A recent decision, in Cowan v Cowan, has caused consternation in the contentious probate world.
It’s common practice for parties to agree a standstill agreement whilst attempting to negotiate settlements in Inheritance Act claims rather than issuing a claim within the six-month time limit. Mr Justice Mostyn disapproved of the process, saying: “I suggest that in no future case should any privately agreed moratorium ever count as stopping the clock in terms of the accrual of delay. Put another way, a moratorium privately agreed after the time limit has already expired should never in the future rank as a good reason for delay.”
Given that this is common practice, it’s likely that there are many practitioners with claims subject to standstill agreements. It remains to be seen what approach the defendants in such cases will take to negotiations following this decision. It’s to be hoped that other Courts will adopt a practical approach and refuse to penalise claimant solicitors in such a position. That, however, is far from certain, leaving several firms anxiously scrutinising their insurance policies.
Less remarked upon has been the facts of the decision. Mr Cowan was a very successful businessman, possessing an estate that amounted to just under £16m on death. He cohabited with Mrs Cowan from 1994, and then marrying her in 2016 after he was diagnosed with a brain tumour. His Will did not make any outright provision for Mrs Cowan but made her the principle beneficiary of two trusts, with a life interest in one of them, in order to minimise the impact of Inheritance Tax.
Mr Cowan left a letter of wishes making clear that, after providing funds for education and support for the families of his son and stepsons, he wanted the trustees to regard Mrs Cowan as the principle beneficiary of the remaining trust fund during her lifetime. Penelope Reed QC, a pre-eminent counsel in this area, argued that, because Mrs Cowan did not have outright ownership of assets and therefore had no absolute control of them, she was at the mercy of trustees who could cut her adrift with no access to money at all. She asserted that the claimant “lacks security” and, therefore, a prima facie case existed that the Will failed to make reasonable financial provision for the claimant, the essential element that a claimant has to prove in such instances.
Mr Justice Mostyn said, “I have to say that I completely disagree. Miss Reed QC’s argument was tantamount to saying that every widow has an entitlement to outright testamentary provision from her husband. This would introduce a form of forced spousal heirship unknown to the law. Plainly, this cannot be right. It must be possible for a testator to provide for his widow by a generous trust arrangement such as this, without the fear that it will be interfered with, at huge expense, in proceedings under the 1975 Act.”
This raises further interesting questions regarding letters of wishes and discretionary trusts. Whilst a letter of wishes was produced in this case, there is usually no obligation to do so. If a letter of wishes is not produced, can it therefore be argued that the Will fails to make reasonable financial provision or, if, as here, the Will leaves large sums in discretionary trusts, does that defeat any claim in the future?
Cowan v Cowan (2019) EWHC 349 (Fam)