Standstill Agreement under the Inheritance Act 1975

18 Dec 2019

Andrew Carswell is a partner specialising in Dispute Resolution at Trethowans. He explains some of the issues encountered in the context of Inheritance claims.

Claims under the Inheritance (Provision for Family and Dependants) Act 1975 are generally brought in the months or early years after a person’s death. For very many years a claim could not be brought until a grant had been issued, although for deaths occurring after 1st October 2015 a claim can be brought beforehand.

Special limitation periods apply to 1975 Act claims. A claim must be brought within six months of the date of the Grant. Thereafter a claim can only be brought with the court’s permission, something not routinely given.

Six months is relatively short period compared to many limitation periods and means the Claimants need to act quickly. That is not always easy as for the first few months following a person’s death, relatives may be grieving. Bringing a claim involves a conscious decision that a Will (or Intestacy) fails to make reasonable financial provision and to then consent a solicitor. More often than not a Grant will have already been obtained, so the six month clock may be ticking.

A solicitor will normally act as quickly as he or she can, but often the detail of a net estate will not be available until enquiries have been made. Full advice can not always be given in the early stages, yet there is still a requirement for a Letter of Claim to be sent and the response to be considered.

To deal with this tight timetable and avoid the need to issue court proceedings, a practice has grown up over the years where parties will enter into a “Standstill Agreement”. This involves both parties agreeing that the limitation clock stops, usually until one party gives notice to the other.

By and large Standstill Agreements work well, but the practice was shaken up earlier this year in the decision of the High Court in the case of Cowan v Foreman [2019] EWHC 349 (Fam). Mr Justice Mostyn criticised the practice which he thought “should come to an immediate end”. He felt that it was not for the parties to give away time that belonged to the court and to do otherwise was to “cock a snoot” at the terms of the Act.

It is unclear why the court took the view that it did. It may be that the judge thought that Standstill Agreements or moratoriums as he called them, encouraged delay and a laid back approach, which in turn might lead to confusion. In the weeks and months that followed this decision, there was considerable concern amongst practitioners and anecdotally I understand that many claims were issued fairly promptly to avoid further difficulty. Matters were not helped to some extent by a decision that arrived shortly afterwards in Bhusate v Patel [2019] EWHC470 (Ch) where the decision of the High Court in Cowan was doubted.

Fortunately some clarification has been obtained. The aggrieved party in Cowan appealed. The Court of Appeal decided to steer a middle course and said that whilst practitioners should be alert to limitation periods, standstill agreements did serve a useful purpose in many cases. It recommended that clear written agreements should be prepared setting out the terms and duration of any standstill agreement and all relevant parties should be included.

The decision of the Court of Appeal brings some clear guidance to the subject and is a relief for many practitioners who would have otherwise issued proceedings. It just shows, however, that early legal advice and proper conduct of claims are essential in this area of the law.

If you are interested in making a claim under the inheritance act, contact specialist solicitor Andrew Carswell on 01202 339044 or submit an online enquiry form to arrange a consultation.

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Andrew Carswell

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