by The Charity Team
There is a very powerful, although somewhat under-utilised, section of the Inheritance (provision for Family & Dependants) Act 1975 (‘the Act’) that could have a detrimental effect on charities’ who inadvertently find themselves caught up in proceedings where this particular section is being used by disgruntled claimant.
S.10 of the Act provides the court with powers to set aside gifts made by the Deceased for up to six years prior to their death, where it can be shown that these ‘gifts’ were made with the intention of defeating a claim under the Act. This therefore could mean that if successful, funds the charity receive may be subject to the claw back.
A recent case, Ruanne Dellal v Guy Dellal & Ors has demonstrated the effectiveness of section 10 if applied by courts.
This case concerned the estate of property tycoon Jack Dellal. Jack sadly passed away in 2012 and left all of his estate to his wife of 15 years, Ruanne Dellal.
Ruanne only received £15.4 million against what was reported as an estate worth £400 million. Ruanne, as Jack’s widow, therefore claimed under the Act on the grounds that she had not been provided with ‘reasonable provision’ in his will dated November 2006. This is despite Mrs Dellal already being in receipt of assets to the value of £41 million in her own name.
Jack also had children from a previous marriage and a sister. Ruanne believed that prior to his death he had secretly given away his wealth to avoid any claims against his estate. So as part of her claim for financial provision (as a wealthy spouse can still bring a claim) she also requested that the court invoke these section 10 powers and bring these gifts back into the estate. Jack’s children and sister contested this.
If the court agreed with Ruanne, then this would mean that the recipient of Jack’s property would be ordered to pay a sum of money or transfer other property back into the estate for purpose of making an award of financial provision to her.
Such an order could only be made if:
If the court agreed with Ruanne, then this would mean that the recipient of Jack’s property would be ordered to pay a sum of money or transfer other property back into the estate for purpose of making an award of financial provision to her. The court would have to consider all the relevant circumstances, such as how the disposition was made, whether any consideration was provided, the relationship between Jack and his children, the condict and financial resources of any recipient that Jack may have disposed to, and all other circumstnaces of the case. Whilst Ruanne’s application ‘struck out’ but this was dismissed by the Court. Proceedings were then adjourned for disclosure of any documents that Jack’s children and sister held which supported the arguement that transfers of Jack’s money or property had been made to or from them in the six years before his death.
Due to the powerful nature a successful Section 10 application can have, it is most likely that this matter will now reach an out of court settlement. Jack’s children and sister are unlikely to want to fully declare any assets that they did recieve from Jack, as the risk to them is too great where judgement found in Ruanne’s favour.
Nevertheless, this case should act as a reminder to charities to fully appreciate the effectiveness of the power if successful. In particular, of there is a large disparity between the probate figure and reported wealth, then charities need to be cautious that such applications can exist.