Inheritance rules

Filed under : Tax Planning - Inheritance

How often have you heard the phrase he or she “left all their money to the dog’s home.” British people do generally have testamentary freedom and can do this. The 3 distinct legal systems of England & Wales, Scotland and Northern Ireland do adhere to this general principle but there are some variations in their respective laws on intestacy.

The concept of testamentary freedom was recently tested in the case of Ilott v The Blue Cross & Others which was decided in the English Supreme Court in March of this year.  Since 1938 there has been some statutory protection for a certain class of people. Namely spouses, civil partners, ex-spouses, children and those who were being maintained by the deceased at the time of death. The Inheritance (Provision for Family and Dependents) Act 1975 which is the current legislation came under scrutiny in the Ilott case.

A daughter living in straitened circumstances with her husband and 5 children had been estranged from her mother since the age of 17. Mrs.Ilott applied under this Act when her mother left no provision for her in her will and left all her money to various animal charities. In awarding the daughter £50,000 the District Judge took account of the long estrangement. The case went to appeal and the Court re-evaluated the claim ordering a variation of the dispositions in the will to grant the daughter £143,000 so that she could buy a family home plus £20,000 in instalments or as a lump sum.

The Supreme Court, the highest court in the land, has overturned the Court of Appeal and restored the original award of £50,000. The court ruled that English law attaches great significance to the principle of testamentary freedom. The legislation in dealing with claims by family members or economic dependents has to limit awards to “maintenance provision”. In doing so the factors the court will take into account are:

  • The actual and foreseeable financial resources and needs of the applicant, any other applicant and any beneficiary
  • The obligations and responsibilities of the deceased towards any applicant or beneficiary
  • The size and nature of the estate
  • Any physical and mental disability of any applicant or beneficiary and
  • Any other matter, including the conduct of the applicant or any other person, which the court may consider relevant.

To sum up this case clearly shows that there is no automatic right to a claim on an estate solely because an adult child has been excluded from a will. The Judge Lady Hale stated that the current law “gives no guidance in deciding whether an adult child is deserving or undeserving of reasonable maintenance.”

Spain and many other countries have fixed rules on inheritance and the concept of obligatory heirs. It is therefore very important to make a formally valid Spanish will if you have assets here. For detailed advice on inheritance and wills for the United Kingdom, Spain, Holland, Belgium and France contact us on 952 527014 or email us on info@decottalaw.net