The case of Kaur v The Estate of Karnail Singh (Deceased), Avtar Singh Lally and Jagtar Singh Lally [2023] EWHC 304 is a salutary reminder to anyone making a Will to consider carefully the provision they make for their immediate family members.
Whilst testamentary freedom is an established principle of English law, testators often fail to realise that their intentions can be frustrated by the application of The Inheritance (Provision for Family and Dependants) Act 1975 ("the 1975 Act").
What was the case about?
In this case, the Deceased made a Will leaving his entire estate to his two sons, with no provision for his widow or four daughters. The Deceased had clearly intended that his entire estate pass down the male line. The value of the estate was in dispute and thought to be either £1.99m or £1.2m. Irrespective, the widow's claim was for half of the estate on the basis that this would comfortably meet all of her needs, both income and capital.
In allowing the claim, Peel J considered the provisions of Section 1 to 3 of the 1975 Act. The Court looked at the various factors set out in Section 3 to determine whether reasonable financial provision had been made for the widow. As the claimant was a spouse, the Court was also required to look at Section 3(2), a provision often referred to as the "divorce cross-check", broadly meaning that the surviving spouse should not ordinarily be worse off as a widow than she would be as a hypothetical divorcee.
Looking at the facts before him, Peel J formed the view that the widow had made a full and equal contribution throughout the 66-year marriage (during which all the marital assets had accrued), both in the home and in the family clothing business (in which she had no direct stake nor from which she received a salary). The judge was clear that on the facts, reasonable provision had not been made for the widow and in his view "it was hard to see how any other conclusion can be reached."
The Court therefore ordered that the widow should receive half of the net value of the estate and the Will should be varied to that effect.
What can we learn from this case?
The case is an important reminder to anyone making a Will to consider carefully the provision they may be expected to make for their immediate family members and in particular, any individual who is financially dependent upon them.
It is not clear from the judgment whether the Deceased's Will was made through a solicitor or other professional. However, practitioners are advised to discuss carefully the implications of disinheriting or making limited provision for immediate family members or those for whom the testator may be expected to provide. It may be that a testator has good reasons for acting in such a way (e.g. a family dispute or where sufficient provision has already been made in lifetime for a particular beneficiary). In this case, it would be sensible to prepare a contemporaneous letter or note outlining the testator's reasoning. Such a letter or note could be presented before a Court as evidence of the testator's intention if the Will was challenged following their death.
Where a testator has no sensible or rational reasoning for acting in such a way, practitioners are reminded to have regard to the test for testamentary capacity set down in Banks v Goodfellow. In assessing testamentary capacity, a practitioner has to be comfortable that the testator is "aware of the persons for whom they would usually be expected to provide" and that they are "free from any delusion of the mind that would affect their dispositions to these people." Where testamentary capacity is questionable, practitioners are reminded to consider "the golden rule" and think about whether a medical opinion should be obtained.
How could the Deceased have achieved his aims without disinheriting his widow?
Where, as in this case, the Deceased wished to preserve his estate for his sons, it would have been prudent for him to take professional advice on how to achieve this. One solution would have been to leave his estate on life interest trusts for his widow, naming his two sons as remaindermen. This would have had the effect of providing an income for the widow, with the ability to delve into capital (depending on the terms of the Will) should it be required for her needs.
Of course, there would still be a risk that one or more of his daughters might make a claim, having been disinherited in favour of their brothers, even if the testator may have had good reasons for acting in this way, for example if he had already ensured his daughters were well provided for. While it is harder for adult children to bring a successful claim under the 1975 Act, it is not impossible, especially where there is financial need, and even unsuccessful claims are expensive for the estate.
Although the inheritance tax ("IHT") position of the Deceased's estate was not discussed in the judgment, it is likely that IHT would have been due as the value of the estate exceeded the available thresholds. A life interest trust would have been beneficial in capturing the spouse exemption and delaying any IHT liability until the widow's passing.
This case serves as a warning that appropriate professional advice, both in relation to the position of any beneficiaries and IHT, should always be sought when thinking about making a Will.
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