02 November, 2022
"One day son, this will all be yours"
There has been an increase in recent years in disputes about the distribution of the estate of a deceased person following their death. Those disputes usually take the form of a claim to challenge the validity of a Will or a claim for financial provision under the Inheritance (Provision for Family and Dependants) Act 1975.
Less common is a claim based upon proprietary estoppel. A claim of this kind can arise when a person has acted to their detriment in reliance upon a promise that they will have an interest in property. The claim is often made after the death of the person who made the promise because it is often only then that the person who has relied on the promise finds out that the deceased has not made good on their promise.
To succeed it is necessary to persuade a court that:
Several cases in recent years have been brought during the lifetime of the person who made the promise and have involved next generation farmers claiming an interest in farms owned by family members. In those cases, the courts have approved the concept of accelerating an inheritance and not waiting until the death of the promissor if they are taking steps which are inconsistent with them giving effect to their promise.
The most recent of these came before the Supreme Court in December 2021, but it did not deliver its judgment until October this year. The essential facts were as follows:
The case was heard first in the High Court which decided to award Andrew a lump sum payment equating to 50% of the market value of the dairy farming business and 40% of the market value of the farmland and buildings (which was owned by Andrew's dad).
Lifetime remedies raise the problem of how to achieve a clean break and the court had to wrestle with the consequences of making a lifetime award. Whilst it accepted that the farm would inevitably have to be sold, it sought to soften the impact on Andrew's parents in two ways:
Andrew's parents appealed to the Court of Appeal, but the appeal was rejected. In a further appeal to the Supreme Court at the end of last year Andrew's parents argued that the amount of the award had not been quantified properly, was disproportionate because it went beyond what was necessary to do justice in the case and relief should not be granted whilst Andrew's parents were still alive. It was argued that the award did not balance the interests of Andrew and his parents or those of others who would have a claim on their estate such as Andrew's siblings because it would necessitate the sale of the farm.
The appeal succeeded to a limited extent because whilst the court ordered that the lump sum equating to 50% of the farm business had to be paid now, the further lump sum equating to 40% of the farmland could either be paid now or, alternatively, could effectively be deferred if Andrew's parents set up a trust holding Andrew's share in the land thereby preventing the need for it to be sold now. The court has directed that Andrew and his parents agree the terms of the trust. The court felt that this struck a better balance between meeting Andrew's expectations and the burden placed on his parents by accelerating Andrew's inheritance. Andrew had expected to receive an inheritance of the farmland when his parents died. Forcing the sale of the farmland now to fund the payment of a lump sum during his parent's lifetime would award Andrew more than what he was promised.
Several points arise out of this case and others involving those seeking a lifetime remedy:
For more information contact John Lambe in our Contesting a Will department via email or phone on 01772 220 235. Alternatively send any question through to Forbes Solicitors via our online Contact Form.
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