Your IndustryApr 12 2017

Leaving behind a clear legacy

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Leaving behind a clear legacy

If you have spent time advising clients about their wills, drafting wills, or understanding wills as part of knowing your client, you will know they come in all sorts of shapes and sizes. But, fundamentally, they should all have one thing in common; at the time they were written, they should have reflected exactly what the person wanted to happen to their estate when they die.

It is a very personal decision. It might be unusual, it might be convoluted, it might not make sense to you or be anything you can relate to, but those are their wishes and if you are a will writer, it is your job to express those wishes as clearly as possible. If those wishes are unusual, or likely to be controversial, it is helpful to also record the 'why' as well as the 'what'.

That is because the number of disputed probate cases has increased substantially in recent years. Many have been widely reported and some involved challenges against a legacy left to charity. That is what happened in the very well-publicised Supreme Court case of Ilott v The Blue Cross and others, decided on 15 March 2017.

Charity trustees

It is worth remembering that trustees of a charity have to act at all times in the best interests of the charity, protecting and maximising the assets of that charity. So, it is no wonder these cases end up in court. Many people choose to support charities with gifts in their will and charities rely on these legacies to fund their work. Equally, there was a daughter in this case, Mrs Ilott, who was not left anything by her mother.

So the case worked its way up to the top of the English court system and was ultimately the first time the Supreme Court had an opportunity to give guidance on what constitutes 'reasonable financial provision' under the Inheritance (Provision of Family and Dependents) Act 1975.  

Ilott vs The Blue Cross

Briefly, Mrs Jackson – who had been estranged from her daughter for 26 years – made two wills 18 years apart, neither of which left anything to her daughter. Both came with side letters confirming her wish that nothing was to be left to her daughter and the later one specifically saying that her executors should resist any claim by her.  

Instead, Mrs Jackson left her estate to various charities that, with the exception of one, she had no particular connection with during her life. Mrs Ilott, who was married with five children and living on low income, challenged that. Ultimately it was decided by the Supreme Court that the original award by the district judge of £50,000 (from an estate worth a little under £500,000) should stand.  

So what was behind this decision? English law, unlike some other systems, recognises that people are free to leave what they want to who they want. They have testamentary freedom. It is subject to one qualification: since 1938, the court has had power in certain circumstances to modify the will (or intestacy rules) if it does not make reasonable financial provision for certain people (which includes the children of the deceased).

It is not about unfairness or about wanting more and it is not about whether the deceased behaved reasonably when they made their will. It is about the provision that would be reasonable for the person making the claim to receive for maintenance.  

In contrast under Scots law, children – along with surviving spouses and civil partners – are entitled to a certain amount of the deceased's moveable estate (that is basically everything other than land and buildings), regardless of the terms of the will. They arise automatically. Not so in England and Wales, where no one, not even a partner or a child, has an absolute right to any part of an estate. 

Now this is not about the merits of the case nor about whether the decision was, in my view, right or wrong. What it is about is the importance of knowing our clients. Knowing what they do and do not want; what they do and do not need us to do for them. And what many of our clients need us to do is make sure they have a will in place that reflects their wishes, whatever they may be. Because those wishes are important. This case demonstrates that. It was only because Mrs Jackson had made her wishes so clear that the court knew what they were.  

Failure to make a will

It is estimated that fewer than half of the UK adult population has got a will. There are lots of reasons for this. For some clients it is simply that they do not like thinking about their own mortality. For others, the decision about who gets what is just too hard to make, so gets put off.  

Others think they are too young or that the process will be expensive and/or time consuming. Some simply do not get round to it even though they know they should. But it is so important. Why would you not want to have had your say about who you want to inherit from you? Why would you not want to do everything you can to leave the people – or causes – you care about as much as possible?  

As will writers, we expect the unexpected from our clients. We are used to having to come up with the right words to clearly set out what our clients want to happen. We know that for some, tax efficiency will be key, while for others it will be all about asset protection.  

Others will have some very specific requirements. I will never forget having to draft a will that left a large amount of money in a trust to look after the client's horse. Then there was the will that was 20 pages long because it included legacies to the client's 25 closest friends. Reasonable or not, those were the client's wishes.

Mrs Jackson may well have acted unreasonably, but if she did, she still freely made a considered choice about who she wanted to inherit. All clients should be given that opportunity and know they have a will that says exactly what they want to happen. Equally, those who do not inherit what they feel they should have need to understand whether they can make a claim and how to go about it. As advisers, we could find ourselves on either side of that, helping our clients achieve what they want to achieve.  

Shona Lowe is head of private client services at 1825

Key points

The Ilott vs The Blue Cross and others case showed the importance of having a will in place.

The courts sided with the deceased because she had expressly prohibited the daughter from being a beneficiary.

Fewer than half the UK population has a will.