'Mixed-use' rate - Stamp Duty Tax
Jack Keats | 06.03.2019
06.04.2018 Philip Whitcomb
The case of Sargeant v Sargeant 2018 EWHC 8 Ch focuses on the case of a farmer’s widow, Jane Sargeant, who tried to make a time-barred claim for reasonable provision from her late husband’s estate over a decade.
This case highlights the importance of sound financial and business planning whilst someone is still alive and highlights the problems that can arise when individuals rely on verbal communications alone.
Joe Sargeant died in May 2005 and at the time of his death there was no dispute over his will or the distribution of his estate. Almost the entirety of his estate was left to a discretionary trust, the beneficiaries of which included his widow Mary and their daughter Jane. The estate consisted mostly of farmland that was originally farmed by Joe and several family members in partnership. Prior to his death, however, the farm had been farmed by Joe only.
At the time of Joe’s death, the farmland was valued at approximately £3m. But due to a planning permission application for residential development, the value of the farmland subsequently increased dramatically to around £8m. As you can imagine, this change in value caused problems.
Following a dispute with her daughter, Jane, Mary Sargeant made a claim under the Inheritance (Provision for Family and Dependents) Act 1975. This Act states that a claim can be made against the estate of the deceased person if they believe that no reasonable provision was made for them in the Will.
The time limit for such a claim is six months after the date that Probate was granted, but with the provision that in exceptional circumstances a person can apply for the time limit to be extended. (Mary required permission to bring proceedings under s. 2 of the Act, which states that no application can be made after the six-month period unless permission is obtained.)
The dispute between Mary and her daughter concerned ownership of the farmland. Mary believed the land was part of Joe’s personal estate. Conversely, Jane took the position that the farmland was owned by the farming partnership, which had passed to her by succession and as such was outside the estate.
Mary, who was facing financial difficulty at the time of her claim, disputed Jane’s original partnership agreement with Joe. In addition, she wished to remove Jane as her father’s executor. However, Mary said that if her reasonable provision was allowed, she would drop these claims.
The problem with Mary’s case is that the Inheritance (Provision for Family and Dependents) Act 1975 imposes a deadline of six months after probate. In Joe’s case, probate was on his will in 2006, meaning Mary was making her claim a full ten years after this deadline. Because of this, Mary had to obtain permission to bring the action several years late. Mary’s argument was that she had not understood her position as a discretionary beneficiary which was, admittedly, a difficult contention to make.
Her request was, however, refused by the Court. The judge stated that this was not ‘a case in which the claim is being made necessary by any supervening event outside Mary’s control. I reject also any suggestion that the delay in bringing the claim has been occasioned by Mary placing reliance on generalised statements that she says her husband made to her before his death along the lines of “you will be a wealthy woman after I die.”’
The Judge went on to specify that no facts had been concealed from Mary and she had not been misled by any person in relation to Joe’s estate, in particular his trustees or, more specifically, Jane. On the evidence, Mary had an arguable case which, if successful, could have resulted in a transfer of assets to her of substantial value.
What was clear was the importance Mary had placed on general comments her husband had made to her prior to his death as opposed to concrete evidence which is the benchmark set by the Court.
On balance, this situation demonstrates the importance of initial family and business planning whilst a person is alive and capable of taking the necessary steps. Trying to solve issues following a bereavement can cause significant problems, as this case clearly demonstrates.