Increase in legacies in Wills, increase in legacy disputes?
Indeed 2018 saw £3 billion donated to charity in wills – an increase of 50 per cent since 2008. Yet interestingly (according to the Telegraph) smaller charities are said to be benefiting more than the larger better known organisations. This could be as a consequence of the negative publicity suffered by charities such as Oxfam following the safeguarding scandal, or Save the Children who faced multiple allegations of discrimination and harassment of staff in 2018 (indeed the latter was recently reported to have seen income drop by a quarter at least in part as a result of these allegations).
Or perhaps it is due to people wanting to leave money to charities with whom they have a personal or local connection and a perception that gifts to smaller charities will make more of a difference.
Regardless of the size of charity that benefits from a will, the importance of treading carefully in the event of a will dispute cannot be emphasised enough. Whilst the principle of testamentary freedom is well established in English law, legacy disputes are ever increasing and charities often feel the force of disgruntled family members seeking to challenge a will, particularly on the grounds that it is invalid or that the family member was financially dependent on the deceased and adequate financial provision has not been made for them.
The validity of a will can be challenged on any of the following grounds:
1. That 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);
2. That the deceased lacked the necessary mental capacity;
3. That the deceased did not have knowledge and approval of the contents of a Will;
4. That the deceased was subject to undue influence;
5. Or that the Will is forged/fraudulent.
The Inheritance (Provision for Family and Dependants Act) 1975 (the 1975 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 1975 Act must be made within six months of the issue of the Grant of Probate.
The most high profile recent 1975 Act claim involving a charity is the case of Illot v The Blue Cross and others  UKSC 17 where the deceased left the majority of her net estate (worth £486,000) to three charities and made no provision for her only daughter who then contested the will despite having been estranged from her mother for over 30 years. The case went all the way to the Supreme Court where the final decision found in favour of the charities yet reinstated a modest award to the daughter of £50,000 made at first instance. The Supreme Court emphasised that the charities were the chosen beneficiaries of the deceased thus confirming that testamentary freedom remains a key principle of English law.
The Charity Commission guidance in this area for trustees is clear – trustees have a duty to act in the best interests of their charity and have a duty to protect, and where necessary, to recover, assets belonging to the charity. The decision whether or not to initiate or defend a legal action over a will must therefore only be made in the best interests of the charity yet needs to take account of the risks and consequences that any legal action could bring such as legal costs and potential reputational damage. The Charity Commission also expects trustees to consider legal action only after they have explored and, where appropriate, ruled out any other ways of resolving the issue in dispute, for example alternative dispute resolution including mediation.
Leaving money to a charity is something that any testator is free to do and charitable giving in a will is clearly gaining traction which is encouraging for the charity sector. Charitable giving should be respected but legacy disputes frequently arise and are unfortunately unavoidable. It is crucial therefore that charities give careful thought as to how to approach these matters including consideration of the following:
1. Early legal advice is always recommended and will ensure the charity is best placed to see off weak claims at the earliest possible opportunity at minimum cost.
2. Early collaboration with other charities benefiting under a will can also be useful (but always be mindful of a potential conflict).
3. Appropriate delegated authorities should be put in place by the Trustees to those responsible for legacy management to ensure that they are able to deal appropriately with any situation that might arise.
4. Information is key therefore requesting a copy of the deceased’s will and related information is a likely first step but all written correspondence must be handled with care.
5. Always be mindful of negative PR implications and ensure that this aspect is carefully managed in parallel with any wider consideration of a potential dispute.
Legacy funds are a key source of funds for charities, big or small, and knowledge is the first step in seeking to ensure that they are best protected.
For further information on the issues raised in this blog post, please contact a member of our team.
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