Our free December 2021 CPD on the Inheritance (Provision for Family and Dependents) Act 1975 (the 1975 Act) is now live in the partner area of the WillPack website. The article below is an extract of the CPD.
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The Two Stage Test
S1(1) and S3(1) of the 1975 Act make it clear that when the court is considering an application under the Act there is a two stage test it must consider.
Firstly under S1(1), the courts must decide whether the disposition of the deceased’s estate, either by will or via intestacy, does not make reasonable financial provision for the applicant.
Secondly under S3(1), if the court decide that reasonable financial provision has not been made, they MAY make an order for reasonable provision for the applicant. In this stage the court has a discretion whether or not to make an order, will quantify the provision and decide in what manner the provision shall be made.
A person receiving no provision does not mean their claim will be successful. The court may decide that the reasonable amount of financial provision for that person to receive is nothing.
During both stages of the test the courts will consider the facts known to them at the time of the hearing rather than at the time of the deceased’s death. For example the applicant may be in a worse financial position at the time of the hearing, or alternatively the value of the deceased’s estate may have risen or fallen since the date of death. The courts also take an objective view of the facts and it is irrelevant if the deceased did not know all the facts, so that fact that they may not have known that one of their children had become financially desolate would be irrelevant.
What is Reasonable Financial Provision
The two stage test mentions reasonable financial provision on a number of occasions. S1(2) of the 1975 Act sets out two different standards of reasonable financial provision. These are known as the ‘Surviving Spouse Standard’ and the ‘Maintenance Standard’
The Surviving Spouse Standard
This is defined as such financial provision as would be reasonable in all the circumstances of the case for a spouse/civil partner to receive, whether or not that provision is required for their maintenance. It is often said that provision under this standard should be at least what the financial provision would have been if the marriage had ended in divorce rather than death.
The standard is always applicable if the applicant is the deceased’s spouse/civil partner, however the courts have the discretion to also apply the surviving spouse standard to judicially separated spouses/civil partners and to former spouses/civil partners. This is if the deceased died within 12 months of the decree of judicial separation, decree absolute or nullity of marriage, and at the deceased’s death no order making or refusing provision for such spouse had been made in matrimonial proceedings. Courts are then enabled to deal with cases where the deceased dies before a financial order is made in divorce proceedings and the former spouse/judicially separated spouse would miss out on the chance to claim their fair share of the family assets.
The Maintenance Standard
The second standard means such financial provision as would be reasonable in all circumstances of the case for the applicant to receive for their maintenance. Maintenance is not defined by the 1975 Act and the courts have not given it a precise definition, instead deliberately leaving its meaning broad. It does not mean just enough to allow a person to simply get by in life but at the same time does also not mean providing anything that a person may regard as desirable. This standard is applicable to all applicants that the surviving spouse standard does not cover.