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Case law: 'Reasonable financial provision' on death of a cohabitee can mean allowing surviving cohabitee to buy house at full value

Unmarried cohabiting couples should both make Wills putting their wishes into effect, and not assume one will outlive the other. Otherwise, the survivor may be entitled to claim the deceased's house as 'reasonable financial provision for their maintenance' in certain circumstances, though they may have to pay full value for it.

April 2018

This update was published in Legal Alert - April 2018

Legal Alert is a monthly checklist from Atom Content Marketing highlighting new and pending laws, regulations, codes of practice and rulings that could have an impact on your business.

A man and a woman lived together as a couple, in her house, for 19 years. He was wealthier than her. Both had assumed he would die first so he had made a Will leaving her a large amount, but she had not done the same for him. In the event, she died first (when he was in his mid-90s), and left her estate to her daughter under her Will.

The daughter had made it clear, even before her mother's death, that she wanted him out of the house if her mother died first. She had even asked him to sign a declaration confirming that he had no claim on the house, which he had done. On his partner's death, he therefore faced the prospect of having to leave the house he had lived in for 19 years.

The daughter offered him the option of buying the house for £425,000, which he refused, saying the house wasn't worth that amount. However, he wanted to stay there because he had lived in it for 19 years, had lived in the village all his life, had good neighbours, had contributed to the house's running costs and didn't want to move at his age. He was prepared to pay the daughter full market value for it.

Family members (other than spouses or civil partners, for whom there is a different test) and dependents of a deceased can, in certain circumstances, contest the deceased's Will on the basis that it does not make reasonable financial provision for them. The man argued that giving him the right to buy the house from the estate at full market value was within the definition of reasonable financial provision necessary for his maintenance. He said that he didn't just want to stay in the house, he needed to, because of the factors mentioned above.

The daughter argued that his paying full market value for the house would not be 'maintenance' or 'financial provision' from the estate as the estate would not be depleted – it would receive full value for the houses.

The High Court ordered that he be allowed to buy the house for £385,000. The Court found that 'maintenance' could include an arrangement where a person was not short of money, but needed to stay in a property for non-financial reasons. Here, the man needed to live in the house. He could afford to buy it at full value, and the order for him to do so was valid.

The Court of Appeal agreed. It said that the deceased had been 'maintaining' him in the sense that she had been providing a roof over his head. The fact that he was otherwise financially secure, and could afford to buy another house, was not fatal to his claim. It also found that allowing him to buy the house at full market value fell within the definitions of 'maintenance' and 'reasonable financial provision'. It was not necessary for the estate to be reduced in value or depleted for there to be 'financial provision' – there could occasionally be cases where ‘it was 'maintenance' to provide a house for someone in [the man's] position, the exact purchase price does not matter’. This was such a case.

The Appeal Court went on to balance his needs against those of the deceased's daughter, finding that his needs outweighed hers. It therefore upheld the High Court's order.

Operative date

  • Now

Recommendation

  • Unmarried, cohabiting couples should ensure they both make Wills putting their wishes into effect, and not assume one will outlive the other, taking into account that the survivor may be entitled to claim the deceased's house in certain circumstances – even if they have to pay full value for it.

Case ref: Lynn Lewis v Thomas Warner [2017] EWCA 2182

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