maintained to be able to make a claim, how much of a contribution must the deceased have been making?

Answer 11

A significant contribution towards the reasonable needs of the claimant

Cannot be a one-off commercial transaction

Question 12

What is the two part process for determining what constitutes reasonable financial provision?

Answer 12

1. Will or intestacy rules failed to make reasonable financial provision for the claimant? (yes)
2. If so, what would such a provision have to be for the answer to part 1 to become no

Question 13

Who does the spousal standard for reasonable financial provision always apply to?

Answer 13

Spouses/CPs

Question 14

To whom does the court exercise its discretion to extend the surviving spouse standard? (s14)

Answer 14

This is DISCRETIONARY:
- Former spouses/CPs who have not remarried
- Spouse who is judicially separated
- Divorce, dissolution (for CPs), nullity (annulments) or judicial separation (formalises end of relationship but does not legally end marriage) occurred within 12 months of death
- No order for financial provision has been made or refused in ancillary proceedings following divorce, dissolution, nullity or judicial separation (you can’t claim twice!)

Question 15

What is the spousal standard for reasonable financial provision?

Answer 15

Such financial provision as is reasonable in all the circumstancesfor a husband or wife or civil partner to receive, whether or not that provision is required for his or her maintenance

Question 16

In their discretion, in what circumstance can the court apply the spouse standard to former spouses?

Answer 16

If the death occurs within 12 months of the divorce decree and no final order has yet been made in the divorce proceedings

Question 17

For all other applicants who aren’t spouses or former spouses qualifying for the spousal standard, what is the standard?

Answer 17

Such financial provision as it would be reasonable in all the circumstances of the case for the applicant to receive for his/her maintenance (without either living in luxury or poverty - not the same as the actual standard of living the claimant enjoyed during D’s lifetime, though this will be relevant)

Question 18

Is the test for this objective?

Answer 18

Yes, although evidence of the deceased’s reasons for not providing for the claimant are admissible

Question 19

What occurs when the court approves an application under the 1975 Act?

Answer 19

The estate is administered according to the terms of the court order, and not the will or intestacy

Question 20

In the event of a successful application under the 1975 Act, what are the court’s four options under their wide discretion?

Answer 20

1. Transfer property
2. Payment of a lump sum
3. Payment of income
4. Settlement of property on trust

Question 21

Does the court have any powers under the 1975 Act regarding property disposed of by the deceased before death?

Answer 21

Yes, if that disposal was intended to avoid the provisions of the 1975 Act

Question 22

common guidelines for all applicants

court should have regard to:

Answer 22

(a) applicant’s financial resources and financial needs
(b) financial resources and financial needs of other applicants
(c) financial resources and financial needs of any beneficiary of the estate
(d) any obligations and responsibilities which the deceased had towards any applicants or beneficiaries
(e) the size and nature of the net estate of the deceased
(f) any physical or mental disability of any applicant or beneficiary
(g) any other matter the court considers relevant in the circumstances (incl the conduct of the applicant or any other person)

this should account for current and
future financial resources and needs

Question 23

Specific guidelines: Spouse / civil partner

Answer 23

(a) The applicant’s age and the duration of the marriage / civil partnership.
(b) The contribution made by the applicant to the welfare of the family of the deceased, including any contribution made by looking after the home or caring for the family.
(c) The provision which the applicant might reasonably have expected to receive in divorce / dissolution proceedings if the couple had ended their relationship at the date of death. (This does not apply if they are judicially separated.) This is guidance only and does not set a limit on the award that can be made.

The court considers the first two criteria for former spouses / civil partners too. The third also applies if the court exercises its discretion to apply the surviving spouse / civil partner standard
under s14.

Question 24

Specific guidelines: Cohabitees

Answer 24

As for spouses/CPs, but excl. the third criterion:
(a) The age of the applicant and the length of the period of cohabitation.
(b) The contribution made by the applicant to the welfare of the family of the deceased, including any contribution made by looking after the home or caring for the family.

Question 25

Specific guidelines: Child of the deceased

Answer 25

Under s 3(3) IPFDA 1975 where the applicant is a child of the deceased, the court must also consider the manner in which the applicant was (or might expect to be) educated or trained.

This section also applies if the applicant was not a child of the deceased, but was treated as such, but the court must also consider:
(a) Whether and on what basis the deceased maintained the applicant, for what time they did so and the extent of their contribution.
(b) Whether and, if so, to what extent the deceased had assumed responsibility for the applicant’s maintenance.
(c) Whether in maintaining or assuming responsibility for maintaining the applicant the deceased did so knowing that the applicant was not their child.
(d) The liability of any other person to maintain the applicant.

Question 26

Specific guidelines: Other applicants

Answer 26

Under section 3(4) IPFDA 1975 if an applicant does not fall within one of the previous categories, but was maintained (wholly or partly) by the deceased, the court must take into account:

(a) The length of time for which and the basis on which the deceased maintained the applicant, and the extent of the contribution made by way of maintenance.
(b) Whether and, if so, to what extent the deceased assumed responsibility for the maintenance of the applicant.

Question 27

Property to which IPFDA applies

Answer 27

‘net estate’ i.e.:

• normal succession estate
• any property in respect of which the deceased held a general power of appointment which has not been exercised
• any property which the deceased nominated by statutory nomination or gave by DMC (minus IHT paid by the donee)
• deceased’s severable share of a joint tenancy (only if ordered by the court under s9)
• any other property disposed of during the deceased’s life but which is made available by the court’s anti-avoidance powers under ss10 and 11 IPFDA 1975

Question 28

possible orders by the court?

Answer 28

• periodical payments
• lump sum
• transfer of property
• settlement of property
• acquisition of property for transfer
• variation of marriage settlements
• variation of civil partnership settlements
• variation of trusts on which deceased’s estate is held (whether arising by will or intestacy)

any order is deemed effective from the deceased’s death, so it is ‘read back’ for tax purposes and treated as if the deceased had made the dispositions at death

Question 29

possible award of interests under a trust

Answer 29

the court has the power to award a life interest (rather than a capital interest) eg where:

• the applicant may simply want to continue to live in the family home, which was owned by the deceased
• deceased may have children from another relationship, to whom the applicant would be unlikely to leave the property upon their own death

Question 30

why award a life interest rather than a capital interest?

Answer 30

Because there is no presumption of a clean break 50:50 basis, there is a question of whether it is appropriate to award the applicant an outright interest in the estate, or whether it may instead be appropriate to grant them a life interest

Question 31

How does the court assess the value and nature of the award?

Answer 31

obtain a list of the applicant’s assets and
liabilities (including any future assets or liabilities)

also helps to determine whether the
applicant has a particular need (such as insufficient income or a need for housing), plus amount and nature of award

Question 32

how to structure SQE2 answer:

Answer 32

1. What is IPFDA /Inheritance Act 1975? Two-stage test (did the deceased fail to make reasonable financial provision and, if so, what award should the court make?)
2. Eligibility - Jurisdiction (domicile) and Recognised category (6)
3. Spousal or maintenance standard?
4. Common guidelines
5. Specific guidelines
6. Possible awards