Good news for those left out of will!

If you were financially dependent on someone who has died or are their spouse, former spouse, their child or were treated as a child of their marriage, you might have a claim under The Inheritance (Family and Dependants) Act 1975. 

What is The 1975 Act?

The 1975 Act, allows such people to make a claim against an estate where the terms of the will, or the Rules of Intestacy if there is no will, fail to make reasonable financial provision for them.  

But even if you have the ability to bring a claim and have a good case how would you fund it? 

Funding a claim under the 1975 Act

Such claims can be expensive as the other beneficiaries of the will or those people entitled to receive something from the estate under the Rules of Intestacy, have to be parties to the case and, in most cases, the court has to carry out an assessment on everyone’s financial needs and resources, both now and in the future. This is to consider any health issues or disabilities that the parties have and any relevant conduct.  

No win, no fee

If a solicitor is confident in the merits of such a case but their client cannot afford their fees, they might consider dealing with it on a no win, no fee basis (a conditional fee agreement). 

These arrangements allow a solicitor to charge an additional fee if the case is successful. The success fee is calculated by reference to the solicitor’s base costs rather than to the amount of money their client receives from the estate. So, for example, if the solicitor’s base costs for pursuing the claim are, say, £50,000 and the success fee was set at 50%, on the successful conclusion of the case, the solicitor would get £50,000 plus a further £25,000 in fees.

A conditional fee agreement

The usual order made by the court is that the loser pays the winner’s costs, but in the case of a conditional fee agreement, the loser does not have to pay the winner’s success fee.

Sometimes, in claims under the 1975 Act, the costs can come from the estate but, again, not the success fee. Going back to the example above, the court is likely to order that the defendant, or the estate, pays the claimant’s base costs of £50,000 but not the success fee of £25,000. 

Given that the purpose of claims under the 1975 Act is to make provision for the claimant’s financial needs, the amount left available to them to fulfil that need might not be enough after payment of their solicitor’s success fee.

The Court of Appeal’s decision in the case of Hirachand v Hirachand last month is a landmark case on this point. 

The Court was persuaded that in a claim under the 1975 Act, the success fee should be treated as a debt owed by the successful claimant to her solicitor and so could be taken into account by the Court when considering what award, she should receive from the estate to satisfy her financial need. 

Whilst the Court did not award her the full amount of her success fee, it awarded a large part of it which, in turn, increased the amount that she received from the estate to allow her to pay for it.

So, this appears to be good news for our clients who have good grounds to bring such claims, but not such good news for our clients who defend such claims as they will pay out more from the estate. 

However, the Court of Appeal made it clear that conditional fee agreements should only be considered as a last resort and that a claimant must show that they had no other way of funding the claim if they are to seek repayment of their success fee as a debt incurred. If not, more of the estate or the parties’ own money will go to the lawyers rather than to the people close to the deceased – and no one wants that!

Claims under the 1975 Act 

Claims under the 1975 Act are difficult to predict as they are highly case-specific and much depends on the way a particular judge views the parties’ circumstances. They are mainly resolved by agreement to avoid the risk of litigation and the decision of Hirachand v Hirachand will, no doubt, mean that where claimants have no other choice but to pursue their cases by way of a conditional fee agreement, even more will settle early without court proceedings.

The Contested Trust and Probate Team at Birkett Long is one of the leading teams in Essex in this specialist area.  

We advise both claimants and defendants in claims under the 1975 Act and, in fact, whilst the case of Hirachand v Hirachand was not one of ours, we regularly instruct the barristers at Radcliffe Chambers and, in particular, Ms Rogers, the barrister, who represented the successful claimant at the first trial and on appeal.  

If you require any more information on this topic, please contact via [email protected] or call 01206 217307.