Contract to leave Property by Will


17th November 2021

Is a pre death contract to leave property by Will enforceable in the face of an Inheritance Act claim?

Sismey v Salandron [2021] 10 WLUK 372 is the first judicial consideration of section 11 Inheritance (Provision for a Family and Dependants) Act 1975 which deals with contracts to leave property by Will.

The law

The Inheritance (Provision for Family and Dependants) Act 1975 (the Act) enables a court to make provision out of a deceased person’s estate for certain categories of claimant (including the deceased’s spouse) in circumstances where the Court is satisfied, having regard to certain factors, that the disposition of the deceased’s estate by Will or intestacy does not make reasonable financial provision for the applicant.

It is a significant piece of legislation has the effect of permitting the Court to interfere with a testator’s freedom to leave their property as they choose. There is much case law on claims under the Act. However, until the case of Sismey v Salandron, there has been no judicial consideration of the operation of section 11 of the Act.

Section 11 is an anti-avoidance provision. If the Court is satisfied that the deceased in his lifetime made a contractual commitment to leave money or other property by his Will to any person with the intention of defeating an application for financial provision by a claimant under the Act, the Court can in effect unravel the commitment so that the relevant money or property is made available as part of the deceased’s estate from which a claim for provision under the Act can be made.

The facts

The facts of the case (somewhat simplified) are as followed:

The deceased, David Sismey, died leaving a spouse, Marissa Salandron (Marissa). Before his death the deceased, as part of financial remedy proceedings on his divorce from his first wife, Sheila, entered into a deed covenanting to leave a certain property (the Property) to his son Thomas Sismey, his son by Sheila. The deed imposed a contractual provision upon the deceased and was intended to bind his personal representatives.

By his Will executed in March 2017, the deceased gifted the Property to Thomas. The deceased married Marissa in 2019 and the effect of this was to revoke the March 2017 Will.

The deceased died intestate in January 2020. Subject to the effect of the deed executed in favour of Thomas, Marissa, as the deceased’s spouse stood to inherit the entirety of the deceased’s modest estate, including the Property.

Thomas brought a claim seeking specific performance of the contractual provision in the deed, alternatively arguing that a constructive trust in his favour had arisen as a result of the deed. Marissa in a separate (but conjoined) action sought an order under the Act for reasonable financial provision from the deceased’s estate in the event the Court allowed either of Thomas’ claims. Further, if the Court concluded that the deed in Thomas’ favour was enforceable, Marissa sought an order under section 11 of the Act that the Property nonetheless formed part of the deceased’s net estate and should not be transferred to Thomas but be available to satisfy her claim under the Act.

Judgment

The Judge held that the deed was enforceable by Thomas against the personal representative of his father’s estate. In the context as to whether section 11 was engaged so that the Property could be treated as part of the deceased’s estate available to make provision for his widow, the Court had to decide whether the deceased in making the deed had intended to defeat any application for financial provision under the Act. On the facts, the Judge held that this intention was evidenced. However, the Court held that Marissa could not establish that the deceased’s former spouse did not provide full valuable consideration for the deed and the consequence of this was that the Property was not susceptible under section 11 to be treated as part of the deceased’s estate.

Conclusion

This is a complicated case involving a detailed scrutiny of the deceased and his former spouse’s financial arrangements on their divorce and what their intentions were in having the deed executed which imposed a contractual obligation on the deceased’s personal representatives to pass the property to Thomas. It is the first time the Court has had to consider section 11 of the Act. The case shows the complex interaction between financial arrangements made on divorce which should take into consideration the position for the parties themselves and their families on death.

If you need advice in respect of the type of claim referred to above, please contact Stephanie Walls.

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