The High Court heard a claim that the financial provision in a will was not reasonable in light of their high standard of living.
Background:
On the 25th of March, 2020, Alexander Klein died aged 87. He left behind his wife of 17 years, Elena Klein (then aged 46), and a son Elliot, then aged 12. Mr. Klein was a wealthy man, but in his will, dated January 2011, he left his wife £300,000 and £100,000 to be held in trust for his son to be distributed as follows: 1/3 on his 18th birthday; 1/3 on his 21st birthday; and the remainder to be disbursed on his 25th birthday.
He made numerous other specific bequests, including £100,000 to be held on trust for his adult daughter; £200,000 to Cydlia Adler, his long term secretary and business partner; £100,000 to his trustee for charitable purposes; and a further £100,000 on discretionary trusts for his relatives, friends and others; plus other bequests to relatives totalling about £179,000. Mr. Klein left the residue of his estate as 10% to Ms. Adler and 90% to be held in a discretionary charitable trust with suggested beneficiaries, including the Yesodai Hatora School, Ponovitz Yeshiva, and orphanages. Mr Klein appointed Ms. Adler as his executrix and as his trustee.
The will, however, made no provision for where Mrs. Klein and their son would live or for their maintenance other than the lump sum left to them. Since his death, the estate has, in the following 5 years, made only one payment to the claimant – the sum of £7,500 – pursuant to an order for interim provision. The net value of the estate, according to the Distribution Account figures, was £8.18 million, most of which comprised shares in 18 limited companies and the matrimonial home. Based on a judgement of October 2024, the deceased was recognised as the true beneficial owner of the shares.
Mrs. Klein and her solicitors entered into contact with Ms. Adler in relation to the estate, but no progress was made and so, in March 2021, she applied for the removal of Ms. Adler as executrix of the will. Ms. Adler was replaced by Cripps Trust Corporation Ltd. and ordered to pay 80% of the claimant's costs. In September 2024, an order for sale was made in respect of one of Ms. Adler's properties to satisfy the payment.
The consequences of Ms. Adler's lack of proactivity resulted in the “administration of the estate becoming extraordinarily complex and protracted.” As a result, Mrs. Klein only issued her claim under the Inheritance (Provision for Family and Dependants) Act 1975 in March of 2023.
Decision:
The High Court agreed with the claimant that the will did not make reasonable financial provision for her, granting her a lump sum of £1,864,089. The Court reached that conclusion based on the factors found in Section 3 of the 1975 Act. Williams J noted that “His dispositions to his family and friends need no explanation. The disposal of the residue to charitable causes is also in some sense [explicable], for obvious reasons, albeit the disparity between the amount provided to the claimant and his son and daughter and the amount which at face value would be distributed to charitable causes raises as many questions as it answers.”
The Court then explained that the reasonable financial provision within the meaning of the 1975 Act is an objective test. “The effect of the will, if implemented, would have required the claimant and Elliot to move to Southend to take up occupation of a small flat with a consequent change of school for Elliot and a wholesale departure from the community and life that they had lived in London. The lump sum provided to the claimant would have been a bar to them receiving means-tested state benefits and would have been exhausted within 12 odd years even if expended at a very modest rate of £30,000 per annum. Objectively this is not reasonable financial provision (assuming much larger sums are available) for a 12-year-old child and a wife of 17 odd years against a backdrop of relative affluence.”
Moreover, the divorce crosscheck argument could also play a role, despite the pre-nuptial agreements they had in place at the time of marriage in September 2003. The fact that the deceased was reluctant for Mrs. Klein to undertake a demanding professional role acted as a brake on her ability to progress in her career as a solicitor. This influenced the financial resources that the applicant is likely to have in the foreseeable future. Such needs were balanced against any financial needs of any other beneficiaries.
There was also a discussion on the value of the estate, which was difficult to determine.
Implications:
This decision highlights how courts can rectify situations in which a will does not make reasonable financial provision in light of the time spent as a couple and the living standard the other party has grown accustomed to. While giving to charity is honourable, it cannot be done to the detriment of the spouse.
This judgement also highlights the difficulties that could flow from estates that have been ‘badly’ managed by their executrix, as well as the need for clear evidence. The Court balanced the financial resources and needs of the claimant with those of other beneficiaries.