Inheritance Tax  

Court case highlights value of IHT planning

Court case highlights value of IHT planning

The son of a former nurse has lost a three-year legal dispute against his siblings over their mother’s will after the High Court ruled that dementia had not affected her capacity to set out her final wishes.

Beryl Parsonage had divided her estate equally amongst her children in a will before she died in 2015 aged 86.

This invalidated a previous will written in 2010 that had left her son Duncan more than his siblings based on gifts they were given during her lifetime.

It came after Mrs Parsonage found out the property’s land was more valuable than previously thought and would have seen her son left with significantly more than his siblings.

But Mr Parsonage disputed his mother's capacity at the time the second will was written.

Following a three-year dispute the High Court this week (10 September) ruled Mrs Parsonage’s dementia symptoms had not affected her capacity to create a new will.

Judge Simon Barker ruled that although the mother, Beryl Parsonage, was suffering from dementia-like symptoms when she drafted a second will in 2011, her condition had not adversely affected her capacity to set out how her assets should be split among her four children.

According to the court there are four requirements concerning mental capacity which must be satisfied.

The person making the will must:

  • Understand the nature and effect of a will, that they are directing how and to whom their estate is to be disposed upon their death;
  • Understand the extent of their property for disposition;
  • Understand exactly who they have chosen to include and exclude from their will; and 
  • Not be affected by a mental disorder or condition which results in them making decisions which would not have been made in a sound state of mind.

Mr Barker said: “Based on the evidence of Ms Taylor, which I accept, Beryl Parsonage was considering her testamentary disposition over Christmas 2010 and reached a conclusion that her then current will, the 2010 will, was wrong, ie, it did not reflect her wishes as to how and to whom her estate was to be disposed of upon death because it caused her children to be treated unequally. 

“What sparked that thinking process is not explained by the evidence. What does also appear though is that Beryl Parsonage was conscious of the need to act while she had capacity.”

Therefore he ruled that Ms Parsonage understood what she was doing and deemed that the 2011 will is valid.

David Gibb, financial planner at Quilter, said: “Dementia is unfortunately a high possibility in the current day. And this has huge implications for ensuring that your wealth is distributed as you’d like it to. 

“Debates around inheritance have the potential to bring out the worst in people and destroy families.

“This case hinges on the fact that Beryl Parsonage updated her will at a time when she was beginning to show signs of dementia.

"When it comes to estate planning it’s important to update your will as soon as possible whenever there is a significant life event or circumstances change as you never know what is around the corner."

He added: “Trusts are an invaluable tool for complex situations. A trust would be run by a number of trustees after your death, who would distribute funds in line with your wishes. However, they can also adapt to any change in circumstances instead of strictly adhering to the will.”