FEATURES
CHARITY LEGACY DISPUTES
What they
would have
wanted…
The rise of contentious legacy cases is a priority for
charity legacy professionals and probate specialists in
the UK, write Chris Millward and Lucy Gill
KEY POINTS
WHAT IS THE ISSUE?
Contentious legacy cases are on the rise
in the UK, and recent court cases have
highlighted the particular challenges
associated with charitable legacies.
WHAT DOES IT MEAN FOR ME?
There are a number of lessons to be
learnt to avoid probate claims post-death
and ensure that clients’ final wishes
are fulfilled.
WHAT CAN I TAKE AWAY?
Key steps to take to reduce the likelihood
of legacy disputes, and the importance of
collaboration in achieving this.
emember a Charity Week takes
place in the UK in September.
This annual awareness week
is designed to encourage more
people to consider leaving a gift to charity
during the will-writing process. Legacies
continue to form a vital part of the charity
funding puzzle, with many charitable
organisations relying on this income
for their survival. Legacy income is also
growing; in 2014/2015, for charities in
the UK, it was valued at more than
GBP2.2 billion, up from GBP1.8 billion
in 2011/12.1 This upward trend is set to
continue, with legacy income projected to
contribute GBP13.3 billion to the charity
sector over the next five years.
However, the increase in contentious
legacy cases poses some threat to this,
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driven in part by the likely consequences of
increasingly complex family arrangements
making estates more difficult and diverse,
but also due to the impact of the 2008
economic downturn. The reduction in
the value of assets has led to beneficiaries
receiving lesser sums than anticipated,
while the number of people in financial
difficulty has increased, resulting in a
greater number of claims.
CLAIMS FOR FINANCIAL PROVISION
The ongoing Ilott v Mitson case has raised
serious concerns for those in the legacymanagement field over the past few years.
Legacy professionals are concerned that
this case is a departure from testamentary
freedom and may threaten future legacy
income. The facts of the case were discussed
in a previous edition of the STEP Journal.2
In short, this case demonstrates
circumstances in which the court will
interfere with a testator’s wishes to provide
financial assistance to dependants. It is
a reminder that testamentary freedom is
fettered by legislation, something testators
should be mindful of in making decisions
about the disposition of their estate.
TESTAMENTARY CAPACITY
The number of disputes about the
validity of a will on the grounds of a lack
of testamentary capacity is also growing.
Inevitably, this relates to the increase in
life expectancy, coupled with the rise
in the number of people suffering from
Alzheimer’s and dementia-related illnesses.
The test for testamentary capacity set
out in the case of Banks v Goodfellow 3 is still
the appropriate test for capacity to make a
will.4 The Mental Capacity Act 2005 came
into force in 2007, and there was some
uncertainty as to its relationship with the
test in Banks v Goodfellow. However, the
court in Walker v Badmin5 confirmed that
the Banks v Goodfellow test for testamentary
capacity is the correct one to apply.
Several recent cases have highlighted
that, while a testator may be suffering from
a degree of mental incapacity, if they satisfy
the test in Banks v Goodfellow, the will is
valid. Capacity depends on the potential
to understand and is not to be equated with
a test of memory.6 Capacity will be found
even where there is a clear decline in mental
health if a will is simple and rational, and
was signed in accordance with instructions.7
A will can be valid despite the testator
suffering from dementia when it was made.8
While not a rule of law or a requirement
of the validity of a will, the ‘golden rule’
described in the case of Kenward v Adams9
sets out good practice where there may be
questions as to testamentary capacity, and
is given significant weight. This golden rule
outlines that, when a testator is elderly or
has been ill, the making of their will ought
to be witnessed or approved by a medical
practitioner who is satisfied as to
testamentary capacity and records
their examination and findings.
The golden rule remains good practice
for will drafters to help ascertain whether
the testator has the requisite capacity,
and provides useful evidence in any
later challenge to the validity of the will.
Furthermore, will drafters that do not
follow this practice have been criticised
by the court.10
DRAFTING CHARITABLE GIFTS
Another problem frequently encountered
by legacy professionals is the inability to
fulfil charitable gifts, because they are too
specific, unclear or no longer possible
to carry out. Practical steps that can be
taken by the will drafter or their client
to minimise the chances of the gifts
failing include:
• checking the charity’s details
(name, address and charity number);
• contacting the charity to check
whether it is likely that the specific
request can be fulfilled;
• expressing the restriction as a wish
rather than a direction;
• including a general clause providing
the executors with the discretion to
benefit a replacement charity in the
event that, for example, the purposes
cannot be carried out according to the
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directions given and to the spirit of
the gift.
MITIGATING THE RISK OF CHALLENGES
In Ilott v Mitson, the court placed
importance on articulating a clear
‘narrative’ around the donor’s decision
when executing the will: why they are
choosing to support that charity, the extent
of their previous relationship with it, and
so on.
For this reason, the charity sector would
urge the will drafter to encourage their
clients to advise the benefiting charity of
their intention to make a gift in their will.
Certainly the charity is likely to find that
contact, and similarly a record of lifetime
support, of great assistance in upholding the
client’s wishes during any challenge further
down the line.
In some cases, it may also be beneficial
for the will drafter to encourage their clients
to have conversations with family and
friends about their choices so that they
understand and hopefully support the
decision, reducing the likelihood of
challenges after death. For charity legacy
professionals, storing and maintaining
accurate records about the donor, their
wishes, family arrangements and the
relationships over a period of time will help
the charity to respond to any claims and
provide evidence to support the donor’s
testamentary wishes.
The need for letters or attendance notes
when taking instructions for a will is acute
in circumstances where the will may be
vulnerable to challenge, whether that is
due to an elderly or vulnerable client, or
the provision of the will being contentious.
There needs to be a clear record showing
that the testator considered, for instance:
the reasons for changing any preceding will;
those who might expect or hope to benefit;
and, ideally, the reasons for benefiting the
charities selected.
Forfeiture clauses are one way of
providing a deterrent to potential claimants
(without extinguishing their rights) and are
perhaps underused. They are a practical
tool that the testator may be attracted to
if they can be encouraged to leave some
provision to a family member or dependant
rather than excluding them completely. If
it operates to dissuade the claimant, it will
certainly save the parties the time and cost
of litigation.
THE ROLE OF CHARITIES
Claims do still arise, despite the best efforts
of those involved. Where a claim is brought
against an estate in which there are charity
beneficiaries, they should be informed as
soon as possible and provided with full
information on the nature of the claim and
the potential impact on their entitlement.
It is normally appropriate for the charity
beneficiaries to take over the conduct of
the claim or subsequent litigation, allowing
the executors to maintain a position of
neutrality. This is particularly important
for professional executors, who will want
to avoid exposing themselves to the cost
risks of litigation.
Where there are difficulties in giving
effect to the charitable gift, the charity
should be engaged in resolving any
difficulties. There may be situations in
which the charity can provide the executors
with the comfort required to safely
distribute, despite complexities over the
wording of the clause.
FINAL THOUGHTS
Ultimately, will drafters, the administrators
of estates and charities are all working
towards the same goal of fulfilling testators’
wishes wherever possible and to the best
of their ability. While challenges to estates
cannot be avoided entirely, those involved
in writing, executing and managing estates
are certainly not powerless against claims.
Through effective collaboration and
increased mutual understanding, the legal
and charity sectors will be better able to
reduce the likelihood of legacy disputes,
and ensure that every charitable legacy
gift achieves its greatest potential.
1
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4
5
6
7
8
9
10
Legacy Trends: Discovering Potential through Data,
Smee & Ford (2015)
Julie Butler, ‘Before you go…’, STEP Journal, Vol24 Iss6
[1870]
According to Banks v Goodfellow, testators must be capable
of understanding: the nature of the act, i.e. making a will;
the extent of the property being disposed of; and claims to
which they ought to give effect. They must also be capable of
comprehending and appreciating that no disorder of mind will:
poison their affections; pervert their sense of right or their will in
disposing of their property; and bring about a disposal which, if
their mind had been sound, they would not have made
[2014]
Simon v Byford [2014]
Burns v Burns [2016]
Lloyds v Jones [2016]
[1975]
Key v Key [2010]
CHRIS MILLWARD IS CHIEF EXECUTIVE AT THE INSTITUTE OF
LEGACY MANAGEMENT, AND LUCY GILL IS A PARTNER IN THE
LEGACY AND TRUST DISPUTES TEAM AT FOOT ANSTEY LLP
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