Case law: Family and dependents claiming from a deceased's estate cannot rely on 'standstill' agreements to excuse late filing of claim
Family members and dependents seeking to claim 'reasonable financial provision' from a deceased's estate must file their claim with the court within the statutory six-month time limit, and should not rely on a 'standstill' agreement to justify their delay, a recent case makes clear.
This update was published in Legal Alert - April 2019
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.
Please note: A newer article on this case was published in the September 2019 edition of Legal Alert following subsequent developments in the legal process.
Some family members and dependents of a person who has died can, in certain circumstances, make a claim against the deceased's arguing that the deceased did not make 'reasonable financial provision' for them. However, the law requires such claims to be made within six months of the date the personal representatives obtain the grant of probate (or letters of administration if there is no will), unless the court exercises its discretion to allow the claim to be brought outside that period.
A spouse applied to extend the time for bringing her claim after her husband had died. Her application was made almost 17 months after her husband's executors (the personal representatives) obtained probate. The law does not include guidance on how the court should exercise its discretion, though previous court decisions can help. One requirement, for example, is that the person making the claim must give good reasons for the delay.
In this case, the couple split their time between the UK and USA and had cohabited for many years, eventually marrying when the husband discovered he had a fatal brain tumour. At that time, the husband set up a joint account which his wife automatically inherited when he died, and she received $375,000 from it.
He also made a new will which set up two will trusts, and provided the trustees with a letter of wishes. Letters of wishes are non-binding letters to trustees stating who the person setting up the trust would like them to consider when deciding who should benefit from the trust. Trustees can then decide whether they will be guided by what is in the letter.
The trusts were complex and the trust funds were significant. The widow was the primary beneficiary and she was able to live in a house the couple had bought in California, and could expect to receive significant income from the trusts. In fact the trustees were eventually paying her $26,250 per month.
Her stated reasons for the late application for reasonable financial provision included that:
- She had signed a 'standstill' agreement with the trustees under which they agreed not to object if she made a claim after the six months had expired, while they waited for her to serve a letter of claim on them - so she had not seen the need to file her claim at court.
- After serving her letter of claim on the trustees there had been ongoing negotiations with a view to a settlement.
The Court said it would only take the standstill agreement into account up to the time the trustees received her letter of claim, which was on 1 May 2018, but not thereafter. She had not filed her court claim until 18 November 2018, so had left it another six months after the standstill agreement had expired.
The Court expressed its general disapproval of standstill agreements, saying their use must come to ‘an immediate end’. It said ‘it is not for the parties to give away time that belongs to the court. If the parties want to agree a moratorium for the purposes of negotiations, then the claim should be issued in time and then the court invited to stay the proceedings while the negotiations are pursued…’
- Family and dependents wishing to make a claim for 'reasonable financial provision' from a deceased estate should file their claim within the statutory six-month time limit. The courts are strict when deciding whether to allow an extension and, particularly, may well not take 'standstill' agreements into account as a reason for failing to file a claim within the time limits.
Case ref: Cowan v Foreman  EWHC 349
Disclaimer: This article from Atom Content Marketing is for general guidance only, for businesses in the United Kingdom governed by the laws of England. Atom Content Marketing, expert contributors and ICAEW (as distributor) disclaim all liability for any errors or omissions.
Copyright © Atom Content Marketing