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International Estate Planning: Making Reasonable Provision for Immediate Family in your Will – A Case Update

Published October 25, 2016 in Expatriate wills, Wills and probate

ILOTT V MITSON (2015 EWCA Civ 797)

1. BACKGROUND AND TAKE-AWAY

Generally, under English law, as with many Anglo-Saxon type jurisdictions, we can pass our whole estate to anyone we like, in any proportions we like, and subject to any conditions we like. In legalese, there is freedom of disposition over the whole estate. This is quite helpful for estate planners.

This is contrasted with a Civil law-type jurisdiction, where there is at least some kind of protected part of the estate, which must be passed to a closed list of the immediate family. This protected part varies significantly between countries. This is less flexible, and therefore potentially less helpful for estate planners.

On this basis, if we can choose the law that governs our will (and there is a choice for the international community, by virtue of the private international law rules, and also under the EU Inheritance Regulation No. 650/2012), for estate planning purposes, it seems obvious to choose the law with the fewest restrictions. Theoretically quite simple.

However, the very recent case of Ilott v Mitson [2015] EWCA Civ 797 shows that under Anglo-Saxon jurisdictions, additional ‘restrictions’ can sometimes come out of the woodwork after the testator has died, which undermine the will and it is too late to rectify them. The choice of law for international wills, therefore, is not as simple as all that, and certainly writing a will is not as simple as “what you write is what you get” (WIWIWYG) for English law documents.

2. THE INHERITANCE (PROVISION FOR FAMILY AND DEPENDANTS) ACT 1975

Despite what our wills say, if any (i) surviving spouse, (ii) former spouse not having remarried, (iii) child, (iv) another person treated as their child by the deceased or (v) a household dependent, is not “reasonably provided for” under the will, that person may ask the court to give them reasonable provision. Under the Act, the court can take this provision out of the estate before the will then comes into effect.

This is essentially the basis on which English courts solve the problems that other legal systems address through forced heirship and protected shares of the estate.

3. ILOTT V MITSON [2015]

Ilott v Mitson was about a difficult relationship between a mother and estranged daughter, who moved in with and later married a man of whom the testator did not approve. In this case, the testator excluded her daughter and all her descendants from the will, despite knowing she was in financial hardship, and instead gave all her possessions to a selection of animal charities.

The court at first instance awarded her GBP 50,000 under the Act, calculated by reference to the State benefits necessary to keep her existing standard of living. Paradoxically, the award actually dis-entitled the daughter to the benefits going forward, and so was negative in effect. The Court of Appeal therefore awarded a sum of GBP 143,000 in order for her to afford to buy out her own home, plus a further GBP 20,000 to satisfy immediate cash requirements. This was also directed to be structured so as to keep the State benefits.

The charities have applied to the Supreme Court to contest this outcome.

4. WHEN CAN YOUR WILL BE UNDERMINED?

In the opinion of this author, the Ilott case is not authority that every will can simply be undermined on application to the court. This particular will document was deliberately calculated to injure someone that should have benefitted under it. That is not usual and may, even without being party to the evidence be easily match with ‘unfairness’. Few professionally advised documents will suffer that fate, although we await the Supreme Court’s conclusions.

Meanwhile, if you have an immediate family in financial hardship, I can only advise that a will that leaves your entire estate to a dogs’ home is unlikely to pass through most international legal systems without challenge. It is comforting to know that English courts will also intervene, as I am convinced a Czech, Polish, French, German and countless other courts would. But watch this space.