Legacy disputes are on the rise and may present a significant threat to the principle of testamentary freedom. High-net-worth family advisors should therefore be alive to the risk of a legacy dispute and, where possible, ensure appropriate steps are taken to lessen the likelihood of a successful claim.
In this blog, Katherine Pymont provides a summary of the possible claims that might be brought against an estate and explains how to lessen the likelihood of a successful claim against a charity when drafting wills involving charitable bequests.
Will legacies are a key source of income for charities. For example, some GBP3 billion was donated to UK-based charities in wills in 2018. The principle of testamentary freedom is well established in English and Welsh law and leaving money to a charity is, of course, something that any testator is free to do and should be respected. That said, legacy disputes are on the rise, and high-net-worth (HNW) family advisors must have a broad understanding of the nature of such claims in order to seek (where possible) to protect against them, or at least do what they can to diminish the prospects of success of any such claims.
Legacy disputes involving charities can have an unpleasant side effect by attracting negative press attention for the charity in question. More often than not for HNW clients, leaving legacies to charities is a continuation of a pre-existing lifetime relationship with the organisation. A public relations fallout for the charity in question, as a consequence of a bequest made with the charity’s best interests in mind, is something that the testator would surely wish to avoid.
The types of legacy dispute that a charity might find themselves embroiled in include a challenge to the validity of a will, a claim under the Inheritance (Provision for Family and Dependents) Act 1975 (the Act) or a will construction or proprietary estoppel claim.
A will can be contested on the basis that it is invalid by relying on one or more of the following grounds:
- it has not been correctly executed (it must be in writing and signed by the person making the will in the presence of two witnesses and then be signed by the two witnesses, in the presence of the person making the will);
- the deceased lacked the necessary mental capacity;
- the deceased did not have knowledge and approval of the contents of a will:
- the deceased was subject to undue influence; or
- the will is forged/fraudulent.
Advisors should always bear in mind that if there is even the slightest doubt as to the testator's capacity and intention to make a will then independent advice on their capacity should be sought as a priority. When it comes to meetings with clients making a new will, it is equally important to take a detailed note of the testator’s instructions to guard against future allegations by family members that a bequest to a charity does not reflect the testator’s intentions because it is irrational and/or a radical departure from previous wills.
Advisors should also be particularly alert to beneficiaries under a will attending appointments with the testator and always ensure the opportunity for the testator to meet with the advisor alone to confirm instructions. If a client elects to make their own arrangements to execute a will, always check that the will has been signed by the testator and properly witnessed when the executed version is returned to you. This is particularly pertinent in cases where mirror wills have been prepared for spouses, where it is not uncommon for each to accidently execute the other’s will. It is also necessary to ensure that the witnesses are not beneficiaries of the will.
The Act enables certain categories of persons to make a claim against an estate, provided they can show that they were financially dependent on the deceased and that the deceased did not make adequate provision for them in their will. Any claim under the Act must be made within six months of the grant of probate being issued.
The following categories of persons are eligible to make a claim under the Act:
- a current spouse or civil partner of the deceased;
- a former spouse or civil partner of the deceased who has not remarried and who has not received a final financial settlement following the breakdown of the marriage or civil partnership;
- any person who, during the whole two-year period immediately before the date of death, was living in the same household as the deceased in the manner of a spouse or civil partner;
- any child of the deceased including illegitimate, legitimated and adopted children of any age;
- any person treated by the deceased as a child of the marriage or civil partnership;
- any person not included above who was maintained wholly or partly by the deceased immediately before their death otherwise than for valuable consideration. The requirement of ‘no consideration’ excludes paid domestic staff from having a claim, under the Act.
The court will take into account the following factors when deciding whether a reasonable financial provision has been granted for a claimant:
- the financial resources and needs of the applicant;
- the financial resources and needs of any other applicant;
- the financial resources and needs of the beneficiaries;
- any obligations and responsibilities of the deceased towards any applicant and any beneficiary;
- the size and nature of the estate of the deceased;
- any physical or mental disability of any applicant or beneficiary;
- any other matter, including conduct, which the court may consider relevant.
In relation to an application by a surviving spouse, the court is also required to consider the age of the applicant and duration of the marriage, as well as the contribution made by the applicant to the welfare of the family of the deceased, including any contribution made by looking after the home or caring for the family.
It is obviously not possible to completely obviate the possibility of an Act claim, but advisors may be able to reduce the prospects of success of any such claim by advising the testator to keep detailed and accurate records of lifetime support of a charity, whether financial or otherwise; and by ensuring that detailed notes are taken (or advising the client to leave an expression of wishes) to explain a particular decision if a testator elects to exclude or limit provision for a close family member. Consideration should also be given to the inclusion of no-contest clause in the will.
A will construction claim arises where there is a dispute concerning the wording, or meaning, in a will. If a claim regarding the construction of a will is unsuccessful then a claim for professional negligence against the individual who prepared it may be appropriate. Ensuring that detailed records are kept setting out the testator’s intentions is likely to assist in dealing with these types of claims.
Proprietary estoppel is an equitable concept that arises in circumstances whereby, first, there is a representation or assurance made to an individual that they have or will enjoy some right or benefit over the owner’s property and, second, as a consequence, the individual relies on that promise to their detriment. Claimants in these type of cases usually argue that the testator has gone back on their promise and bequeathed the property to someone else. Such claims arise regularly in relation to farms and landed estates where the common theme is a purported reliance by the adult child on a promise from their respective parents that one day the farm in question will be theirs. Evidence is key in these cases (which often come hand in hand with an Act claim) so, again, advisors should ensure detailed notes are taken or advise the client to leave an expression of wishes to explain a particular decision if a close family member is excluded (or benefits significantly less than other close family members or a charity).
If a challenge is made to a charitable bequest and the HNW advisor who prepared the will is approached by the intended beneficiary charity, the advisor should seek independent legal advice as a priority. This will ensure the charity is best placed to see off weak claims at the earliest possible opportunity at minimum cost, as well as manage any potential public relations fallout.
This blog was first published as an article titled ‘Charitable legacy challenges’ in STEP Journal Plus, August 2020.
See also our blog series for charities with a range of topics including litigation, crisis management and investigations.
About the author
Katherine Pymont is a Senior Associate in our Dispute Resolution team. Katherine specialises in wills, trusts and inheritance disputes. Her experience includes challenging the validity of a wills, claims under the Inheritance (Provision for Family and Dependants) Act 1975, removal of executors and trustees and breach of trust claims.