It is always recommended that parties involved in a legal dispute make attempts to resolve matters out of court wherever possible. However, the time taken to negotiate can cause problems, as there is a time limit by which a claim should be commenced. In Inheritance Act claims, the deadline to start a claim is six months from the date on which the Grant of Probate or Grant of Letters of Administration is issued by the Probate Registry. A solution to this has been to use a standstill agreement, which is an attempt to stop the clock.
However, a recent case has cast doubt on whether this is a reliable option. We answer the following questions:
- What is an Inheritance Act claim?
- What is a standstill agreement in an Inheritance Act claim?
- Is a standstill agreement guaranteed to stop the clock on Inheritance Act claims?
What is an Inheritance Act Claim?
An Inheritance Act claim refers to a claim for financial provision from someone’s estate after their death under the terms of the Inheritance (Provision for Family and Dependants) Act 1975. If certain categories of individuals feel that they have not been adequately provided for after someone’s death, they may be eligible to make a legal claim against the estate.
Those entitled to claim are:
- The deceased’s spouse or civil partner
- A former spouse or civil partner of the deceased, provided that they have not remarried or entered into another civil partnership
- A cohabiting partner who lived with the deceased as if they were their spouse for at least two years immediately prior to the date of death
- A child of the deceased
- Anyone treated as a child of the family by the deceased
- Anyone who was being maintained, wholly or partly, by the deceased as at their death
A spouse or civil partner who makes a successful claim can expect a similar sum to that which they would have received in a divorce. All other successful claimants will only be entitled to reasonable financial provision. The amount awarded will not be so much as to provide a life of luxury; however, neither will it be so little that it results in a life of poverty.
When deciding how much to award a successful Inheritance Act claimant, the court will take the following into account:
- The financial resources available to the claimant, both now and in the foreseeable future
- The financial needs of the claimant, now and in the foreseeable future
- The financial resources and needs of other beneficiaries or potential claimants
- The obligations and responsibilities the deceased had
- The size and nature of the estate
- Any physical or mental disability of any of the beneficiaries or potential claimants
- Any other factors that the court considers relevant
What is a Standstill Agreement in Inheritance Act Claims?
Due to the complex nature of an Inheritance Act claim, it can be difficult to negotiate a final settlement within the six months allowed. Standstill agreements have been used in the past to give the parties longer in which to try and resolve matters. They will each sign a document agreeing to put matters on hold for a period of time, during which they will continue negotiating to try and reach a settlement.
How Long Do Standstill Agreements Last?
If a standstill agreement is considered the right option, your solicitor can negotiate to agree on the length of time it will last. It is common to agree on a period of several months, and it may then be possible to agree on an extension if a chance of settling matters out of court still exists.
Will a Standstill Agreement Stop the Clock on Inheritance Act Claims?
In 2019, the case of Cowan v Foreman cast doubt on whether standstill agreements can be relied upon. The judge held that it was for the courts to sanction a stay and that it was not something that the parties could agree on between themselves. The case then moved to the Court of Appeal.
The Facts of Cowan v Foreman [2019] EWCA (Civ) 1336
The Will of Michael Cowan placed most of his £16 million estate into a discretionary trust for the benefit of his wife, Mary Cowan, and a number of other beneficiaries. A letter of wishes accompanying the Will requested that Mary be treated as the main beneficiary of the trust.
Mary claimed that she wanted control of the assets, which included her home and herself. Her solicitors negotiated with the trustees and, after the limitation period passed, agreed to a standstill agreement.
A settlement was not reached, and 17 months after the limitation period expired, Mary’s solicitors applied to the court for permission to make a legal claim out of time, i.e. after the legal deadline had passed.
The Judgments
The high court did not permit the claim to go ahead but allowed the case to be transferred to the Court of Appeal.
The Court of Appeal allowed the claim but made the following points:
- The courts should consider whether a case has a real prospect of success
- The parties to a dispute do not have the authority to extend the six-month time limit. Only the court has this power. However, if written consent to an extension is obtained from all interested parties, the courts will usually allow a claim to proceed out of time
- The courts may take into account that attempts to settle the matter were made after the expiry of the deadline and, in appreciation of this, not penalise the claimant for trying to negotiate matters. Lady Justice King elaborated on this point, saying where there is a ‘properly evidenced agreement to which no objection has been taken by the executors and beneficiaries, it is unlikely that in the ordinary way, a Judge would dismiss an application for an extension of time’.
- The courts will consider the facts of each case in deciding whether the delay was warranted
An alternative and perhaps safer option is for a claimant to issue proceedings within the six-month time limit, then ask the court for an adjournment while attempts are made to negotiate a settlement.
Contact Our Contentious Probate Solicitors
If you are involved in a Wills or inheritance dispute or you are considering making an Inheritance Act claim, our contentious probate solicitors can represent you to protect your interests and provide you with practical advice.
To speak to one of our expert contentious probate solicitors, ring us at 0330 173 3980, email us at info@witansolicitors.co.uk or fill in our contact form, and we will talk through your situation with you and discuss how we can help.
