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Cohabitees’ inheritance rights – courts will decide each case on its facts

Date:3 MAY 2018
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Private Client analysis: In Thompson v Ragget and others [2018] EWHC 688 (Ch), [2018] All ER (D) 18 (Apr), the claimant claimed reasonable financial provision under the Inheritance (Provision for Family and Dependants) Act 1975 out of the estate of her late partner, who had left her nothing. Paul King, CEO and head of legal practice, and Jen Wiss-Carline, chartered legal executive at April King Legal, comment on the case.

What are the practical implications of this case?

If a cohabiting couple do not make wills and one passes away, the survivor has no statutory right to inherit under the intestacy rules. However, like the claimant, a surviving cohabitee may use the courts to claim for financial provision where they have cohabited for two years, or where they were a dependent immediately before the deceased’s death.

A key issue in such cases, like the present case, is whether to provide accommodation by way of a life interest, rather than a capital transfer. In the well-publicised case Ilott v The Blue Cross and others [2017] UKSC 17, [2017] 1 FLR 1717, Lord Hughes noted:

'[I]t is necessary to remember that the statutory power is to provide for maintenance, not to confer capital on the claimant...If housing is provided by way of maintenance, it is likely more often to be provided by such a life interest rather than by a capital sum.’
However, in the present case HHJ Jarman QC recognised that granting a life interest rather than conveying a property outright was not an absolute rule, stating:

‘All cases are fact sensitive and in the present case that possibility is a reality.’
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This case gives some assurance to cohabitees that the courts will decide each case on its facts, and the award of a capital sum rather than a life interest is still possible where appropriate. Key points that influenced the judgment in the present case included the length of cohabitation, the claimant’s financial dependency on the deceased, and the fact that conveying the property to the claimant outright would do away with the need for her to ask permission to make renovations or to raise capital.

A further consideration is the deceased’s letter of wishes – while such letters are not binding, they can help or hinder such cases. In Ilott, the deceased’s letter was evidence that the deceased was ‘capricious and unfair’ towards her daughter, and her decision to disinherit was ‘harsh and unreasonable’. Notably in the present case, the deceased’s letter contained inaccurate statements and assumptions. This emphasises the need for letters of wishes to be drafted carefully and accurately, in reasonable terms and without accusations.

What was the background?

The case involved a claim by a cohabitee for reasonable financial provision under s 1(1)(ba) (as a cohabitee) or 1(1)(e) (as a dependent) of the Inheritance (Provision for Family and Dependants) Act 1975 out of the estate of her late partner. The couple had cohabited for 42 years, and the claimant was financially dependent upon the deceased throughout that time and at his death. The net estate was valued at £1,535,060 and included a number of properties.

The deceased entirely disinherited the claimant, instead leaving his estate to two of the defendants who were his tenants. In a letter of wishes, he explained he had made no provision for the claimant or her four adult children, expressing distrust in three of them. Further, he noted that he was the claimant’s main carer and that after his death, she would have to go into a home. He also stated her to be financially comfortable.
In fact, the claimant had savings of just £2,500 and her only income consisted of state benefits and disability living allowance totalling £1,114 per month. Further, her GP confirmed she was ‘certainly fit enough to reside in private accommodation with a relevant social care package’ and to do so would be in her best interests.
The key question was what financial provision would be reasonable in all circumstances of the case for her to receive for her ‘maintenance’.

What did the court decide?

HH Judge Jarman QC considered it would be reasonable to provide the couple’s home, ‘Elidyr Cottage’, which had been bought in 2016 for the couple to live in. As to whether the cottage should be transferred outright or a life interest granted, he referred to Illot in which it was emphasised that the statutory power is to provide maintenance, not to confer capital. However, he noted that all cases are fact-sensitive, and taking into account all factors, including the 42-year period of cohabitation, it was reasonable to convey the cottage (in which the defendants had no interest) to the claimant—noting: ‘such an approach is likely to facilitate all concerned moving on from this litigation’, and to do so would allow the claimant to ‘take decisions relating to her home, such as making structural alterations or raising money without the need to seek permission’.
He further awarded £28,844.68 for adaptations and moving costs, together with £160,000 for ongoing maintenance and care costs. The judgment meant the bulk of the estate still went to the tenant defendants.

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This analysis was originally published on LexisPSL Private Client (subscription required). Click here to request a free 1-week trial