An analysis of the case of Kaur v Estate of Karnail Singh & Ors  EWHC 304 (Fam), and the lessons to be learned for testators domiciled in England and Wales, as well as their advisers.
The basic principle
The principle of testamentary freedom is a fundamental one in England and Wales. It sets the jurisdiction apart from its European neighbours, whose legal systems virtually all impose some form of forced heirship upon individuals making wills.
In a recent article, I looked at how vastly the position on this subject differs even between two jurisdictions as historically, culturally and geographically connected as England and Wales, and Scotland.
For individuals domiciled in England and Wales, there is no 'reserved' portion of your estate which your spouse or your heirs are automatically entitled to receive.
The Inheritance (Provision for Family & Dependants) Act 1975 ('1975 Act') does however render a claim for 'reasonable financial provision' from the estate possible. Such a claim can only be brought by prescribed individuals, having a particular relationship with the deceased. Spouses and children fall within the categories of potential claimants.
The onus is on the claimant party (who feels the estate distribution does not make adequate provision for them) to show this is in fact the case.
If that can be established, the court will next address the question of the precise nature and extent of the financial provision which should be awarded to the claimant.
Considerations of both limbs of the test involve the court applying a specific 'standard' to the question of provision, which is higher than pure 'maintenance' in the case of a spouse.
The claimant in the case of Kaur v Estate of Karnail Singh & Ors was the widow of the deceased, who made such a claim for reasonable financial provision under the 1975 Act. The judgement, handed down earlier this month, has received significant academic and professional attention in the legal arena, as well as wider media scrutiny.
So why is it such a significant case, and what key points can we learn from it?
Mrs Kaur brought a claim under the 1975 Act following exclusion from her husband Mr Singh's will.
The couple had been married for 66 years. Mr Singh however omitted his wife and their four daughters from his will on the basis that he wished to leave his estate exclusively to his male heirs; being their two sons.
The gross value of Mr Singh's estate was just under £2 million upon his death. All of the assets comprised in his estate, including the family home, had been acquired over the course of his marriage to Mrs Kaur. Justice Peel therefore commented that following her husband's death, Mrs Kaur was left with 'next to nothing'.
Justice Peel applied the two-limbed test noted above and found no difficulty in concluding that reasonable financial provision had not been made for the claimant. In addressing this, and the 'overlapping' question of what Mrs Kaur's award should comprise, he considered the 'Section 3(1)' 1975 Act factors in the usual way.
This process generally involves analysing and weighing up the relative financial resources and needs of the claimant and other beneficiaries, the obligations and responsibilities the deceased had towards these parties, against the backdrop of the value of the estate as a whole.
Where a claimant spouse is specifically concerned, however, additional factors which a court will consider include:
- the length of the marriage;
- the contribution of the claimant to the family of the deceased; and
- the provision s/he may reasonably have expected to receive had the marriage ended in divorce.
My reading of the judgment leads me to believe that these 'Section 3(2) factors' were particularly compelling to Mr Justice Peel in the circumstances of the case. In fact, the 'divorce cross check' was cited by him as 'pointing unerringly towards an equal division of the assets'. His award was accordingly made to grant Mrs Kaur half of the net value of her husband's estate.
It is particularly noteworthy that here, Mr Justice Peel's comments seem to suggest it will not always be necessary to strictly consider the precise monetary value a spouse requires for her 'provision'. Instead, a proportion of the entire estate may instead simply be awarded (notwithstanding its overall size, provided that this is sufficient). Here, the required proportion for Mrs Kaur was deemed to be one half.
The case demonstrates that even in a jurisdiction in which 'testamentary freedom' still has a real meaning, testators cannot ignore the fact that robust protections are afforded to vulnerable beneficiaries. The reasons or traditions which inform the testator's approach will not matter a great deal, when considered against the simple fact of the provision required for the claimant.
More broadly, testators should also be aware that Mr Justice Peel promoted an 'abbreviated’ approach in appropriate 1975 Act cases (without a full trial). This could mean such challenges become more accessible and attractive to claimants in the future. For updates in that respect, it is very much a case of watching this space.
From a personal perspective, I confess that I read this case with a mixture of emotions.
Pride, derived from knowing that I work within a legal system that will rectify injustice, even where competing factors and principles are in the mix.
Sadness, that after such a long and meaningful contribution to her marriage and family, Mrs Kaur should find herself in a position in which her claim became necessary.
Yet also, recognition that culturally, this form of planning is likely steeped in history and tradition, that can sometimes mean there is an understandable difficulty for testators to deviate from it. This can evidently be the case even in the context of a happy family, and a long marriage. As advisers, we have to respect and understand that thinking, yet make our clients fully aware of the dangers a literal translation in to their estate planning may carry.
I found myself contemplating whether a great deal of time, heartache and money could not have been saved if a round-the-table discussion had been held prior to Mr Singh dying. This could have considered how best to try and achieve his objectives, while still providing adequately those family-members most in need.
Both lifetime and will trusts could have been contemplated, inheritance tax savings considered, and the potential ramifications of a 1975 Act claim fully explored.
I don't deny these are often difficult discussions to navigate. But this case has made me all the more determined to redouble my efforts, and have them at every opportunity I can.