Inheritance Act Claim Succeeds in Discretionary Trust Case

Mr W, our client, was the son of Mrs W who died in July 2011. Mr W was one of 3 children of the deceased. He had a sister (M) and a brother (R).  Mrs W had fallen out with R prior to making her Will. She executed the Will (with the help of M’s husband A) and in it she gifted £20,000 to M with the remainder of her estate being written into trust. M and A were named as the executors and trustees with absolute discretion as to who should receive anything from her estate. This is known as a discretionary trust.

Whilst our client was named as one of the possible beneficiaries of the trust, there were a number of other beneficiaries - including 14 grandchildren and great grandchildren. The beneficiaries weren’t limited to people living at the time of Mrs W’s death, but also future descendants of her children. It was a confusing and uncertain trust under which Mr W had no means of ensuring that he got his fair share of his mother’s estate.

Initial conversations between Mr W and M suggested that the trustees would give him an equal share of the residue, so long as their mother’s wishes for R not to benefit was respected. However, it soon became apparent that M and A were not in fact willing to make any provision for our client and so he sought legal advice from this firm.

Grant of Probate was issued to A and M in November 2011, stating a net estate of £512,893.83.

On our advice Mr W pursued a claim against his mother’s estate as a under section 1(1)(c) of the Inheritance (Provision for Family & Dependants) Act 1975. He relied upon the following section 3 factors in support of his claim:-

  • 3(1)(a)- his financial need for provision (particularly his need for housing as he had sold his home in England with a view to using the inheritance he had been promised by his mother to renovate a run-down property in France. Without an inheritance he would remain living in a caravan: as compared to;
  • 3(1)(c)- the remaining beneficiaries’ lesser need for provision- in particular the fact that M and A were reasonably well of in their own right due to A’s job. The remaining beneficiaries had no actual right to an inheritance from the trust only a right to be considered and so their need could not be as great;
  • 3(1)(e)- the estate was of a sufficient size to make provision for him;
  • 3(1)(d) and (g)- the deceased’s conduct in promising him an inheritance which he relied upon when selling his English property and buying a run-down property in France, gave rise to an obligation to provide for him with a defined inheritance on her death.

It was necessary to commence court proceedings but the parties agreed to a stay of those proceedings to enable negotiations to be entered in to. This was difficult with seventeen defendants, some of whom were minors and others who didn’t respond to correspondence.

Terms of settlement were eventually reached with the executors’ solicitors whereby Mr W received a substantial lump sum, plus his legal costs. The Court approved the settlement and costs were agreed with the estate, allowing our client to receive his inheritance and follow his planned dream of renovating his property in France.

It is not uncommon for people making a Will to leave the decision making to their executors/trustees, instead of deciding who to leave their estate to themselves. However, these discretionary trusts can create divisions and disputes within families if not properly thought through. Whilst trustees have obligations to exercise their duties fairly, they can, if they make the decision in the right way, withhold an inheritance from a beneficiary who they don’t want to benefit. This is where the 1975 Inheritance Act can sometimes help and Mr W’s case is a good example of how such claims can often be resolved by way of an “out-of-court” settlement, without the necessity of an expensive contested trial.

If you have lost out due to a discretionary trust and would like to know if you can pursue an Inheritance Act claim then call us now for a a free initial assessment on FREEPHONE 0808 139 1599