Changes to Estate Distribution after Death - IPFDA

Question 1

What is the purpose of the Inheritance (Provision for Family and Dependants) Act 1975 (IPFDA)?

Answer 1

To enable certain categories of people to apply for reasonable financial provision from the estate of a deceased person where the will or intestacy rules do not make such provision.

Question 2

What is the jurisdictional requirement under s 1(1) IPFDA 1975?

Answer 2

The deceased must have died domiciled in England and Wales.

Question 3

What are the categories of eligible applicants?

Answer 3

• Spouse or civil partner
• Former spouse or civil partner (not remarried or re-partnered)
• Cohabitee (living as spouse/civil partner for 2 years before death)
• Child of the deceased (includes adopted children)
• Person treated as a child of the family (e.g. step-child)
• Person maintained financially by the deceased

Question 4

What does ‘maintenance’ mean in this context?

Answer 4

A substantial contribution in money or money’s worth towards reasonable needs—not just emotional or social support

Question 5

What is the time limit for making an IPFDA claim?

Answer 5

Six months from the date of the grant of representation

Question 6

Can this time limit be extended?

Answer 6

Yes. The court has discretion to extend the time in special circumstances

Question 7

What factors are considered when extending the time limit?

Answer 7

• Reasons for delay
• Whether negotiations were started in time
• If the estate has already been distributed
• Whether refusal would leave the applicant without remedy
• Whether the claim is arguable

Question 8

Where can an IPFDA 1975 application be lodged?

Answer 8

County Court or the High Court (Family or Chancery Division, depending on the nature of the case).

Question 9

When is the Family Division of the High Court usually appropriate?

Answer 9

When the applicant is a spouse, civil partner or cohabitee and the case does not involve complex issues of interpretation.

Question 10

What property is included in the deceased’s ‘net estate’?

Answer 10

• The normal succession estate
• Unexercised general powers of appointment
• Property given by donatio mortis causa or statutory nomination
• Severable share in joint tenancy (if the court so orders under s 9)
• Certain lifetime dispositions brought back into the estate under ss 10–11 (anti-avoidance provisions)

Question 11

What are the grounds for a claim?

Answer 11

• The will failed to make reasonable financial provision for the applicant
• The intestacy rules failed to make reasonable provision

Question 12

What factors will the court consider in IPFDA cases?

Answer 12

• Applicant’s financial needs and resources
• Obligations of the deceased
• Size and nature of the estate
• Competing claims
• Applicant’s relationship with the deceased
• Any other relevant matters

Question 13

What orders can the court make?

Answer 13

• Periodical payments
• Lump sum
• Transfer or settlement of property
• Acquisition of property
• Variation of marriage or civil partnership settlements
• Variation of trusts under will or intestacy

Question 14

When are orders deemed effective from?

Answer 14

From the date of the deceased’s death. They are “read back” for inheritance tax purposes.

Question 15

What are the two stages of an IPFDA claim?

Answer 15

1. Did the deceased fail to make reasonable financial provision?
2. If so, what award (quantum and form) should be made?

Question 16

What standard of provision applies to a surviving spouse or civil partner?

Answer 16

Such provision as it would be reasonable to receive, whether or not needed for their maintenance (a higher standard).

Question 17

What standard applies to all other applicants?

Answer 17

Provision that is reasonable for their maintenance, considering their needs and resources.

Question 18

When can the higher spouse standard apply to a former spouse or civil partner?

Answer 18

• They have not remarried/entered a new civil partnership
• The separation or divorce occurred within 12 months of death
• No financial provision order was made/refused in divorce

Question 19

What common factors must the court consider for all applicants?

Answer 19

• Applicant’s financial needs/resources (now and foreseeable)
• Needs/resources of other applicants and beneficiaries
• Deceased’s obligations to others
• Size and nature of the estate
• Physical or mental disability
• Any other relevant factor (e.g. conduct)

Question 20

What does the court consider for children of the deceased?

Answer 20

How the applicant was (or might be) educated or trained

Question 21

What must the court consider once a failure to provide is established?

Answer 21

• The quantum (how much)
• The form (e.g. lump sum, property transfer, life interest)

Question 22

What is required to assess quantum and form of award?

Answer 22

A breakdown of the applicant’s assets, liabilities, and financial needs.

Question 23

What types of orders can the court make?

Answer 23

• Periodical payments
• Lump sum
• Transfer or settlement of property
• Acquisition of property
• Variation of marriage or civil partnership settlements
• Variation of trusts under will/intestacy

Question 24

From when do IPFDA orders take effect?

Answer 24

From the date of death – they are read back for tax purposes.

Question 25

Is an interest under a discretionary trust always sufficient?

Answer 25

No. It may not constitute reasonable provision because there’s no guarantee of benefit.

Question 26

When might a life interest be a more appropriate award?

Answer 26

- When the applicant wishes to remain in the home - When capital ownership would conflict with the interests of the deceased’s other beneficiaries (e.g. children from a previous relationship)