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What Is Meant By ‘Reasonable Financial Provision’ In A Will?

Retired couple with financial advisor

Lewis v Warner [2017] EWCA 2182 (Civ)

The case of Lewis v Warner, which involved the challenging of a Will, was unusual for several reasons.  Firstly, the claimant was a millionaire, who unlike most people who argue they have not received adequate provision in a Will, had no pressing financial needs.  Secondly, the claimant always expected to die before the deceased so had not conceived of becoming a beneficiary of their Will.  During the case, the judge was asked to rule whether the claimant, an elderly man, could remain in a property owned by his partner (but which the claimant had also lived in) for 20 years, who had pre-deceased him but failed to grant him a right to live in the home.

The facts of the case

Ninety-one-year-old Thomas Warner and his partner Mrs Blackwell lived happily in the latter’s home for almost 20 years before she passed away.  Mr Warner was reasonably well off and never expected to be a beneficiary of Mrs Blackwell’s Will as he was the wealthier of the pair and had the means to buy his own property.  However, at his age, he had no desire to move out of the home where he had spent some of the most joyful years of his life.  His health was poor and his neighbour, who was a doctor, had provided him with an emergency button which she promised to always respond to.  The property was also located in the village Mr Warner had resided his entire life.

Lynn Lewis, the appellant in the case was Mrs Blackwell’s daughter.  She was the sole beneficiary of her mother’s Will.  She did not want to live in the house herself; she wanted to sell the property for the maximum value.  She was happy for Mr Warner to buy the property, as long as she attained full market price.

Mr Warner brought a claim under the Inheritance (Provision for Family and Dependants) Act 1975 (the Act, s1(1)(ba) and 1(1A).  Section 1(1)(ba) of the Act states a cohabitee who satisfies certain qualifying conditions is entitled to apply for provision from their deceased partner’s estate.

In the first instance, the Recorder ruled that under the Act the property should be transferred to Mr Warner for £385,000.  A valuer had valued the property at £340,000.  Ms Lewis had a separate valuation which provided a higher figure, but it was still well below the £385,000 sale price.  The main sticking point was that Ms Lewis wanted an open market sale, which was denied by the Recorder’s order.  She, therefore, appealed the Recorder’s decision.

The Court of Appeal had to rule on two issues, namely, whether the Recorder was right to conclude that the deceased’s Will did not make reasonable financial provision for Mr Warner’s maintenance, even though he could adequately provide for himself.  Secondly, whether the Recorder was entitled as a matter of law to make the order that he made under the Act.

The Court of Appeal’s decision

The Court of Appeal held that by not making provisions for Mr Warner to stay in the house they shared, Mrs Blackwell had not provided ‘reasonable financial provision’.  The court looked closely at the case of Ilott v Mitson [2017] UKSC 17 and stated that the concept of ‘reasonable financial provision’ for maintenance was central to the court’s ability to depart from the testator’s original wishes under the Will.  The court was not permitted to simply grant the desire of a person challenging the Will; the court had to focus on whether reasonable financial provision for maintenance had been made.  In doing this, the court had to have regard to the factors set out in section 3 of the Act, which included:

(a) the financial resources and financial needs which the applicant has or is likely to have in the foreseeable future;

(b) the financial resources and financial needs which any other applicant for an order under section 2 of this Act has or is likely to have in the foreseeable future;

(c) the financial resources and financial needs which any beneficiary of the estate of the deceased has or is likely to have in the foreseeable future;

(d)  any obligations and responsibilities which the deceased had towards any applicant for an order under the said section 2 or towards any beneficiary of the estate of the deceased;

(e) the size and nature of the net estate of the deceased;

(f) 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;

(g) any other matter, including the conduct of the applicant or any other person, which in the circumstances of the case the court may consider relevant.

After considering these factors, especially the obligations Mrs Blackwell had to Mr Warner, Mr Warner’s physical disabilities, his age, and the amount of time they had lived together, the Court of Appeal ruled that providing a particular home could be classed as maintenance and, given the circumstances, Mrs Blackwell had not made reasonable financial provision under her Will for Mr Warner.

The Court of Appeal subsequently upheld the order made by the Recorder.  It held there was nothing wrong with the Recorder’s decision, given the exceptional circumstances of the case.  Ms Lewis was happy to sell the property to anyone for full value, and the sale ordered gave her full value.

Had Mr Warner been younger and less infirm when his partner died, he would have been required to move out of the property and buy himself another one, as he could have afforded to do.  However, the Recorder had plainly thought that requiring him to do so, given his circumstances, should be avoided.

Conclusion

In delivering the Court of Appeal’s judgment, Sir Geoffrey Vos ruled that dependence does not always mean financial reliance and the needs of an “old and infirm” man to stay in a familiar home outweighed the interests of the beneficiary of the Will.

“This is not a matter of what might have been sensible or desirable. It is a matter of Mr Warner’s objectively assessed needs.

“The absence of a moral obligation was outweighed by what was required to preserve the status quo for a very old, infirm person”.

Not only does is this decision important in the context of contentious Wills and Probate, but it also highlights the pressing need for the laws around cohabitees to be overhauled to prevent these types of bitter and costly disputes from developing in the first place.

Please note, this article does not constitute legal advice.

Hart Reade Solicitors is a full-service law firm with offices in Eastbourne, Hailsham, Polegate and Meads.  We hold a Lexcel accreditation from the Law Society of England and Wales and are members of The Association of Lifetime Lawyers.  To make an appointment with one of our civil litigation solicitors regarding a Will or Probate dispute, please phone our office on 01323 727 321.