Inheritance Act Claims - Case Study
The People
R came to England in the early 1970s and having met her fiancé they quickly became engaged and she moved in to live with him. To the outside world they appeared in all respects as husband and wife. R devoted herself to her fiancé helping with his work accompanying him on business trips, cooking and cleaning even washing and cutting his hair. On top of this R did a lot of hard physical work in terms of making improvements to the house and garden.
The Problem
Although engagement rings had been bought and indeed their relationship had lasted longer than many marriages R and her fiancé never did get married. Although prior to his death they had been to see a firm of solicitors with a view to making wills “leaving everything to each other” they never actually got round to making wills either. Following R’s fiancé’s death, with no children, no living, parents or brothers and sisters everything that he owned (including the house in which R and he had lived for in excess of 30 years) passed under the Intestacy Rules to two nephews to whom R’s fiancé was not even close. The first set of solicitors that R consulted advised her that although she had a claim under the Inheritance Act the house in which she lived would inevitably have to be sold and she would have to find somewhere else to live.
The Solution
Although we were convinced that if it went to trial R’s case was sufficiently strong so that she could be awarded all of the estate we were concerned that the court might order some costs to be paid out of the estate l in which event she might end up in real terms with less than could be achieved by negotiation.
One of the nephews who had been in an institution all his life died. We were able to persuade the other nephew to accept a small lump sum payment out of the estate but otherwise to settle the case on the basis that R would inherit everything. Unfortunately because R and her fiancé were not married she was not entitled to the spouse exemption in terms of Inheritance Tax (IHT) and there was on the face of it a large IHT bill. This made things particularly tight in financial terms.
We first obtained a consent order settling the Inheritance Act claim as set out above. We then approached HM Revenue and Customs asserting that by virtue of assurances made to her by her fiancé that the house was “their house” the contributions which R had made to improving the property in reliance upon those assurances meant that she already owned half of the house before her fiancé’s death. The Revenue after some reflection accepted that argument which had the effect of reducing the value of the deceased’s estate below the Inheritance Tax threshold such that R was able to remain in the house that she had shared with her fiancé for in excess of 30 years. This was something which she had been advised previously was impossible.
Who to contact
Paul Grimwood
Partner, Head of Civil Litigation
Email
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