Baker v Baker & Ors

Under the Inheritance (Provision for Family and Dependants) Act 1975, reasonable financial provision for a surviving spouse is assessed in all the circumstances. It is not confined to maintenance. The court must weigh the spouse’s needs and expectations against the beneficiaries’ circumstances, the size and nature of the estate, the deceased’s obligations, and the practical consequences of the proposed award.

Equality may provide a useful cross-check, but it is not a presumption and must be approached cautiously in claims under the Act. The court may take account of the effect of an order on a continuing family business, including the difficulty and expense of separating the estate’s interest from that business.

Susan Baker applied under the Inheritance (Provision for Family and Dependants) Act 1975 following the death of her husband, Geoffrey Baker. The estate included the former matrimonial home, business premises, business goodwill and other assets. The deceased’s four adult sons had continued and developed the business after his death, without formal arrangements accounting for the estate’s interest.

The central issues were whether the Will made reasonable financial provision for Mrs Baker, the value of the estate’s interest in the business, and the appropriate form and amount of any award. The court also considered the relevance of equality as a cross-check in a spouse’s claim.

1. Assessment under the Act. The Will failed to make reasonable financial provision for Mrs Baker, who had been the deceased’s wife and partner for more than 20 years and had cared for the home and family. For a spouse, reasonable provision means what is reasonable in all the circumstances for a wife to receive, rather than merely what is required for maintenance, under section 1(2)(a) of the Inheritance (Provision for Family and Dependants) Act 1975 [25], [30].
2. The court applied the statutory factors in section 3, including the applicant’s and beneficiaries’ financial resources and needs, the deceased’s obligations, the size and nature of the estate, disability, conduct and other relevant circumstances. It also considered Mrs Baker’s age, the duration of the marriage, her contribution to the family and the provision she might reasonably have expected on divorce [24]-[32].
3. Business valuation. In the absence of proper expert evidence, the court adopted a necessarily broad-brush valuation. The estate’s interest in the business and its assets was assessed at approximately £600,000 to £800,000. Relevant factors included the inherited name and goodwill, the assets and customer connections existing at death, the sons’ seamless continuation of the business, their use of inherited assets, their subsequent investment and skill, and the absence of payment to the estate [11], [21]-[23].
4. Equality. Cunliffe v Fielden [2006] 2 WLR 491 and White v White [2001] 1 AC 596 supported use of equality as a yardstick or cross-check. There was no presumption of equal division. In a claim under the 1975 Act, the deceased remained free to leave his estate as he wished, subject only to the statutory obligation to make reasonable provision [35]-[36].
5. Order. Mrs Baker was awarded the former matrimonial home, Dale House, absolutely, together with a lump sum of £410,000. £25,000 was to be paid immediately from estate funds, with the balance to be raised, subject to further argument on the precise terms and timing. The total provision was approximately £750,000, which was reasonable having regard to the estate’s value, Mrs Baker’s circumstances and the need to preserve the sons’ business [38]-[42].