Stepping Stones: Hannah Mantle and Charles Hancock write for the STEP Journal on modern families

Contentious Trusts and Estates Senior Associate, Hannah Mantle, and Private Client Associate, Charles Hancock, have authored an article for the STEP Journal entitled 'Stepping Stones'.

In their article, Hannah and Charles review recent case law in England and Wales that illustrates how the courts are adapting to the modern definition of 'Family'.

The article was first published in the STEP Journal, Issue 3, 2022, page 70 on 6 June 2022.

It is widely reported that in recent years the number of people contesting wills has increased dramatically. One reason for this is the complicating factors associated with changes to the traditional family structure. The STEP Report Meeting the Needs of Modern Families (the Report), sponsored by TMF Group and released in November 2021, challenges legislators to adapt and modernise in order to support the needs of modern family structures.

This article focuses on some of the key legal principles surrounding trust, inheritance and succession disputes in England and Wales and considers how current case law is adapting to the changing definition of the ‘family’.

How estates can be challenged

Notwithstanding the long-standing principle of testamentary freedom in England and Wales, there are numerous ways for an aggrieved party to challenge a will, for example:

• lack of proper formalities;
• lack of capacity or lack of knowledge of approval;
• fraud or undue influence; and/or
• subsequent revocation.

Of course, different conditions must be satisfied in order to bring a successful claim in the various categories. Although this article cannot examine the types of challenge in detail, it touches on some recent examples that demonstrate that some older wills or deeds containing prescriptive definitions about family members, or the intestacy rules, are not always beneficial for modern family structures.

Additionally, where a person dies domiciled in England and Wales, a claim may be brought under the Inheritance (Provision for Family and Dependants) Act 1975 (the 1975 Act). The 1975 Act provides a mechanism for various categories of person to bring a claim against the deceased’s estate where they are left without ‘reasonable’ financial provision. This could be a spouse or civil partner, ex-spouse or ex-civil partner, child, ‘child of the family’ or someone maintained by the deceased. The claimant must show that the provision made for them was not sufficient to be reasonable, and for everyone other than spouses or civil partners, the provision made under the 1975 Act will be restricted to maintenance (and balanced against the needs of other beneficiaries or claimants).

How the law is adapting to the definition of 'Family' in the modern era

For a long time, the law in England and Wales has tried to evolve with changing norms. An example of this is the introduction of the Legitimacy Act 1976, which broadened the default definition of children to include legitimate, illegitimate, legitimated and adopted children (together ‘child’ or ‘children’). Another example is the 1975 Act, which was amended as recently as 2014, and was preceded by legislation that only allowed spouses and certain children to benefit. As the Report shows, there has been a shift away from the traditional family structure of a heterosexual couple and their biological children, and a rise of blended families (i.e., those brought together over time by new relationships).

To some extent, these changes have been recognised in the UK Human Rights Act 1998 (the 1998 Act) the UK Civil Partnerships Act 2004 and the UK Marriage (Same Sex Couples) Act 2013 (the 2013 Act). However, one of the challenges faced by courts is how to interpret trust deeds created prior to such legislation: trust deeds that may contain restrictive definitions written in the context of a specific culture.

The case law

The recent case of Goodrich v AB is an example of a modern approach to trust interpretation. The trustees of two employee benefit trusts sought direction from the England and Wales High Court (the Court) concerning the construction of the terms ‘spouses’ and ‘children’ contained in a settlement deed dated
April 1990. The Court determined that civil partners and same-sex spouses were included within the definition of ‘spouses’, but stepchildren were excluded from the definition of ‘children’.

The judge held that s.3(1) of the 1998 Act required the Court to interpret the definition of spouse in the 1990 trust deed in accordance with the rights guaranteed under the Convention for the Protection of Human Rights and Fundamental Freedoms. The judge read down sch.4 to the 2013 Act, which usually excludes same-sex couples when interpreting references to marriage in legal instructions drafted before the 2013 Act was in force, therefore removing its discriminatory effect and allowing it to comply with the 1998 Act.

The Court also held there was no impediment to including same-sex spouses in the beneficial class (and that same-sex spouses should be included using traditional textual and contextual construction principles). This is an important decision for those considering the interpretation of older settlements
and the impact of the human rights legislation upon them.

Although the Court considered that to include stepchildren in the definition of ‘children’ would be overly onerous on the trustees, especially in the context of an employee benefit trust, it is nevertheless possible to include stepchildren as beneficiaries of a trust by ensuring, if relevant, that the definition of children expressly includes stepchildren or by including them by name.

In an inheritance context, an obvious (but important) point to remember is that a successful challenge may result in a previous will being admitted to probate; or if there is no previous will, the intestacy rules being applied. This was evident in the recent case of Reeves v Drew and others, where the deceased’s son successfully convinced the Court to uphold his father’s earlier will.

When referring to the deceased’s final will, the judge held that the deceased’s daughter had ‘pulled the wool’ over her father’s eyes and exploited his poor literacy and that the deceased had not understood the terms of his latest will at the date on which he signed it and had not intended to alter his testamentary dispositions so radically.

Conversely, in the recent case of Wilson v Spence, the stepchildren successfully challenged their stepfather’s will, only to have their grant of letters of administration revoked as they had misrepresented their relationship to the deceased by claiming they were his children, as stepchildren do not inherit or have a right to administer an intestate estate.

The recent 1975 Act case concerning the estate of Stewart Higgins shows a relatively modern application of the 1975 Act, which addressed the distinction between children and stepchildren. Higgins died intestate in 2017 and his stepson (the Claimant) claimed on the basis he had not been provided for under the intestacy rules. The Claimant, aged 45, had been nine years old when his mother married Higgins and he and his sister had remained close to Higgins until his death. Further, Higgins had supported the Claimant with his previous divorces and contributed financially towards his weddings. Higgins also promised the Claimant that he would be provided for under his wills, equalising a substantial gift Higgins had given to the Claimant’s sister during his lifetime.

In reaching a decision, the Court considered the difficulties sometimes faced by adult children of the deceased making a 1975 Act claim, who usually require more than simply the qualifying relationship in order to successfully claim against their parent’s estate (stemming from the case of Re Coventry, and confirmed in Illot v Mitson). In the Claimant’s case, the Court confirmed that this applied equally to stepchildren and decided that ‘something more’ had indeed been demonstrated because:

• Higgins had expressed that he wished to equalise matters as between the Claimant and his sister when it came to making a will; and
• Higgins was close to the Claimant and vice versa, in contrast with the intestacy beneficiaries (seven relatively distant cousins), although Higgins did maintain some contact with them.

The case provides some clarity for the category of 1975 Act claimants who are ‘treated as a child of the family’ and clarifies how the 1975 Act can be used to meet the needs of modern family structures. Although the position is arguably different for minor children and stepchildren, Higgins shows that adult stepchildren can be treated in a similar way to adult children under the 1975 Act. Perhaps, in due course, we will see whether the position would be different if it were necessary to balance a stepchild’s needs against those of a child.

Conclusion

Although the Report found that blended families were on the rise and that their complexity can lead to more conflict, one of the other key conclusions was that ‘communication and early planning is essential’. This is borne out by many of the examples above. In a family trust, children can be defined appropriately to the particular family; and if they are not, then cases such as PQ v RS9 confirm that the difficulties need not be insurmountable.