The Inheritance (Provision for Family and Dependants) Act 1975
When somebody dies and ‘reasonable financial provision’ is not made for their dependents by their Will, the dependents can apply to the Court under the Inheritance (Provision for Family and Dependants) Act 1975 (“the Act”), asking the Court to award them property from the Estate.In brief, surviving spouses are entitled to bring claims under the Act, and claims by surviving spouses are subject to special rules – a surviving spouse does not have to prove that he/she needs the money, merely that what is left to them is not reasonable in all the circumstances of the case.
In order to assess what constitutes reasonable financial provision for the surviving spouse in each case, the Court will have regard to what the surviving spouse would have received if, instead of one spouse dying, the married couple had divorced at the date of the Deceased’s death (the “deemed divorce cross-check”). Crucially, however, the Act expressly provides that the cross-check does not set an upper or lower limit on what a surviving spouse may be able to claim under the Act.
Standish v Standish
In Standish v Standish [2024] EWCA Civ 567 the Court of Appeal decided a high value divorce claim – the Court had to decide how around £125 million of assets should be divided between the divorcing couple.
The legal issue before the Court boiled down to the following: where one spouse has come into the marriage with greater wealth than the other and transfers assets into the less wealthy spouse’s sole name to mitigate tax, but the transferred assets are treated by the couple during the marriage as property ringfenced for the original owner, how should those assets be divided on divorce?
The Court in Standish held that the determining factor governing the division of such assets was their origin, not who held them during the marriage; so the wife who had held the ringfenced assets for the husband (the original owner) had to give them back to him, and because they had been ringfenced and not treated as the couple’s joint property the wife could not claim any part of them in the divorce.
Why is Standish Significant in Claims Under The Act?
Standish is relevant to claims under the Act for four reasons:
1. when applying the deemed divorce cross-check, the Court may consider whether assets held by the Deceased at death were held by the surviving spouse at the start of the marriage (and perhaps even vice versa – that issue may be relevant where there are competing claims against the estate under the Act);
2. the Court may also consider whether any assets held by the other spouse at the start of the marriage were essentially ringfenced for that spouse despite having been transferred into the other spouse’s sole name;
3. only assets that would have been available to divide between the parties in the hypothetical divorce proceedings should be taken into account in the cross-check; and
4. the combined effect of the above may radically affect the size of the hypothetical divorce ‘pot’ in the cross-check and affect the Court’s assessment of how much should be awarded to the surviving spouse in their claim under the Act.
However, as above, the cross-check does not set an upper or lower limit on what may be awarded to a spouse under the Act, and in Lilleyman v Lilleyman [2012] EWHC 821 (Ch) Mr Justice Briggs (as he then was) explained why the cross-check is not the be all and end all in such claims, finding:
1. in a claim under the Act, the Court (cannot and) is not required to carry out a detailed analysis of a hypothetical divorce – so the cross-check can only ever be a rough gauge;
2. having only one spouse to provide for in a claim under the Act inevitably makes the cross-check an incomplete guide to what financial provision (if any) should be made; and
3. there may be reason to depart from the way marital assets are divided in divorce claims.
Consequently, though the divorce cross-check remains an important consideration in claims by spouses under the Act and though Standish has added further nuance to the application of the check, ultimately claims under the Act continue to be determined by reference to what constitutes reasonable financial provision for the surviving spouse having regard to all the circumstances of the case.
How can we help?
For assistance in dealing with Inheritance Act claims, or questions on any contested wills and estate administration matters, contact Ralph Wheeler on ralph.wheeler@porterdodson.co.uk or click below for our dedicated help line.