LAW REFORM COMMISSION PUBLISHES REPORT ON SUCCESSION LAW UNDER WHICH A CHILD (INCLUDING ADULT CHILD) CAN CLAIM THAT A PARENT DID NOT MAKE PROPER PROVISION IN A WILL FOR THE CHILD
- Report recommends that the law should be reformed, in particular as it applies to adult children
- Adult children may continue to bring applications under the law if they prove there has been parental failure to make proper provision for them based on a needs test
- Report also recommends the reformed law should apply not just to cases where the parent’s will has failed to make proper provision but also where no will was made (intestacy)
Tuesday 30th May 2017: the Law Reform Commission’s Report on Section 117 of the Succession Act 1965: Aspects of Provision for Children will be launched by Ms Justice Marie Baker, judge of the High Court, in the Distillery Building, Church Street, Dublin, at 5pm this evening.
Section 117 of the 1965 Act: has a parent made proper provision for a child in his/her will?
The Report examines section 117 of the Succession Act 1965, which provides that a child, including an adult child, of a deceased parent who has made a will can apply to court and claim that the parent failed in his or her “moral duty to make proper provision for the child” in accordance with the parent’s means during the parent’s lifetime. If the court agrees that the parent failed to comply with the duty to make proper provision for the child, it can make an order that adjusts the amount left to the child in the will and order that a different amount that the court thinks is proper should be made for the child out of the parent’s estate.
Case Study 1: GM case (1970)
In one of the first cases under section 117 (decided in 1970) called the GM case (names are anonymised because these cases are heard in camera), the plaintiff was an only (adopted) child, and was 32 when the case was heard. He was a merchant seaman. His late father had been a doctor and had paid for all the plaintiff’s education. The father’s will left everything to his widow, the plaintiff was left nothing in the will and he then brought a claim under section 117. The High Court decided that the following 5 factors should be taken into account in these cases:
- any amount left in the will to the surviving spouse (or else the value of the minimum statutory legal right share of the surviving spouse under the 1965 Act);
- the number of children, their ages and their position in life when the parent who made the will dies;
- the parent’s means;
- the age, financial position and prospects in life of the person making the claim under section 117;
- whether the parent has already made proper provision for the child; and
- the facts at the date of death, not when the will was made.
In the GM case the Court concluded that the father had failed to make proper provision for the plaintiff. The Court awarded him half of the father’s estate, after taking account of his mother’s mandatory legal right share under the 1965 Act and other will-related expenses.
Case Study 2: SF case (2015)
A section 117 case decided in 2015, the SF case, involved a situation directly related to the economic crash that emerged after 2008. The estate is this case was worth over €14 million, and the parent’s will had divided it equally between his 6 children. One of the children, who brought the case under section 117, had worked in the family business instead of pursuing his own independent career. When his father was alive, he had sold to the plaintiff some development land for €1.2 million: this was financed by a bank loan to the plaintiff, which had been guaranteed by the father. Because of the economic crash, the development land was worth just €160,000 in 2015, but the plaintiff still owed €1.6 million on the bank loan. This meant that the plaintiff was in a much worse financial position than his siblings because much of his share of the estate would be needed to pay off the bank loan. Against this background, the High Court decided that the father had failed to make proper provision for the plaintiff because he had not referred in the will to the loan guarantee he had given the plaintiff; and because the guarantee was now worthless the plaintiff was in a considerably worse position than his siblings because much of his share of the estate would be required to pay off the balance remaining on the bank loan. The Court therefore decided that the plaintiff’s bank loan of €1.6 million should be paid out of the €14 million estate, that he should be given an additional sum of €500,000 and that he and the other 5 children should then share equally the remainder in the estate.
The Commission makes 19 recommendations for reform of section 117, and the Report includes a Draft Succession (Amendment) Bill for this purpose.
Reforms should take account of changing family relationships and changing demographics
The Report concludes that the law should take account of changing family relationships and demographic changes since the Succession Act 1965 was enacted. Important social changes since the 1960s have included the recognition of equal rights for all children in succession law and the introduction of divorce, which has meant that applications under section 117 often now involve more complex family settings. The Report also takes account of demographic changes since the 1960s. These have affected what is called the “generational contract” that operated in the 20th century, under which the adult generation first cared for young people, then the young people grew up and they cared for their older parents. Since the 1960s, a number of related changes have occurred. First, parents are having fewer children, and therefore there are fewer of them to care for the parents in later life. Secondly, the parents are living longer, so that they have a longer time period, potentially, to fund their own later life, notably their health and care requirements. This also means that they may be less likely to leave inheritances for their children in the way that children in the 20th Century may have expected. Leading gerontologists, such as Professor Sarah Harper, have commented that we may currently be moving into an “adapted generational contract,” which means that older people will have more responsibility for themselves than in the past.
Section 117 should be based on “proper provision” but not “moral duty”
The Commission recommends that section 117 should be amended by the removal of references to “moral duty” to simply provide that a deceased parent has a duty to make “proper provision” for a child. The phrase “moral duty” may unduly emphasise an expectation or entitlement to inherit, rather than an appropriate focus on the needs of a child, including an adult child.
Presumption that parents have provided for their adult children, subject to 3 exceptions
Reflecting the approach that emphasises the needs of the child, the Commission recommends that section 117 does not require any further reform so far as it applies to children under the age of 18. However, for a child who is over the age of 18 (or over 23, if in full time education), the Commission recommends that it is appropriate to presume that a parent has already properly provided for them. Again, applying the needs test the Commission also recommends that this presumption should be subject to 3 specified exceptions: (a) where the adult child has a particular financial need arising from their health or decision making capacity; (b) where the estate contains an item of particular sentimental value to the adult child; or (c) where the adult child had provided care and support for the deceased.
Section 117 should be extended to intestacy
Under the current law where a parent dies without making a will (intestate), the estate is distributed in accordance with specific fixed shares in the Succession Act 1965. The courts may not vary these shares, even in cases of particular hardship, and under the current law an application under section 117 is not possible. In 1965 the Oireachtas decided not to extend section 117 to include intestacy because it might give rise to additional litigation. The Commission notes, however, that in other countries where such applications are available, there has been no increase in such claims. The Commission also considers that, in any event, it is preferable to allow for an application under section 117 in cases where injustice might otherwise arise.
Ring-fencing the shares of surviving spouses
While the fixed shares of a surviving spouse who is the parent of an applicant under section 117 are currently protected, the fixed shares of a surviving spouse who is not the parent of the applicant are not. The Commission recommends that, in making an order under section 117, the court may not reduce any spouse’s share to less than the amount to which he or she would have been entitled had the deceased died and made a valid will (wholly testate).
Current time limits should remain, but be clarified
Section 117 specifies that an application must be brought within 6 months of taking out full probate or administration of the estate: this is usually between 9 to 15 months after death. The Commission recommends that this should remain the case: this is because any lengthening of the time limit would cause further delay in administering estates with the potential to create uncertainty over inheritance. The Commission recommends that section 117 could be clarified to allow a claim to be brought before full probate of the estate (which would reflect current practice).
No duty to notify potential claimants
The Report recommends there should be no change to the existing law, that executors or administrators of estates are not under a duty to notify potential claimants of the existence of section 117. This is because such a duty would conflict with their obligations to administer the estate efficiently. The Commission also recommends that personal representatives should not be under a more limited duty to notify potential claimants of the fact of death of the parent as this would give rise to similar difficulties.