Charities and internal investigations
The annual statistics for The Royal Courts of Justice, January to December 2016 were recently released.
The figures show a significant increase in the number of claims issued under the Inheritance (Provision for Family and Dependants) Act 1975 (“1975 Act”), from 116 claims made in 2015 to 158 claims in 2016.
In order to make an application under the 1975 Act, a person who falls within one of the specified categories of claimants (set out in s1 (1) (a)-(e) of the 1975 Act) may apply to the court for an order on the ground that the disposition of the deceased’s estate effected by his will or the law relating to intestacy, or the combination of his will and that law, is not such as to make reasonable financial provision for the appellant.
It is likely that the increase in claims can largely be attributed to the Court of Appeal decision in the case of Ilott v Mitson & Ors handed down towards the end of 2015, which significantly increased an award made pursuant to the 1975 Act in favour of an adult child excluded from her estranged mother’s will. Previously expectations of success for adult children in such cases were limited. The case was subsequently appealed to the Supreme Court who handed down its judgment earlier this year finding that the Court of Appeal had no proper basis for interfering with the judgment at first instance.
The highly publicised Supreme Court judgment may affect the public perception of an individual’s entitlement under the 1975 Act and lead to claims by adult children slowing down in the short term. This may be reflected in the annual statistics for The Royal Courts of Justice, January to December 2017 in due course. However, in time we would expect the position to level out as a result of the fact specific nature of claims under the 1975 Act. Read more about this case and 1975 Act claims generally (See our previous blogs: Inheritance claims by children - on the rise?, Inheritance claims by adult children – update, and Contentious Trusts and Probate Monthly Round-Up: March 2017).
Disputes relating to Trust property have also increased considerably, from 141 claims made in 2015 to 201 claims made in 2016. These sorts of claims can include disputes over the value of certain assets, such as the case of Daniel and another v Tee and others  EWHC 1538 (Ch). This case was bought by two beneficiaries against professional trustees on the grounds that the trustees had failed to take appropriate care to invest in a properly diversified investment portfolio and had wrongly relied on the advice of professional investment advisers. For more information on this case, and a round-up of trust litigation cases bought in 2016, please see Wills and Probate Round-Up 2016.
Another area of increase in claims is for breach of fiduciary duty, from 69 in 2015 to 100 in 2016. Trustees are in a fiduciary position. A failure to carry out their duty of loyalty will result in a claim for breach of fiduciary duty. If fiduciaries are placed in a position of conflict, any steps which are taken in breach of the fiduciary duty can be set aside eve if no loss has resulted. These types of claims might include theft of estate assets by an executor or fraudulent distribution of assets to favour some beneficiaries over others.
It should be remembered that not all duties carried out by a fiduciary are fiduciary duties.
Not all categories of disputes for trusts, will and probate have increased. Variation of trust claims have reduced from 46 claims in 2015 to just 17 cases in 2016 and contentious probate actions have reduced from 164 in 2015 to 77 in 2016.
The figures do not provide for how many of the cases issued have been successful.
It should be noted that it is recorded that with effect from 2016 the figures are derived from the new case management system, Pentaho and consequently the figures for 2016 are said to be not directly comparable with those for previous years.
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