inheritance-act
Court of Appeal overturns decision to throw out a Widow’s delayed application to claim from her late husband’s estate.
  • 7th Aug 2019
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You may recall a recent article published on the consequences of the case of Cowan v Foreman [2019] and the time limits for bringing a claim under Inheritance (Provision for Family and Dependants) Act 1975 (“the Inheritance Act”).

 

Background

 

The claim was being brought by Mrs Cowan, against the estate of her late husband Mr Cowan. Mr & Mrs Cowan had been in a relationship since 1991 and married in February 2016 not long after Mr Cowan’s cancer diagnoses. Mr Cowan subsequently died approximately 2 months later. At the date of Mr Cowan’s death his estate was worth approximately £29m.

 

Mr Cowan made a Will shortly before his death leaving legacies to his children, personal possessions to Mrs Cowan and the remainder of his estate on a discretionary trust for various beneficiaries. Mr Cowan left a letter of wishes indicating how he wished for the discretionary trust to be administered and specifically that Mrs Cowan was to be regarded as the principal beneficiary.

 

Probate was granted in December 2016. Mrs Cowan was notified of the contents of the Will and became concerned that the trust would not (amongst other concerns) provide her with sufficient funds to live.

 

The Law

 

The Inheritance Act 1975 has long been the legal mechanism by which certain people (such as cohabitants, spouse or children of the Deceased) can make claims for reasonable financial provision, should the Will of a deceased individual not provide them with reasonable financial provision (required for their maintenance in the instance of Cohabitants and children).

 

The parameters of the Inheritance Act are strict in a number of areas, not least with regard to the time limits by which a person is able to bring a claim under the Act. Under S.4 Inheritance Act 1975, claims against the estate cannot be made after the end of the period of six months from the date on which the grant is first taken out – being the “statutory period”, except with the permission of the Court. .

 

If reaching near the end of the statutory period, common practice has been for all parties to enter into a standstill agreement to extend or suspend the statutory period to give parties more time to try to settle any claim.

 

The Case

 

In the Case of Cowan v Foreman the Claimant sought to bring the claim 17 months after the statutory period expired. The claimant had brought a claim against the £16m estate of her deceased husband, who had not made outright provision for her but made her the principal beneficiary of two discretionary trusts.

 

The High Court recently handed down judgment in the case stating that despite standstill agreements being common practice, such an agreement cannot “stop the clock” on the statutory period. However, the Court of Appeal has reversed the decision of the High Court allowing the claim under the Inheritance Act outside of the statutory period.

 

The court found that it was not necessary for there to be a good reason in every case for a delay, and that each case should be considered on its own facts. Instead it appears that the Court would have greater regard to whether the claim has strong prospects of success.

 

It was held that the purpose of S4 Inheritance Act 1975 was to avoid unnecessary delay in the administration of estate rather than a disciplinary provision designed to prevent stale claims. The High Court’s critical comments on the use of standstill agreements (to extend the statutory period) were also dismissed and instead without prejudice discussions are to be encouraged as an alternative to issuing proceedings.

 

Asplin LJ went on to say:

 

‘Although the potential claimant will have to take a risk if an application is made subsequently to extend time in circumstances where negotiations have failed, if both parties have been legally represented, it seems to me that it would be unlikely that the court would refuse to endorse the approach.'

 

Lady Justice King agreed the Claimant’s appeal should be allowed and added:

 

“I should stress however, that if parties choose the ‘stand-still’ route, there should be clear written agreement setting out the terms/duration of such an agreement and each of the potential parties should be included in the agreement”.