Your IndustryMar 12 2014

Will power

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This relates to the estate of 90-year-old Joan Edwards, who died in 2012. Unusually, her 2001 will stated that her net residuary estate (the balance remaining after all liabilities and other legacies had been paid) should be held for “whichever Government is in office at the date of my death for the Government in their absolute discretion to use as they may think fit”.

The controversy which prompted the political parties’ offer to return their legacies surrounded the fact that Ms Edwards’ executors had interpreted her above will instructions in a particular way. They decided to divide the £520,000 bequest between the two government parties. This meant that approximately £100,000 was paid to the Liberal Democrats and £420,000 to the Conservative Party directly. Did Ms Edwards intend for that occur, or would she have anticipated that her estate would be more generally used to benefit the country?

Indeed, it has been reported that Lord Prescott commented that the funds should be returned as they were “left to the nation”.

The solicitors who prepared the will (who are also the executors of Ms Edwards’ estate) have apparently issued a statement confirming that, when the will instructions were obtained, they queried the unusual nature of the proposed bequest. Ms Edwards had apparently confirmed that the estate was to be left to “whichever political party formed the Government” at the date of her death.

Whilst it may initially appear that there was no scope for any misinterpretation, the will refers to whichever “Government” is in power rather than whichever “political party formed the Government”.

It is therefore not uncommon for there to be a real chasm between the outcome anticipated by a testator and what their will and executors later achieve.

Ultimately, there are three stages to ensuring that a testator’s wishes are carried out. The first involves ensuring that they consider obtaining specialist legal advice. The second is that the will which is prepared is valid, well drafted, up-to-date and accurately reflects their goals.

The third is that their executors either understand, or take reasonable steps to ascertain, the testator’s intentions and then implement their wishes.

Will preparation

In Ms Edward’s estate, an absolute discretion was given in the will for the “Government” to use the money as they saw fit. One interpretation of this was applied by her executors. However, another interpretation might be that these funds were intended for the benefit of the public purse, rather than specific lump sums being given to each political party.

That is why will preparation requires absolute clarity and the foundation of this is always good communication between the testator and their professional advisers.

It is crucial for any adviser to ensure that the testator’s goals are achievable, their wishes are accurately recorded and that they are made aware of any potential problems which might arise from the contents of their will. In order to minimise the risk of future problems, some key questions to consider include:

1.Does the will reflect what the testator wants to achieve?

2.Is the will clear and unambiguous, or is there any scope for misinterpretation?

3.Has the will been executed using the correct procedure?

4.Has the will either been regularly reviewed or updated as the testator’s circumstances have changed?

5.Was the testator free from any undue influence when the will was made?

6.Did the testator have the testamentary capacity required to make their will (namely, did they understand the size and nature of their estate, the contents and effect of their will and those for whom they should consider making financial provision?)

In the case of Ms Edwards’ estate it was the executors’ decision to distribute the funds in a particular way which Ms Edwards might never have intended to occur. When Ms Edward’s will was drafted, she may not have envisaged that a coalition government would be in power at the date of her death and may also not have wanted the legacy split between two parties.

It is not unusual for executors to sometimes be asked to exercise their discretion when dealing with estate assets. The level of discretion allowed will usually depend upon the terms of the will. It can sometimes be a very difficult task and so, the more information that is made available to them about the testator’s wishes, the better.

Where executors are unsure about what was intended by the testator, specialist legal advice can be obtained or, in more complex cases, the court can be asked to determine how the will should be interpreted. This provides not only certainty, but also some comfort for the executors if there is later any dispute over how the estate assets have been distributed.

If a testator has included an unusual legacy in their will, it is very important for their executors to try and establish what their intentions were at the time when the will was made.

One way of potentially avoiding any misinterpretation is for testators to leave a Memorandum of Wishes with their will. This separate document is not made public and can outline their wishes in far greater detail than their will. This document is also a particularly useful tool when sensitive issues need to be explained, for example, why a family member has been omitted from a will.

If a Memorandum of Wishes had been prepared in Ms Edwards’ case (which has not yet been confirmed), it may have been able to provide further information about whether she intended her legacy to benefit the nation generally, or whether she wanted payment to go directly to whichever political party was in power at the time of her death.

For executors tasked with interpreting a will, a Memorandum of Wishes can therefore provide an invaluable insight into what the testator wanted to achieve and why.

It is important to consider that problems involving either the construction of a will (how it is drafted) or its interpretation can result in claims being made against the estate. These can be costly, erode the estate assets and also delay the estate administration.

I regularly deal with claims which could have been avoided had either the above questions been asked when the will was prepared or the executors made enquiries about the testator’s intentions before distributing the estate assets.

If £520,000 is now handed over to HM Treasury by the Liberal Democrats and Conservative Party (as they have suggested is their intention), it still leaves the unenviable task of having to determine how those funds should be distributed.

So, whether it a large sum left to political party or an unusual bequest to a family member, it is always prudent for executors to clarify the testator’s exact intentions. Also, to consider and provide for any issues which may arise in the future at the time when the will is made.

Victoria Jones is a partner at law firm Lester Aldridge

Key points

The will of Joan Edwards, who died in 2012 aged 90, stated that her net residuary estate should be held for whichever government is in office at the date of her death

In Ms Edward’s estate, an absolute discretion was given in the will for the “government” to use the money as they saw fit

It is important to consider that problems involving either the construction of a will or its interpretation can result in claims being made against the estate.