Janet* was a retired lady in her early seventies. She had separated from her husband, Bill*, who was around the same age, a year before his death, however, they were not divorced.
When they split up, they divided their £80,000 savings equally and Janet continued to live in the marital home, which was worth £325,000.
Bill also continued to help Janet financially following the separation, giving her around £500 a month out of his larger pension for her upkeep.
The problem
When Bill died Janet’s income dropped to around £400 a month, leaving her more than £10,000 a year short of what she needed to live.
Janet’s husband’s will made some specific gifts to family members, but the bulk of his estate and assets, including his half share of the house, were left to his and Janet’s son. That meant the house would have to be sold and Janet would receive only half of the net proceeds.
The law
The Inheritance (Provision for Family and Dependants) Act 1975 says Janet was entitled to receive ‘reasonable financial provision’ as the wife of the deceased. To make a claim we had to consider what financial resources and needs she had, as well as what she was likely to need in the foreseeable future. We also had to consider the financial needs of the beneficiary of the will, Janet’s son, too.
What happened next?
Even though Janet and Bill had shared some of their marital assets 50/50, it was clear she had not been properly provided for by the estate, but unfortunately, her son’s stance was that his mother wasn’t entitled to anything beyond what she had received already.
We wrote to him as the executor and a beneficiary of the estate and received a response from his solicitors. They made an initial offer of £35,000 as a lump sum to resolve the matter.
We knew this wouldn’t solve Janet’s long-term financial situation so we told them that reasonable financial provision had not been made. Janet was willing to downsize her home so that the property could be sold and the beneficiaries of the will would not need to wait until her death to inherit from the 50% share of the property – but only if a bigger financial offer was made so that she could live comfortably now.
Everyone was keen to avoid a costly court appearance so we agreed that we would try a formal mediation meeting first. That involves using an independent impartial person to try to get a settlement that suits everyone. This isn’t a scary experience – you don’t even need to see the other party face to face as the mediator shuttles between you all, and we’re at your side the whole time.
At Janet’s mediation, it was agreed that her claim would be settled with a payment of £65,000, plus her legal costs. With the investments they sold when she and Bill separated, she would have a nest egg of more than £105,000 to top up her modest pension. By Janet agreeing to downsize her property, Janet’s son was able to receive his inheritance from his father’s share of the property straight away. Although in these circumstances it made sense for Janet to downsize to allow her son to receive funds straight away, it was not expected of her and she could have made arguments to stay in the property for the rest of her life had she chosen to.
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