Craig Ridge, Partner and Head of Contentious Probate and Trusts, and Georgia Stott, a Senior Associate in the team, advised Mrs R, the widow of a wealthy business owner in relation to a claim against his estate for reasonable financial provision.
Mrs R was widowed 6 years prior to approaching us. Her husband had been the sole breadwinner for the family, running his own business and managing various properties. His will left the entirety of his estate to his daughters, leaving his wife with very little and no security in terms of where she would live. The will also appointed his accountants as executors. Relations between the executors and the beneficiaries were quite strained, as it appeared to the beneficiaries that very little had been done to further the administration of the estate, despite the length of time that had passed.
As the estate passed to the deceased’s daughters, several hundred thousand pounds was paid, as his estate did not benefit from any spousal exemption.
There were various issues that our client faced when she came to see us. Firstly, the fact that any claim she made for greater financial provision from her husband’s estate would be “out of time”. In other words, she would need the court’s permission to make her claim. Secondly, the strained relationship with the executors would make reaching an agreement more challenging. Thirdly, we needed to consider whether there was a means by which we could try and recover the inheritance tax that had been paid, despite the length of time that had passed. The good thing was that our client’s daughters, who were the primary beneficiaries of the estate, were on our client’s side. They wanted to ensure she received fair provision as well. But our client was keen to balance this with ensuring that they ultimately benefited.
We advised our client that we considered the prospects of her being given permission to make her claim out of time would be good. This was on the basis that those personally affected by it – her children – supported her claim. Also, she did not know until she took advice from us that she had an option to make such a claim. Finally, the estate had not been administered so there would be no issue in recovering assets. But we advised that she couldn’t delay in making her claim. As such, we issued her claim for her, and then agreed with the other parties that it would be paused (stayed) while they negotiated.
On the face of it the negotiations should have been straightforward. Those personally affected by her claim (our client and her daughters) were able to reach agreement relatively easily, on terms that would see our client receiving the benefit of the estate for her lifetime, with it ultimately passing to her children on her death.
This agreement would have three benefits:
- Our client’s needs would be met for the rest of her life;
- She and her daughters would be named as trustees so they would be in control of the trust fund; and
- The spousal exemption would apply meaning the inheritance tax could be reclaimed utilising a provision of the Inheritance (Provision for Family and Dependants) Act 1975. As a result, the estate would be several hundred thousand pounds richer.
However, the difficulty was with the executors. They sought to try and negotiate an indemnity in their favour in exchange for agreeing the terms. Eventually they were persuaded to agree the terms on the basis that seeking to personally benefit from the negotiation placed them in a position of conflict.
Overall our client achieved a very good result. Her needs would be met for the remainder of her life, and she and her children would be in control of all the assets, including the family business.
