Life Interest Or Lump It?

The Inheritance (Provision for Family and Dependants) Act 1975 provides certain categories of applicant a right to bring a claim against an estate for reasonable financial provision where the applicant believes that such a provision has not been made for him/her.

When considering a claim by a spouse under the Act, the Court has a broad range of remedies that it can award, ranging from a lump sum payment to regular maintenance payment to a life interest in property.

In most contentious probate cases, the bulk of the financial value of the estate is held in the matrimonial home. This can present difficult decisions for Judges presented with an application under the Act, especially where there are children of the spouse but not of the deceased involved. This is because the Court will be concerned that the estate of the spouse may ultimately pass to beneficiaries that the deceased had not wanted it to, and were unrelated to him or her.

This is exactly the scenario in the case of Banfield v Campbell [2018].

Banfield v Campbell

Case background

The deceased’s spouse in this case had children from a previous relationship. The deceased had previously indicated in a letter of wishes that she wished the bulk of her estate to pass to her son upon her death. This was a key factor in the Judge determining that a life interest was a far more appropriate remedy than a lump sum. In summing up, Master Teverson stated:

“A further factor in the present case pointing away from the award of a lump sum to purchase a property outright are that the housing requirements of the Claimant are ones that are relatively expensive to meet on his case. I accept the approach of the Defendant to that extent. I accept that where a lump sum is sought involving 50% or more of the estate it is much more likely to be appropriate to make provision for housing by way of a life interest to avoid conferring capital and to avoid depriving the Defendant of capital which would otherwise pass to him.

“Taking into account all the section 3 factors, including in particular Mr Banfield’s resources and housing needs, the length of his relationship with the Deceased and the size and nature of the net estate, I have concluded that I should order that 3 Westville Road be sold under the direction of the court and that Mr Banfield be granted a life interest in one half of the net proceeds of sale which are to be used in or towards providing alternative accommodation for him. It will be open to Mr Banfield if he wishes to contribute capital of his own towards the purchase in which case it will need to be agreed and declared in what proportions as between him and the estate or the Defendant the property is owned.”