Monthly Archives: December 2016

Ames v Jones Strikes Blow to Claims of Disinherited Adult Children

By | An update | No Comments

Child unemployed as “lifestyle choice” fails to show being disinherited was unreasonable: Ames v Jones 2016

A daughter’s claim for financial provision from her late father’s estate was rejected on the grounds that her unemployment was a “lifestyle choice”.

The deceased left his estate (Approximately £1 million) to his wife of thirty years. The deceased’s only child, Miss Ames (41), an unemployed mother of two, lodged a claim against the estate under the Inheritance (Provision for Family and Dependents) Act 1975 (the “1975 Act”), claiming that his Will failed to make reasonable financial provision for her given her financial circumstances.

Under the 1975 Act, an adult child does not have an automatic right to inherit their parent’s estate: this can only be granted where court considers unreasonable provision in the circumstances has been made. The claimant must show that the estate does not make reasonable financial provision for their maintenance. This is a very context-specific rubric.

In Miss Ames’ case, the court considered all aspects of the 1975 Act including the financial needs and resources of the claimant. The court found that, though Miss Ames alleged to be in a poor financial position, she failed to provide good evidence that she was unable to earn her own income to meet her needs. In comparison, her stepmother was a pensioner and submitted evidence that she had little disposable income.

Most notably the Judge decided that Miss Ames’ lack of employment was a “lifestyle choice”, and that this entirely undermined her claim.

The Judge concluded that the mere fact an adult applicant is a child of the deceased is unlikely to be decisive.  These claimants are unlikely to succeed unless it can be demonstrated that the balance comes down in their favour when considering all the factors under the 1975 Act.

Miss Ames therefore had to pay her own costs of £47,000, and those of her stepmother’s at around £85,000.

This is just one example of the current 1975 Act caselaw. It is however a clear example of how these cases depend on evidence that is only properly tested by the court on the day of trial. Given the complexities, vagaries and context-specific factors, this case is a reminder of how the legislation and caselaw can only go so far in providing accuracy and confidence in how individual claims might resolve.

Will a trust really help protect my house from my insolvency?

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There are many reasons people may wish to place their assets into trust during their lifetime. Some do so to keep their property outside of the Probate process, to speed up sale upon death, to protect vulnerable or reckless beneficiaries, or to reduce the risks of someone challenging their Will. Some people, especially sole traders, wish to use trusts to keep their family home away from creditors.

An asset held in trust is deemed not to be owned by the person who set it up – the “settlor” – but is instead owned by the trustees. This does provide a strong protection over those assets: they are “no longer the settlor’s assets” to be divided up by the creditors.

However, nothing is ever that easy.

The Insolvency Act provides that the court may set aside transfers into trust five years prior to any claim that leads to bankruptcy: within two years of the bankruptcy, any such transaction can be set aside; between two and five years before bankruptcy, they can be set aside if the donor was insolvent at the time or made insolvent by the transfer.

In addition, there is no time limit to the court’s power to set aside a trust where the reason for the settlement was to put assets beyond the reach of someone who is or may at some time make a claim, or to otherwise prejudice such a potential claimant’s interests. This is a real obstacle for those who want to protect their properties precisely for these reasons.

As such it can be dangerous to place assets into trust with these motivations in mind. Similar problems are faced by those who wish to place their property into trust to avoid it being used for care fees.

Trusts can only be used safely if they are settled with proper motivations in mind: otherwise, they may even make matters worse for the settlor and their family.