Cohabitation is woven into our society and is amongst the fastest growing areas of family life. Since 1996 it has been possible for cohabitants to make an inheritance dispute claim against their deceased partner’s estate, provided they have been living in the same household for at least two years immediately prior to death. But a central question is what is the extent of that claim?
The answer is there is no definitive answer, at least not one that can be applied by some formula to every claim.
Inheritance dispute claims by cohabitees
The problem lies in what the Court is required to consider for the cohabitant’s future day to day needs. This is referred to as ‘maintenance’ and in Inheritance (Provision for Family and Dependants) Act 1975 (1975 Act) claims, the Courts have been slow to adopt a universally accepted definition.
By way of comparison, spouses in 1975 Act claims appear to have a little more certainty as to what they can claim. In approaching what to award, the Court may consider how much a spouse might receive if the marriage had ended not by death but by divorce. This is known as the deemed divorce crosscheck and is statutorily preserved by s3(2) of the 1975 Act:
In the case of an application by the wife or husband of the deceased, the court shall also …. have regard to the provision which the applicant might reasonably have expected to receive if on the day on which the deceased died the marriage, instead of being terminated by death, had been terminated by a decree of divorce.
The yardstick of equality is often adopted and then extraneous factors, such as the length of the marriage, raising the children of the deceased, inherited property and so on are factored in to arrive at a figure to award.
But even this has been somewhat recently undermined by the s5(2) of the Inheritance and Trustee Powers Act 2014. This applies to deaths after 1st October 2014 and confirms the deemed divorce crosscheck can have no upper or lower limit, thereby rendering it potentially meaningless. But the deemed divorce crosscheck does at least still give some kind of idea of what a spouse might be able to claim in 1975 Act proceedings.
Facts of a case
As with all 1975 Act claims, the outcome is wholly dependent upon the facts of the case and applying ‘maintenance’ is no different. It requires a close examination of not only what the cohabitant needs but also what they could have expected had the relationship with the deceased not been terminated by death.
At best, it means whatever is appropriate to the circumstances and that can really mean anything, so that one case which on the surface has similar facts might have a completely different outcome.
Let us assume a cohabitant lived with her deceased partner for say 10 years, everything was in his name (it does still happen) and when he died, he had not left a will. This means the intestacy provisions bite, so effectively the cohabitant is at the back of the queue, they get nothing.
However, they can clearly make a claim under the 1975 Act depending on their own financial circumstances. In order to assess what an appropriate award might be, the court firstly has to address whether there is a valid claim and if so, what that award should be.
It has to consider a range of matters, including the lifestyle the cohabitant and the deceased enjoyed together and what level of expenditure they typically incurred.
Flamboyant lifestyle
In Negus v Bahouse [2008], the deceased and the claimant, Ms Negus had lived together for eight years. When the deceased died without leaving a Will, his Estate was worth £2.2 million.
Although Ms Negus received £600,000 from the Estate (from life interests etc.), she still made a claim under the 1975 Act against the deceased’s son who was the principal beneficiary.
After a detailed analysis, the Court awarded Ms Negus assets in the region of £835,000 or 37% of the net Estate. Among other things, Ms Negus said she needed £38,000 per year to fund the admittedly flamboyant lifestyle she had shared with the deceased.
The Court accepted Ms Negus’ assertion they were going to get married and that she had a reasonable basis for believing her future financial needs would be met. The deceased’s son appealed, arguing the Judge had got the application of ‘maintenance’ wrong.
The Court of Appeal carefully considered earlier authorities and concluded that maintenance means the ability of the claimant to discharge the costs of daily living by whatever standard is appropriate to the claimant.
Therefore, maintenance depends on the individual circumstances of the case. If the claimant and deceased lived in a hovel, maintenance would be less than if they lived in a palace. So a claim to continue a lavish lifestyle will only succeed if it was preceded by the same standard of living enjoyed by the deceased with the claimant.
The relative financial positions of the parties is crucial, so a financially independent cohabitant is likely to be in weaker position than one who was dependent upon the deceased.
How Nelsons can help
Kevin Modiri is a Partner in our Dispute Resolution team, specialising in inheritance dispute claims.
If you have any questions in relation to the subjects discussed in this article, please contact Kevin or another member of our expert team in Derby, Leicester or Nottingham on 0800 024 1976 or via our online form.