Calculating Financial Provision in 1975 Act Claims: Duxbury vs Ogden Tables and the Role of Cashflow Reports

When quantifying financial provision in claims under the Inheritance (Provision for Family and Dependants) Act 1975, practitioners face important decisions regarding the most appropriate calculation method to represent a claimant's future financial needs. The two principal approaches—Duxbury calculations and the Ogden Tables—each possess distinctive characteristics with their own merits and limitations that warrant careful consideration.

Duxbury Calculations

The Duxbury method has established itself as the traditional approach in family law and inheritance disputes since emerging from the landmark case of Duxbury v Duxbury. Its widespread acceptance stems from its practical design, which aims to provide income while gradually depleting capital over the claimant's anticipated lifetime. This approach closely aligns with the principle of reasonable financial provision for maintenance that underpins 1975 Act claims.

One of the primary strengths of Duxbury calculations lies in their realistic investment assumptions, which typically incorporate returns from a mixed portfolio that mirrors common investment strategies employed by recipients of inheritance provisions. The courts handling inheritance disputes have developed considerable familiarity with this method over decades of application, lending it judicial credibility in the 1975 Act context.

Furthermore, Duxbury calculations offer a degree of adaptability that proves valuable when accounting for varying financial needs at different life stages. This flexibility allows for adjustments based on anticipated changes in circumstances, such as retirement or increased care requirements in later years.

However, the Duxbury approach is not without its shortcomings. Critics have raised concerns about potentially outdated economic assumptions that may not accurately reflect current financial realities, particularly in times of economic volatility. The methodology also suffers from limited transparency compared to alternative approaches, with the underlying calculations not as thoroughly documented or accessible to scrutiny.

Another issue arises from the variability between different Duxbury calculation tools, which can produce inconsistent results depending on the specific software or formulae employed. Additionally, standard Duxbury calculations may not adequately account for individual factors such as health conditions or unique personal circumstances that might significantly impact financial needs. The relative lack of statutory backing can also leave more room for disputes regarding appropriate parameters, potentially leading to increased litigation costs.

Ogden Tables

The Ogden Tables present an alternative approach grounded in actuarial science. Developed and regularly updated by the Government Actuary's Department, these tables benefit from considerable mathematical rigour and transparent methodology. The clear documentation of underlying assumptions allows practitioners and courts to understand precisely how calculations have been derived.

Regular revisions ensure that the Ogden Tables reflect current mortality data and economic conditions, maintaining their relevance despite changing circumstances. The tables offer sophisticated multiplier adjustments that enable modifications based on health conditions and other personal factors, potentially providing more personalised calculations in appropriate cases. Their statutory recognition, albeit primarily in personal injury contexts, lends them an element of credibility that can prove persuasive in more contentious inheritance disputes.

Nevertheless, the application of Ogden Tables in inheritance cases remains less common, resulting in courts and practitioners possessing less familiarity with their application in the specific context of 1975 Act claims. This unfamiliarity can create additional hurdles when presenting such calculations to the court. Moreover, these tables were originally designed for quantifying damages in personal injury claims rather than inheritance provision, raising questions about their direct transferability to maintenance-based assessments.

There exists some concern that Ogden calculations may produce figures that exceed what courts typically consider appropriate in 1975 Act cases, potentially overestimating reasonable financial provision. The correct application of multipliers and discount factors requires specialised knowledge, creating additional complexity for practitioners without specific expertise in this area. Additionally, the relative scarcity of established case authorities for using Ogden Tables in inheritance disputes leaves practitioners with less precedential guidance.

The Value of Bespoke Cashflow Reports

While standard calculations suffice for most claims, certain scenarios warrant the additional investment in comprehensive cashflow modelling. These bespoke reports prove particularly valuable when dealing with claimants who have complex financial circumstances, such as irregular income patterns, multiple property holdings, or business interests that require nuanced financial analysis beyond what standardised calculations can provide.

Cases involving significant age disparities, such as young dependants or elderly claimants with specific needs, also benefit from tailored modelling that accounts for extended time horizons or particular late-life requirements. Taxation complexities present another scenario where detailed cashflow analysis becomes invaluable, especially when inheritance tax, capital gains tax, or income tax considerations substantially impact the real value of any provision made.

Claimants with varying future needs, particularly those with anticipated changes in care requirements or housing situations, require projections that incorporate these foreseeable developments. Similarly, disputed life expectancy cases, where health conditions may substantially affect longevity projections, demand more sophisticated modelling than standard tables can provide.

When exploring alternative provision structures, such as life interest trusts alongside capital provision, comprehensive cashflow analysis helps illustrate the practical outcomes of different approaches. Cases involving means-tested benefits introduce additional complexity, as different award structures may significantly affect benefit entitlements, requiring careful consideration of interactions between inheritance provision and the benefits system.

In estates with multiple dependants making competing 1975 Act claims, detailed financial modelling helps quantify the impact of various distribution scenarios, assisting courts in balancing the needs of different claimants against limited estate resources.

Practical Considerations for Practitioners

When advising clients on financial provision in 1975 Act claims, practitioners should consider several factors beyond merely selecting a calculation method. The court's typical approach in the relevant jurisdiction often influences which method will receive the most favourable reception, so awareness of local judicial preferences can prove advantageous.

Thorough assessment of both the estate's complexity and the claimant's financial situation should inform the choice of calculation method. In straightforward cases with limited assets and simple income needs, standard approaches may suffice, while complex circumstances might justify more sophisticated analysis.

Practitioners should evaluate whether standard assumptions about investment returns and life expectancy appropriately reflect their client's situation or whether adjustments are necessary. The potential benefits of detailed calculations must be weighed against the additional costs involved, particularly in smaller estates where proportionality remains an important consideration.

Preparing alternative calculations using different methodologies can demonstrate the range of possible outcomes, strengthening negotiating positions and helping courts understand the implications of various approaches to provision. This multi-faceted analysis often facilitates settlement discussions by illustrating the potential outcomes of litigation.

Conclusion

The selection between Duxbury calculations and Ogden Tables in 1975 Act claims requires careful consideration of each case's unique circumstances rather than adherence to habit or convention. While Duxbury calculations maintain their position as the predominant approach in inheritance disputes, certain situations exist where Ogden Tables may provide valuable alternative perspectives that better represent a claimant's genuine financial needs.

In more complex cases, the investment in bespoke cashflow modelling can equip both practitioners and the court with nuanced understanding of actual financial requirements, potentially strengthening claims and facilitating more appropriate provision. Throughout this process, practitioners must remain focused on the fundamental purpose of the legislation—ensuring that any award provides reasonable financial provision for the claimant's maintenance needs, as the Act intends.

The thoughtful application of appropriate calculation methodologies, combined with sensitivity to individual circumstances, enables practitioners to better advocate for their clients while assisting courts in reaching fair and sustainable outcomes in these often emotionally charged and financially complex disputes.

The Financial Conduct Authority does not regulate Cashflow Modelling and Inheritance Tax Planning.