Author: Sasha Burl

What is Reasonable Financial Provision?

Posted on by Sasha Burl

What is ‘reasonable financial provision’ under the Inheritance (Provision for Family and Dependants) Act 1975 (‘the Act’) and what exactly is taken into consideration when making a claim?

The Act enables certain people who have not been left sufficient monies under a Will to bring a claim for reasonable financial provision from the Deceased’s Estate.

The Act sets out who is eligible to apply. They will need to be a “connected person” which includes a spouse or civil partner, a former spouse or civil partner, a child of the Deceased, a partner of the Deceased or any other person who was being financial maintained by the Deceased immediately before their death.

In a recent case, Wellers were instructed by Executors of an Estate to defend a claim made by the Deceased’s relatives who claimed that the Deceased was providing for their family financially before her death and that without any financial provision from the Estate, they would be living in poverty. They were able to bring a claim as “…any other person who was being financial maintained by the Deceased immediately before their death…”

The first question was whether financial provision was being made before the Deceased’s death, and if so, how much. We also needed to consider whether the payments being made immediately before death were considered reasonable financial provision. Reasonable financial provision is defined in the Act as “…such financial provision as it would be reasonable in all the circumstances of the case for the applicant to receive for his maintenance…”

Although the Claimants were able to show that the Deceased had in fact been making payments to them, they could not show that the payments being made amounted to reasonable financial provision as they were unable to produce evidence of their income and expenditure showing their needs.

There were also unable to show that regular payments were being made immediately before the Deceased’s death. In fact, the evidence revealed that no payments had been made by the Deceased to the Claimants for six months prior to death so the Court concluded that the limited payments made to the Claimants by the Deceased would not amount to reasonable financial provision based on the evidence supplied.

The Claimants produced thousands of pages of bank statements, which simply did not support their claim that they had been receiving any significant or regular payment from the Deceased before her death. The Claimants failed to show that any payments they had been receiving prior to the Deceased’s death amounted to a contribution towards their reasonable needs. 

Due to the Claimants lack of evidence in support of their claim, we made an application for the claim to be struck out on the basis that the Claimants did not have a real prospect of success. This application was successful, and the Claimants were ordered to pay our clients’ costs.

As stated above, for a Claimant to be successful in a claim for financial provision on the basis that they were being financially supported by the Deceased, they must establish that they are a “connected person” and then satisfy all other requirements under the Inheritance Act.

Every case is different, and what may be established as reasonable financial provision in one case, does not necessarily set the threshold for reasonable financial provision in another. The Court is required to consider all of the circumstances of a case to include the relationship the Claimant had with the Deceased, the financial position of them before the Deceased died, the financial position of the Claimant after the Deceased’s death and the financial circumstances of all beneficiaries.

Therefore, there is no specific threshold for what is deemed as reasonable financial provision. Every case should be assessed on its own merit, taking into consideration the circumstances of the case and potentially the financial position before and after the Deceased’s death, of all parties involved.  

Here at Wellers, we can help you navigate through these often difficult and sensitive claims whilst protecting your interests as each claim is considered carefully on a case-by-case basis.  Do not hesitate to contact Sasha Burl today on 01732 446372 or email enquiries@wellerslawgroup.com

When a success fee becomes a financial need

Posted on by Sasha Burl

On 18 December 2024, the long-awaited Judgment in Hirachand v Hirachand and another [2024] UKSC 43 was handed down.

By way of a brief background, Navinchandra Dayalal Hirachand (“the Deceased”) died, leaving a widow (“the widow”), a daughter (“The daughter”) and a son, Katan Hirachand (“Respondent two”). The daughter had severe mental health problems and made a claim against the Estate for financial provision under the Inheritance (Provision for Family and Dependants) Act 1975 (“The 1975 Act”). S3(1)(a) of the 1975 Act allows certain parties to make a claim against an Estate for financial provision. The Court shall have regard to the “financial resources and financial needs which the applicant has or is likely to have in the foreseeable future…” when exercising its power in determining the financial provision that should be awarded, if any, to a party.

The daughter entered into a Conditional Fee Agreement (“CFA”) with her solicitor to fund the litigation proceedings. The CFA specified that if the daughter lost, the solicitors (and counsel) would not be paid but if she won, they would receive their fees and a success fee of 72%.

The High Court ruled in the daughter’s favour and concluded that the Will of the Deceased did not make reasonable financial provision for the daughter and she was awarded a lump sum of £138,918, which included a sum in respect of the success fee payable under the CFA, concluding that the success fee was a liability of the daughter and therefore a “financial need”.

The award in respect of the success fee was appealed to Court of Appeal (“COA”) on the basis that a success fee should not be considered a financial need and that under Section 58A(6) of the Courts and Legal Services Act 1990, the daughter would not have been able to recoup the success fee as part of a costs order. The COA upheld the decision of the High Court and determined that the CFA success fee was a debt required to be paid by the daughter and therefore was considered a “financial need” within Section 3(1)(a) of the 1975 Act.

The widow appealed to the Supreme Court (“SC”). The Supreme Court allowed the appeal and excluded the award in respect of the success fee to the daughter. This decision was made for various reasons, taking into consideration whether or not a success fee was considered a “financial need” of the daughter.

Whilst taking in to account the fact that payments to fund legal costs in matrimonial proceedings under the Matrimonial Causes Act 1973 (“MCA”) may constitute “maintenance”, the general rule under the Civil Procedure Rules do not allow for success fees to be claimed as part of a costs order (S58A(6) Courts and Legal Services Act 1990) and that in any event costs should be dealt with under a separate costs order and should not form part of a substantive award. Given claims under the 1975 Act are civil proceedings, the CPR apply and not this case is not a case being brought under the Matrimonial Causes Act but a case under the 1975 Act.

It was argued by the daughter’s legal counsel that S58(A) only applies to costs orders and that provision, such as the success fee award in this case, as part of a substantive award is left open. The SC argued that the order made was a “costs order” as it included a provision of payment towards the daughter’s success fee.

In conclusion, this case will set precedent in 1975 Act cases going forward in that these cases are still civil proceedings, and are bound by the rules set out therein, and success fees are not to be included in any relief awarded under the 1975 Act. Therefore, any success fee would need to be paid by the Claimant and the rules under Section 58A (6) of the Courts and Legal Services Act 1990 would apply.

Judgment can be found at https://www.bailii.org/ew/cases/EWCA/Civ/2021/1498.html

if you have any queries or wish to discuss any potential claims you may have under the Inheritance (Provision for Family and Dependents) Act 1975, then contact Sasha Burl at sasha.burl@wellerslawgroup.com or on 01732 457 575.

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